The trading conditions in many markets, such as those for cocoa, sugar, cotton, and tea, make it very difficult for producers to earn a living. Farmers are often paid prices which don’t begin to cover the costs of production. Fair Trade ensures that Producers are paid a fair price that covers costs of production and adequate living standards for hired labour.
Ethical Working Conditions
Fair Trade includes ethical labour conditions for both hired labour situations and small producer organizations. There must be a Joint Body, which includes workers and management. This group is responsible for managing the Fair Trade premium.
In addition to the Fair Trade price, organizations receive a sum of money called the Fair Trade premium. This money goes into a communal fund for workers and farmers to use to improve their social, economic, and environmental conditions. Producers are paid a price premium that supports business development and community initiatives such as improving access to health and education.
Fair Trade producers take action to protect the environment in which they work and live. These measures include careful use of fertilizers and pesticides, crop rotation, and, in some cases, shade-grown production. Producers, consumers, and businesses build stronger connections, reducing inefficiencies and encouraging more direct relationships.
LONG TERM BUISNESS RELATIONSHIPS
Fair Trade Standards require buyers to give a financial advance on contracts, called pre-financing, if producers ask for it. This facilitates access to capital, which is often one of the biggest obstacles to development. Fair Trade relationships also provide producers with long-term access to markets. These relationships should be based on mutual respect, transparency, and commitment, and grow stronger over time.