-
Assisting Disadvantaged Producers. The prime objective of Fairtrade is to develop access to markets in developed countries for producers who tend to be marginalised by conventional trading structures. Fairtrade producers must also be able to demonstrate that they can meet market requirements for quality, consistency and continuity of supply as well as the capacity to process orders for export. To avoid dependency on Fairtrade, producers are encouraged to maintain and develop existing export business.
-
Direct Trade. Fairtrade coffee is bought directly from farmers’ organisations at a guaranteed price. Most coffee buyers trade through the world commodity markets, so the buyer and seller never meet. This means that buyers do not know who the growers are, or how much they receive for their beans. Nor is it possible for buyers to know what conditions the producers work in. By bypassing the international commodity market and buying direct from farmers’ associations or co-operatives, Fairtrade enables farmers to get a greater share of the rewards for their labour.
-
A Fair Price. Fairtrade criteria establish a minimum guaranteed price that covers the cost of production and ensures a living wage for growers. The set Fairtrade price rises in line with market prices if they rise above the minimum Fairtrade price.
-
Pre-Finance. Some small producers find it difficult to obtain finance to make their products available for export and often have to pay very high interest rates. Producers may therefore request part-payment of orders in advance of delivery, for which a fair commercial cost should be passed on by the importer.
-
A Premium. In addition to the purchase price paid by importers, a separate payment is made which is designated for social and economic development in the producing communities. The farmers and growers themselves decide how these funds are to be spent. As part of the Fairtrade criteria, registered producers are accountable to the Fairtrade Labelling Organisation for the use of this money. It is generally used for improvements in health, education or other social facilities, although it may also be used for certain development projects to enable growers to improve productivity or reduce their reliance on single commodities.
- Long-term Trading Relationships. Fairtrade encourages importers to place orders well in advance so that producers can plan their business with some security.