What Is Fair Trade and Why Is It Important?

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Ever wondered what the words “Fair Trade” you see on certain products at the store mean? If you’re like many consumers today, you’re becoming more aware of the impact your purchases have, not just on your personal life, but on the world at large. Understanding what fair trade is will be an important part of your overall sustainability journey.

What is Fair Trade?

Fair trade is a social movement aimed to promote sustainable development and reduce poverty. It does this by providing better trading conditions and advocating for the rights of marginalized producers and workers, especially in developing countries.  In short, it’s ethical trading. 

The philosophy of fair trade is rooted in equality, and sustainability. Its mission is to change the way global commerce operates by ensuring that the people involved in making the goods we love have decent working conditions and are paid fairly. This empowers individuals to break free from the cycle of poverty, enhance their living standards, and invest in their communities. It’s about creating opportunities and empowering people to foster change in their lives.

Fairtrade vs. Fair Trade

The term Fairtrade and fair trade are oftentimes used interchangeably. Though similar, understanding the nuance will help bring clarity to the broader industry

Fair trade is the general term used to describe the idea of creating a just global trading system. It’s not a regulated term, meaning any company can freely use it without needing to meet any standards.

Fairtrade on the other hand is a certification granted to products that meet the international standards set by Fairtrade International. Being able to recognize this official certification label will allow you to distinguish between greenwashing and the real deal.

The Origins and History of Fair Trade

The fair trade movement began in the mid-20th century as an effort to help poverty-stricken communities in the aftermath of World War II. The movement started as an effort by non-governmental organizations to provide relief to refugees and other war-affected communities after the war.

However, the term ‘fair trade’ started to become more mainstream in the late 1980s and early 1990s when the first fair trade certification system (1), Fairtrade International, was established. We’ll go more into certifications later in this article. This marked a key milestone in the fair trade movement, making it easier for consumers to identify and purchase fair trade products.

Over the years, fair trade has evolved from a niche market to a globally recognized movement, with a growing range of products – from coffee and chocolate to clothing and jewelry – being certified as fair trade. It’s a testament to the power of ethical consumerism, and how our purchasing choices can make a real difference in people’s lives.

The Principles of Fair Trade

Fair Trade is guided by a set of principles that provide a framework for its ethical and sustainable approach to trade. These principles, established by the World Fair Trade Organization (WFTO) (2), include:

  1. Creating Opportunities for Economically Disadvantaged Producers
  2. Transparency and Accountability
  3. Fair Trade Practices
  4. Fair Payment (ie fair wages)
  5. No Child Labor, No Forced Labor
  6. Non-Discrimination, Gender Equity, and Freedom of Association
  7. Good Working Conditions
  8. Capacity Building
  9. Promoting Fair Trade
  10. Respect for the Environment

These principles guide the conduct of businesses involved in fair trade and ensure that they promote sustainable development and reduce poverty through trade. 

Product Categories Fair Trade Covers

Fair trade covers both food categories and non-food categories. The specific product covered depends on the certification (see below), as each organization has its own focus. 

Common food products include:

  • Bananas
  • Cocoa
  • Coffee
  • Sugar
  • Tea
  • Cotton

Common non food products include:

  • Flowers
  • Clothes
  • Jewelry
  • Furniture
  • Toys

Why is Fair Trade Important?

For Producers

Fair trade fundamentally prioritizes people. Producers in developing nations often face the brutal realities of poverty. Fair trade ensures that these farmers and workers receive fair payment, which can greatly enhance their living conditions. Fair trade principles incorporate an additional amount known as the ‘fair trade premium,’ (3) which communities can use to invest in social, environmental, or economic development projects. So, every fair trade product you buy can contribute to new schools, health clinics, or clean water systems!

For Consumers

Fair trade provides a way for consumers to align their purchases with their values. Each product bearing the fair trade logo signifies that the workers involved were paid equitably. Moreover, many fair trade products also adhere to organic, non-GMO, or sustainably produced standards, contributing to your health and well-being.

For the Environment

Fair trade also champions environmental sustainability. Fair trade principles mandate reduced pollution, limited use of harmful chemicals, and increased biodiversity. When farming communities receive fair payment, they can invest in sustainable farming practices, safeguarding our planet for future generations.

Fair Trade Standards and Certification

Fair trade operates under a set of stringent standards (4) designed to ensure that farmers and workers are treated equitably and that products are made in environmentally friendly ways.

The Process of Certification

A producer or brand intending to be certified as fair trade has to comply with these standards, which are assessed by an independent certifier. The certifier conducts regular audits to ensure continued compliance. This rigorous process ensures that when you buy a product with a fair trade certification, it truly stands for the values it represents.

Major Fair Trade Standards & Certification Bodies

Several organizations globally provide fair trade certification, the most well-known being Fairtrade International. Other reputable bodies include the World Fair Trade Organization (WFTO) and the Fair Trade Federation (FTF). Each has its own set of standards and principles, but all aim to ensure fair prices, good working conditions, sustainable practices, and equitable trade terms for farmers and workers.

Understanding Different Fair Trade Certifications

Not all Fair Trade certifications are created equal. Each certification body has its own unique set of standards and principles, although they all work towards the same goal of promoting fairness and sustainability in trade. Let’s take a closer look at the major ones:

Fairtrade International (FLO)

  • Certifies at product level
  • Focuses on agricultural producers and large-scale farming operations

  • Global reach, widely recognized

World Fair Trade Organization (WFTO)

  • Certifies at business / organization level
  • Focuses artisans, craft producers, smaller-scale operation

  • Global reach, niche in recognition

Fair Trade Federation (FTF)

  • Certifies at business / organization level
  • Focuses on agricultural producers, artisanal producers
  • North America coverage


Fairtrade International (FLO)

World Fair Trade Organization (WFTO)

Fair Trade Federation (FTF)

Method of Operation

Certifies at product level

Certifies at business / organization level

Certifies at business / organization level

Specific Focus

Agricultural producers

Large-scale farming operations


Craft producers

Smaller-scale operations

Agricultural producers

Artisanal producers


Global reach, widely recognized

Global reach, niche in recognition

North America

Fairtrade International (FLO)

Fairtrade International is the most well-known fair trade certification. It operates on a global scale, certifying a wide range of products, from coffee and tea to bananas and cotton.

To be recognized by Fairtrade International, certain specific requirements need to be met. These are laid out in the Fairtrade Standards and include:

  • Democratically organized farmer groups: These can be cooperatives or organizations where farmers have a say in decisions and operations.
  • Fair labor conditions: Producers must adhere to International Labour Organization (ILO) conventions on working conditions, rights, and wages.
  • Sustainable production methods: Producers are required to work towards more sustainable practices, including reducing environmental impact and banning harmful agrochemicals.

Payment of the Fairtrade Minimum Price and Premium: The Fairtrade Minimum Price aims to cover the average costs of sustainable production and acts as a safety net for farmers when market prices drop. The Fairtrade Premium, an additional sum, goes into a communal fund for workers and farmers to use as they see fit.

World Fair Trade Organization (WFTO)

The WFTO certification focuses more on organizations rather than individual products. It’s awarded to businesses that demonstrate a 100% Fair Trade supply chain, adhering to the WFTO’s Ten Principles of Fair Trade. These include creating opportunities for economically disadvantaged producers, transparency, fair payment, and ensuring no child labor or forced labor, among others.

Fair Trade Federation (FTF)

Similar to WFTO, the Fair Trade Federation focuses on companies in North America. FTF members are evaluated against nine principles (5) that go beyond just the product or production process. They include fair wages, cooperatively structured workplaces, consumer education, and environmental sustainability.

Understanding the differences between these certifications can help you make more informed choices when buying fair trade products. Remember, every fair trade purchase is a step towards a more equitable and sustainable world.

Fair Trade vs. Direct Trade

As we’ve explored, fair trade is a movement designed to ensure producers in developing nations receive a fair price for their goods, are engaged in sustainable practices, and uphold specific social standards. Organizations are certified by established bodies like Fairtrade International, ensuring compliance with these standards.

Direct trade, on the other hand, is a term often used in the coffee industry, but it applies to other sectors as well. It involves importers buying directly from producers, thus eliminating intermediaries. Direct trade prioritizes personal relationships and negotiation between the buyer and producer to ensure a fair price and quality product.

Pros and Cons of Each Approach

Fair trade’s primary advantage is its assurance to consumers that products adhere to specific social, economic, and environmental standards. Its main criticism, however, is the bureaucracy and cost associated with certification, which can be prohibitive for some producers.

Direct trade emphasizes direct relationships, potentially resulting in better quality products and higher prices for producers. It lacks, however, a universal certification system or standard set of principles, making it challenging for consumers to know if all ethical considerations are met.

Illustrating the Differences

Consider the coffee industry. A coffee farm certified by Fairtrade International guarantees a minimum price for their beans, along with a fair trade premium for community development. The farm must also follow strict environmental and labor regulations.

In contrast, a direct trade coffee roaster might build a personal relationship with this farm, negotiate prices above the fair trade minimum, and directly influence the beans’ quality. However, their commitments to labor standards and environmental regulations are not audited by an external body.

How to Support Fair Trade?

1. Buying Fair Trade Products

An effective way to support fair trade is by consciously purchasing fair trade certified products. Look out for certification labels like the Fairtrade Mark or the World Fair Trade Organization (WFTO) Guarantee System. These labels indicate that the product complies with fair trade principles.

These products are increasingly available in supermarkets and online, spanning a range of goods, including coffee, chocolate, bananas, clothing, and jewelry. By choosing these products, you directly contribute to better living and working conditions for producers in developing nations.

2. Promoting Fair Trade Practices

Beyond individual consumption, you can also advocate for fair trade practices. This could be through raising awareness among friends and family, supporting campaigns by fair trade organizations, or lobbying your local representatives for policy changes favoring ethical trade.

Additionally, encourage your favorite brands and local stores to stock more fair trade products. Businesses respond to consumer demand, and your voice can influence their sourcing practices.

Remember, supporting fair trade is not just about a purchase – it’s a step towards global economic fairness and sustainability.


In the face of economic disparities and environmental challenges, fair trade presents a powerful approach towards a more sustainable and just global economy. By ensuring producers receive a fair price for their goods, promoting environmental sustainability, and prioritizing social welfare, fair trade significantly contributes to sustainable development and social justice.

As consumers, each of us has the power to make a difference. By choosing fair trade, you vote for an equitable world with every purchase. You contribute to positive change, giving farmers and workers across the globe the chance for a better life and a sustainable future.

Don’t underestimate your power to shape the world. Start today, choose fair trade, and be part of the solution.


  1. “Behind the Fairtrade Mark.” Fairtrade America, 2023. https://www.fairtradeamerica.org/why-fairtrade/the-fairtrade-difference/for-shoppers/behind-the-fairtrade-mark/
  2. “Our 10 Fair Trade Principles.” World Fair Trade Organization, 2023. https://wfto.com/our-fair-trade-system/our-10-principles-of-fair-trade/ 
  3. “Fairtrade Premium overview.” Fairtrade America. https://www.fairtrade.net/impact/fairtrade-premium-overview 
  4. “Fairtrade Trader Standard.” Fairtrade America, 2015. https://www.fairtradeamerica.org/app/uploads/2020/08/Fairtrade-America-Trader-Standard-English.pdf
  5. “Fair Trade Federation Principles.” Fair Trade Federation. https://www.fairtradefederation.org/principles/