The Fairtrade Foundation is a charity based in the United Kingdom that aims to help disadvantaged producers in developing countries by tackling injustice in conventional trade, in particular by promoting and licensing the Fairtrade Mark, a guarantee that products retailed in the UK have been produced in accordance with internationally agreed Fairtrade standards. The foundation is the British member of FLO International, which unites FLO-CERT, 25 National Fairtrade Organisations and 3 Producer Networks across Europe, Asia, Latin America, North America, Africa, Australia and New Zealand.
The organisation is an independent non-profit organisation that licenses use of the Fairtrade Mark on products in the UK in accordance with internationally agreed Fairtrade standards.
Areas of activity Its four key areas of activity include: Providing independent certification & licensing use of the Fairtrade mark; Aid producers' position in the Fairtrade sector when selling to traders and retailers; Work with partner organisations to support producer organisations and networks; Raising awareness of Fairtrade issues and the role of Fairtrade.
How it works
The marketing system for Fairtrade and non-Fairtrade products is identical in the consuming countries, using mostly the same importing, packing, distributing and retailing firms. Some independent brands operate a virtual company, paying importers, packers and distributors and advertising agencies to handle their brand, for cost reasons.Davies, I.A. and A Crane, ‘Ethical Decision Making in Fair Trade Companies’, Journal of Business Ethics 45: 79–92, 2003. P84 In the producing country Fairtrade is marketed only by Fairtrade certified cooperatives, however if there is not enough market demand, those products are sold onto the conventional market at market prices, marketed by Fairtrade certified cooperatives (as uncertified), by other cooperatives and by ordinary traders.Mohan, S. (2010). Fair Trade Without the Froth - a dispassionate economic analysis of 'Fair Trade'. London: Institute of Economic Affairs.; Kilian, B., Jones, C., Pratt, L., & Villalobos, A.: 2006, ‘Is Sustainable Agriculture a Viable Strategy to Improve Farm Income in Central America? A Case Study on Coffee’, Journal of Business Research, 59 (3), 322–330.; Berndt, C. E.: 2007, Is Fair Trade in coffee production fair and useful? Evidence from Costa Rica and Guatemala and implications for policy. Washington DC.: Mercatus 65 Policy Series, Policy Comment 11, Mercatus Centre, George Mason University.; Riedel, C. P., F. M. Lopez, A. Widdows, A. Manji and M. Schneider (2005), ‘Impacts of Fair Trade: trade and market linkages’, Proceedings of the 18th International Farming Symposium, 31 October–3 November, Rome: Food and Agricultural Organisation, http://www.fao.org/ farmingsystems.; Kohler, P. (2006), ‘The economics of Fair Trade: for whose benefit? An investigation into the limits of Fair Trade as a development tool and the risk of clean-washing’, HEI Working Papers 06–2007, Geneva: Economics Section, Graduate Institute of International Studies, October.
Cooperative traders and exporters can only sell produce on Fairtrade terms if they meet the set of standards set by Fairtrade International that demand minimum requirements to criteria such as pricing and terms of trade. Farmers pay FLOCERT a certification and inspection fee. Other administration costs and production costs are incurred to meet these standards. Commodity prices can drop when the world market is oversupplied. A minimum price, which is paid to producers, acts as a safety net for farmers at times when world markets fall below a sustainable level. An additional sum of money, called the Fairtrade Premium, is paid to farmers for products sold on Fairtrade terms. Some cooperatives can sell only a third of their output as Fairtrade, because of lack of market demand, and sell the rest at world prices.Mohan, S. (2010). Fair Trade Without the Froth - a dispassionate economic analysis of 'Fair Trade'. London: Institute of Economic Affairs.; Kilian, B., Jones, C., Pratt, L., & Villalobos, A.: 2006, ‘Is Sustainable Agriculture a Viable Strategy to Improve Farm Income in Central America? A Case Study on Coffee’, Journal of Business Research, 59 (3), 322–330.; Berndt, C. E.: 2007, Is Fair Trade in coffee production fair and useful? Evidence from Costa Rica and Guatemala and implications for policy. Washington DC.: Mercatus 65 Policy Series, Policy Comment 11, Mercatus Centre, George Mason University.; Kohler, P. (2006), ‘The economics of Fair Trade: for whose benefit? An investigation into the limits of Fair Trade as a development tool and the risk of clean-washing’, HEI Working Papers 06–2007, Geneva: Economics Section, Graduate Institute of International Studies, October; Renard, M. C. and V. P. Grovas (2007), ‘Fair Trade coffee in Mexico: at the center of the debates’, ch. 9 in D. Murray, L. Raynolds and J. Wilkinson (eds), Fair Trade: The Challenges of Transforming Globalisation, London: Routledge. Pp 38-9; Riedel, C. P., F. M. Lopez, A. Widdows, A. Manji and M. Schneider (2005), ‘Impacts of Fair Trade: trade and market linkages’, Proceedings of the 18th International Farming Symposium, 31 October–3 November, Rome: Food and Agricultural Organisation, http://www.fao.org/ farmingsystems; Bacon, C. (2005), ‘Confronting the coffee crisis: can Fair Trade, organic and speciality coffee reduce small-scale farmer vulnerability in northern Nicaragua?’, World Development, 33(3): 497–511; Mohan, S. (2010). Fair Trade Without the Froth - a dispassionate economic analysis of 'Fair Trade'. London: Institute of Economic Affairs. As the additional costs are incurred on all production, not just that sold as Fairtrade, cooperatives sometimes lose money on their Fairtrade membership.Weber, J. (2006). Rationing in the Fair Trade Coffee Market: Who enters and How? International colloquium on fair trade and sustainable development. Montreal: Ecole des Sciences de la Gestion, Universite du Quebec.; de Janvry, A., McIntosh, C., & Sadoulet, E. (2010). Fair Trade and Free Entry:The Dissipation of Producer Benefits in a Disequilibrium Market. Retrieved December 24, 2012, from , C. E.: 2007, Is Fair Trade in coffee production fair and useful? Evidence from Costa Rica and Guatemala and implications for policy. Washington DC.: Mercatus 65 Policy Series, Policy Comment 11, Mercatus Centre, George Mason University. After the certification fees have been subtracted from the overall income earned on Fairtrade terms, the rest goes into a communal fund for workers and farmers to use as decided democratically within the farmers' organisation, or by a workers' committee on a plantation. The additional sum (Fairtrade Premium) is invested in ‘social projects’ such as clinics, women's groups and baseball pitches.
To become certified Fairtrade producers, the primary cooperative and its member farmers must operate to certain Fairtrade standards, set by the organisation. FLO-CERT, the for-profit side, handles producer certification, inspecting and certifying producer organisations in more than 50 countries in Africa, Asia, and Latin America.FLO-CERT (2008). FLO-CERT . URL accessed on August 1, 2008. In the fair trade debate there are many complaints regarding apparent failed enforcement of these standards, with Fairtrade cooperatives, importers, and packers profiting by evading them.Raynolds, L. T.: 2009, ‘Mainstreaming Fair Trade Coffee: from Partnership to Traceability’, World Development, 37 (6) p1089.; Valkila, J., Haaparanta, P., & Niemi, N.: 2010, ‘Empowering Coffee Traders? The Coffee Value Chain from Nicaraguan Fair Trade Farmers to Finnish Consumers’, Journal of Business Ethics, 97, p264.; Valkila, J.: 2009, ‘Fair Trade organic coffee production in Nicaragua - Sustainable development or a poverty trap?’ Ecological Economics, 68, 3018-3025.; Utting, K.: 2009, ‘Assessing the impact of Fair Trade Coffee: Towards an Integrative Framework’, Journal of Business Ethics, 86, p139.; Valkila, J.: 2009, ‘Fair Trade organic coffee production in Nicaragua - Sustainable development or a poverty trap?’ Ecological Economics, 68, 3022-3023.; Reed, D.: 2009, ‘What do Corporations have to do with Fair Trade? Positive and normative analysis from a value chain perspective’, Journal of Business Ethics, 86, pp 12, 21.; Mohan, S. (2010). Fair Trade Without the Froth - a dispassionate economic analysis of 'Fair Trade'. London: Institute of Economic Affairs. (e.g. p67); Kohler, P. (2006), ‘The economics of Fair Trade: for whose benefit? An investigation into the limits of Fair Trade as a development tool and the risk of clean-washing’, HEI Working Papers 06–2007, Geneva: Economics Section, Graduate Institute of International Studies, October. Jacquiau, C. ( 2006 ). Les Coulisees du Commerce Équitable. Paris: Mille et Une Nuits.; Jacquiau, C. (2007). Max Havelaar ou les ambiguïtés du commerce équitable: Pourquoi le Sud rue dans les brancards. Monde Diplomatique September.; ; Weitzman, H. (2006, August 9). ‘Fair’ coffee workers paid below minimum wage. Financial Times .; Weitzman, H. (2006, September 9). ‘'Ethical-coffee’ workers paid below legal minimum. Financial Times .; Weitzman, H.: 2006, The bitter cost of ‘Fair Trade’ coffee. Financial Times, September 8.; Reed, D.: 2009, ‘What do Corporations have to do with Fair Trade? Positive and normative analysis from a value chain perspective’, Journal of Business Ethics, 86, p12.; Moore, G., Gibbon, J., & Slack, R.: 2006, ‘The mainstreaming of Fair Trade: a macromarketing perspective’, Journal of Strategic Marketing, 14, 329-352.
Criticism Fairtrade operations have led to criticism of the foundation.Griffiths, P., ‘Ethical objections to Fairtrade’ Journal of Business Ethics July 2011(DOI) 10.1007/s10551-011-0972-0 www.springerlink.com Accessed at , J., Haaparanta, P., & Niemi, N. (2010). “Empowering Coffee Traders? The Coffee Value Chain from Nicaraguan Fair Trade Farmers to Finnish Consumers.” Journal of Business Ethics, 97:257-270. Kilian, B., Jones, C., Pratt, L., & Villalobos, A. (2006). “Is Sustainable Agriculture a Viable Strategy to Improve Farm Income in Central America? A Case Study on Coffee”. Journal of Business Research, 59(3), 322–330.Mendoza, R., & J. Bastiaensen, J. (2003). “Fair Trade and the Coffee Crisis in the Nicaraguan Segovias.” Small Enterprise Development, 14(2), 36–46. It is argued that, because retailers and cafes in the rich countries can sell Fairtrade coffee at any price they like, nearly all the extra price paid by consumers, 82% to 99%, is kept in the rich countries as increased profit. There is evidence that dishonest importers do not pay the full Fairtrade price, so an even smaller proportion reaches the Global South.Raynolds, L. T. (2009). Mainstreaming Fair Trade Coffee: from Partnership to Traceability. World Development, 37 (6) 1083-1093, p. 1089; Valkila, J., Haaparanta, P., & Niemi, N. (2010). Empowering Coffee Traders? The Coffee Value Chain from Nicaraguan Fair Trade Farmers to Finnish Consumers. Journal of Business Ethics, 97:257-270 p. 264, Valkila, J. (2009). Fair Trade organic coffee production in Nicaragua - Sustainable development or a poverty trap? Ecological Economics, 68 3018-3025, pp. 3022-3; Reed, D. (2009). What do Corporations have to do with Fair Trade? Positive and normative analysis from a value chain perspective. Journal of Business Ethics, 86:3-26, p. 12; Barrientos, S., Conroy, M. E., & Jones, E. (2007). Northern Social Movements and Fair Trade. In L. Raynolds, D. D. Murray, & J. Wilkinson, Fair Trade: The Challenges of Transforming Globalization (pp. 51–62). London and New York: Routledge.