What Is Fair Trade?

By: Gaurav Batra In: Trade Last Updated: 2011-01-13

Fair Trade is a social movement, based on an international approach, which aims to ensure the producers in the developing countries to get a fair deal. The movement calls for the fair pricing of goods and provision of civilized working conditions for the employees. Fair trade organizations are categorized into various types and that includes the organizations that provide certifications as well. Let's take a closer look at the following points to get better acquainted with this concept.

Categories of Fair Trade Organizations

Producers: The people engaged in cultivating or making of the products such as sugar, coffee, rice, handicrafts items and many others.
Importers: The person involved in buying of the goods from the producers and further selling these to either the individual or retailers.
Retailers: The individual selling the goods that are bought from the importers or from the producers.
Labelling Initiatives: The organization that monitors fair trade produce and provides a label to make a distinction of these goods from others.

Principles Of Fair Trade

Fair price: The employees receive a certain amount of floor price and also the certified premium.
Fair labor conditions: Under fair trade practices, the workforce is secure about the wages and safe working conditions. And the movement strictly prohibits child labor.
Direct trade: In fair trade, the importers directly purchase from the producer and this eliminates the middlemen and enables them to deal in the global market.
Democratic and transparent organizations: This helps the workers to take a wise decision while investing revenues.
Community development: The fair trade premiums are invested in social and business development projects such as scholarship programs, quality improvement training etc.
Environmental sustainability: Sustainable methods are used in all business activities like production, marketing, packaging, delivery etc.

Fair Trade movement has benefited the companies by enhancing their credibility in the market and generally making the business world more professional by eliminating many corrupt practices. As more and more companies realize the benefits of being certified as a fair trade organization, this trend will surely benefit everyone in the society in the long run.