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“Fair” – a much used term

In connection with Fair Trade a number of different terms are now being commonly used:

“fairly traded”: fairly traded usually means fair dealings while trading goods. This includes topics like worker rights, tariffs, subsidies, and of course fairness in dealing with business partners and producers.

“Fair Trade”: this expression comprises the whole Fair Trade movement including organisations and companies using other fair trade labels (there are other certification agencies apart from FLO) and companies that are not certified but adhere to the principles of Fair Trade. What matters is that the essential principles of Fair Trade are being upheld and the ultimate aim of changing the conditions of world trade and supporting disadvantaged producers are shared.

“Fairtrade” describes the activities of the Fairtrade Labelling Organisation (FLO), national Fairtrade organisations, Fairtrade marketing organisations and Fairtrade producer networks.

So what is Fairtrade labelled?

People in the global South are at the centre of the efforts of Fairtrade labelling. Fairtrade supports small scale farmers and workers in developing countries in getting better access to world markets. Only products that comply with Fairtrade standards will carry the Fairtrade label. Here are some of the core criteria:

  • Fairtrade prices need to cover at least the costs of production.
  • Fairtrade does not allow working conditions that pose health risks, forced labour, discrimination and exploitative child labour.
  • Producer groups receive Fairtrade premiums through which they can finance projects like new water wells, education, medical care etc.
  • Longterm trade relationships facilitate long term planning.
  • Fairtrade supports producers converting to organic agriculture and pays a premium for organic produce. Environmental standards restrict the use of pesticides and chemicals and do not allow genetically engineered crops.
  • Through dialog, transparency and mutual respect Fair Trade furthers equality in international trade.

By buying fairly traded goods consumers make a contribution to development and attempts to overcome poverty. The aim is to encourage responsible consumption and thereby reduce poverty in the southern hemisphere. Fairtrade stands for acting ethically, sustainability and transparency – it is a way to build bridges between producers and consumers. Consumers who buy Fairtrade labelled products make a practical contribution to improve the lives of farming families and workers in a sustainable way. At present 1.3 million smallscale farmers and workers in more than 70 countries benefit from Fair Trade.

Why do some products say that they are “fairly traded” but do not carry the Fairtrade label?

Some organisations have been promoting Fair Trade for many years. Many of these organisations were founded before Fairtrade certification was even invented. In some instances companies or organisations offer products for which Fairtrade standards don’t exist, like handicrafts.

Fair Trade or “fairly traded” are not protected terms. With products that claim to be fairly traded (without a label) it is important to ascertain the basis for this claim. The FLO label requires a third party audit and guarantees the compliance with defined standards.

What is the Fairtrade Labelling Organizations International (FLO)?

The Fair Trade Labelling Organisations International (FLO) is the international umbrella organisation for national Fair Trade organisations. FLO was founded in Bonn, Germany in 1997 with the aim to unify the different national Fairtrade standards and labels. FLO consists of two independently operating branches:

FLO e.V. develops certification criteria and standards.

FLO-CERT (FLO certification) is an auditor that ascertains whether the criteria and standards have been met.
Today the international Fairtrade-labelling-structure consists of three producer networks, 25 national Fairtrade organisations, FLO e.V. and FLO CERT. The national Fairtrade organisations manage the Fairtrade label in their respective countries. In Germany the national organisation is TransFair e.V., in Switzerland it is the Max Havellar Foundation, in Austria it is Fairtrade Österreich, in Britain it is the Fairtrade Foundation … The producer networks represent the many different producer groups in Latin- and South America, Africa and Asia (CLAC: Coordinadora Latinoamericana y del Caribe de Comercio Justo, AFN: African Fairtrade Network and NAP: Network of Asian Producers).

According to the German nonprofit organisation ‘Forum Fairer Handel’ the FLO Fairtrade label is one of the strictest Fair Trade labels and also the most recognised one. Both, fairly traded produce and products produced with fairly traded ingredients can be Fairtrade labelled, there are Fairtrade coffee, bananas, cotton, cosmetics, jewellery, wood and even gold.

What does FLO actually do?

The Fair Trade Labelling Organisation (FLO) is a non-governmental organisation. It develops Fairtrade standards and looks after producer groups. FLO is the umbrella organisation of most national Fairtrade organisations (the Fairtrade Foundation and TransFair being just two of them) and the producer networks.

Fairtrade standards apply for Fairtrade producers and workers. Retailers and companies that want their products to carry the Fairtrade label have to abide by the standards, too. In fact this goes for the whole supply chain, including importers, exporters and licensees. FLO supports the producers so that they are able to meet the standards and obtain the Fairtrade certification; it also creates better market access for farmer co-operatives. FLO works with a local liaison officers who support the producers though training, advice on certification and contacts to retailers or processing companies.

What are Fair Trade standards?

Fair Trade is based on economic, ecological and social values, which form the basis of the Fair Trade standards.

Fair Trade standards have been developed to sustainably improve the lives of small scale farmers and plantation workers in the poorest countries of the world. Some Fair Trade standards are developed by the FLO Fairtrade standards committee in co-operation with producers, retailers and experts. FLO-Fairtrade standards consist of core indicators and development indicators. The core indicators have to be met by all producer groups in order to get FLO certification. After the initial certification the development indicators come into play. They are more far reaching and aim to improve the producers’ working conditions but also put into place sustainable long-term environmental protection measures.

How much FLO labelled Fairtrade is in FAIR SQUARED?

Every ingredient in a FAIR SQUARED product that is available under FLO standards will be sourced as such. If for example a product in our cosmetic range requires apricot kernel oil and somewhere in the world Fairtrade producers make this oil we will buy it. But there are ingredients needed in cosmetics that are not available under FLO-Fairtrade conditions, and therefore cannot be counted as part of the FLO-certification percentage.

Products like creams that stay on your skin must contain at least 5% Fairtrade ingredients, products that are rinsed off, like soaps, have to contain at least 2% Fairtrade ingredients. That doesn’t sound like a lot …
BUT: many cosmetic products have a water content of up to 90% and water will never be FLO-Fairtrade certified. Fairtrade labelled cosmetics need to state the Fairtrade percentage of the whole product, including water. If we were to specify the Fair Trade percentage for the dry content it would be much higher, but unfortunately we can’t, it would be a violation of the FLOP-Fairtrade criteria. But we can tell you here that the average Fair Trade ingredient percentage in the dry matter is more than 35%. The rest are natural ingredients needed to make good cosmetics that are not (yet) available under Fair Trade conditions. But we’re working on it, our goal is to have the maximum percentage of Fair Trade ingredients without lowering our quality standards.

Who controls the implementation of the FLO-Fairtrade standards?

Once a producer organisation has achieved the Fairtrade certification it is monitored annually. Every three years the certification has to be renewed which includes a full audit. The certification organisation FLO-CERT audits whether producers and retailers comply with the Fairtrade standards and fulfil the social, economic and ecologic criteria. They also monitor the payment of the agreed minimum price and the Fairtrade premium.

FLO-CERT is the independent certification arm of FLO. The organisation certifies producers and retailers in more than 115 countries in accordance with Fairtrade standards. The auditors monitor compliance with the FLO-Fairtrade standards on site.

Does the money reach the producers?

FAIR SQUARED sources all ingredients that are available under Fairtrade from FLO certified producers. This guarantees the payment of an agreed minimum price and an additional Fairtrade premium, which helps the producers and their families to improve their living and working conditions.

The independent FLO audit is important for all concerned, consumers can be certain that Fairtrade moneys reach the producers in full. There are products for which no FLO Fairtrade standards exist. One of them is natural latex or rubber. The Fair Rubber Association has developed criteria for fairly traded rubber, their implementation is monitored, too. If producers meet the Fair Rubber Association standards they will be certified and can carry the Fair Rubber logo; and with that logo consumers can be certain that the Fair Trade premium reaches the producers in full.
But unfortunately not all is fair in fair trade. Claiming something is ‘fairly traded’ without providing proof through a third party auditor is not enough.
That’s why we at FAIR SQUARED are in close contact with our producer partners and after every visit we return with the knowledge that Fair Trade can change lives for the better.

Fair Trade has its critics.

Since there are a number of Fair Trade initiatives, and the concept of what Fair Trade is or could be has developed over time, and since global politics and circumstances change constantly, too, it is no wonder that some consumers ask: how fair is Fair Trade?

Here is some of the criticism that has been raised. Long and weighty repliques are available – you can also check some of them out on the FLO/ Max Havelaar websites.

Certification costs for producers are too high, in particular if they haven’t found a fair trade buyer yet. The only ones profiting are the auditors, some of them coming up with ever new logos.

We say: Within the Fairtrade system there is a fund in aid of economically disadvantaged producers and co-operatives that can help bridge the gap and make certification possible. Parnters of the Fair Rubber Association pay no fee at all. On the contrary: They can get financial support for a Forest Stewardship Council (FSC) certification.

The Fairtrade licence fee is calculated from the retail price of a product without taking the percentage of actual Fairtrade ingredients into account – in cosmetics for example the Fairtrade licence fee is 3%.

We say: Correct, but in the case of cosmetics the producers benefit. Most cosmetics consist of up to 90% of water, which will never be a Fairtrade ingredient.

The producers receive a fraction of the Fair Trade up-mark.

We say: Of course we can all be annoyed about the fact that retailers in Europe calculate a net margin of 40% to 60% for distribution. The Fair Trade producers don’t care because they want to sell as much produce as possible and the only ones who can make that happen are the retailers in Europe. And unless a particular retailer has a wide net of subsidiaries the overheads are substantial and eating into the margin. That’s why the idea of fair trade needs to inform trade relationships everywhere.

‘Free-riders’ get one product certified and not the whole range.

We say: Correct, but the consumer decides whom they trust and what they buy.

There are migrant labourers who do not benefit from Fairtrade.

We say: Yes, that’s a loophole in the Fairtrade system, one FLO is working on closing. To our knowledge none of our Fairtrade partners employ migrant labourers.