What is Fairtrade and Just How Fair Is It Really?

For over 20 years, the Fairtrade label has been reassuring consumers that the products they buy give a fair price to farmers in developing countries. From bananas and coffee, to cotton and gold, the Fairtrade Foundation in the UK now certifies over 6,000 different products. Its distinctive logo is recognised by an amazing 93% of the British public.

But with the proliferation of alternative certification schemes, and uncertainty over how the Fairtrade Premium is spent, you might be wondering how fair Fairtrade really is. Let’s look more closely at this famous labelling scheme and what the concept of fairly traded really means, especially when it comes to the fashion industry.

What Is Fairtrade?

Although they have become inextricably linked in most people’s minds, fair trading and Fairtrade are not one and the same. While Fairtrade refers specifically to the labelling scheme overseen by Fairtrade International (and the individual country-based organisations that fall under its umbrella, like the Fairtrade Foundation in the UK), fairly traded refers to the overall movement to ensure that farmers and producers receive a fair price for their products.

The concept of fair trade began in the mid-1900s. NGOs working to alleviate poverty in developing countries began to import craft items to sell in Europe and the USA. The first Fair Trade shops opened in the 1950s. They focused on giving a fair price to artisans for their craft items, with the aim of giving people in developing countries a viable path out of poverty. NGOs such as Oxfam and Traidcraft still play an important role in the fair trade movement, campaigning and raising awareness of the power of trade and market forces to alleviate poverty.

Fair trade might have started out focusing on craft items, but it was coffee that turned it into a global movement and led to the establishment of the Fairtrade labelling scheme. In 1989, coffee prices around the world crashed in response to a re-structuring of international trade regulations. This removed the existing International Coffee Agreement and allowed private traders to enter the sector. It was seriously bad news for coffee growers, who saw their livelihoods threatened as the price they could secure for their coffee beans dropped to rock bottom.

In response to the coffee crisis, a Dutch development agency called Solidaridad launched the first Fairtrade labelling scheme. Its coffee was marketed under the name Max Havelaar, after a fictional Dutch character, and reached the shelves of Dutch supermarkets in 1989.

This was the catalyst for a number of similar schemes in different countries. In the UK, NGOs came together in 1992 to form the Fairtrade Foundation. Its first certified product was a chocolate bar, soon followed by coffee and tea. In 1997, the individual schemes of different countries were brought together under the umbrella of Fairtrade International.

What Does Fair Trade Mean?

The idea of fair trade is to ensure a fair price for farmers and producers in developing countries. As the coffee crisis in the late 1980s and early 1990s showed, free trade rarely secures a living wage for the people at the beginning of the supply chain. The competition to sell produce drives prices down and leaves farmers vulnerable to changing markets.

This race to the bottom has a knock-on effect on society and the environment, forcing farmers and producers into poverty and driving a need to find more cost-effective ways to work. This can lead to the use of child labour, destructive environmental practices, gender inequalities, and the erosion of workers’ rights.

International free trade can cause problems for producers in developed countries too. Because their prices are readily undercut by countries where the cost of living is lower, farmers have to drop their own prices to entice buyers, or risk losing trade to other countries. To combat this, many developed countries, including the USA and EU countries, offer subsidies to their farmers.

Critics argue that these subsidies mean that producers in developing countries aren’t operating in a truly free market – the subsidies keep prices artificially low, preventing those from countries that don’t offer subsidies from being able to command a fair price.

Fair trade aims to address these problems by levelling the marketplace so that farmers in developing countries receive a reasonable price for their produce. Under the Fairtrade certification scheme, farmers must receive either the minimum price set by Fairtrade International, or the market price if that is higher. The minimum price is deliberately set high enough to allow farmers to grow their produce in a sustainable way. Buyers must also pay a Fairtrade Premium, which is used for projects that benefit the local community.

More Than Just a Fair Price

The Fairtrade scheme goes beyond just setting a reasonable minimum price for growers. To gain accreditation, farmers and producers must meet a range of criteria that aim to protect the environment and workers’ rights.

Fairtrade and the Environment

From the beginning, the Fairtrade Standards have included regulations which aim to protect the environment and promote sustainable agriculture. To be eligible for the scheme, producers must meet requirements on energy use, soil and water management, waste management, and the protection of biodiversity.

They are banned from using certain harmful chemicals and are generally encouraged to work towards reducing pesticide use. Training is provided to help farmers reach these goals. Some communities choose to reinvest their Fairtrade Premium in environmental projects such as reforesting and composting.

Fairtrade and Human Rights

As well as environmental protections, Fairtrade Standards require farmers and producers to work in a way that safeguards human rights. Growers may not allow anyone younger than 15 to work for them and anyone under 18 is not allowed to work in a way that interferes with their education. No forced labour may be used. Gender equality is being addressed, with training programmes and schemes to empower women and strict policies against gender-based bullying and violence.

The Fairtrade Premium is set aside in a community fund which can then be used for social benefit. Fairtrade growers must come together to form a co-operative. Representatives from the co-operative then decide how the Premium is spent. It is often reinvested in community and education projects.

Fairtrade and the Consumer

By the time we are considering buying a Fairtrade t-shirt, or a bag of coffee beans, the product has been on quite a journey from the raw material to the shelves of our shops. We are a long way from the original producer, but Fairtrade provides a connection between us and them by ensuring that a fair cut of the price we pay for goods will go to those responsible for growing the raw materials. For those of us who choose to shop ethically, the Fairtrade symbol is an easily recognisable mark of a product that has been made with the planet and people in mind.

Fairtrade and the Fashion Industry

The Fairtrade scheme concentrates on accrediting small-scale producers in developing countries, especially where the raw materials typically receive a lot of processing before ending up on our shelves, making for a complicated supply-chain. This has led to a focus on consumables such as coffee, chocolate, and tea.

But the growing understanding of sustainability issues in the fashion industry has led to increased scrutiny of supply chains and workers’ rights in many sectors. The Fairtrade scheme focuses on two areas in particular: cotton and gold.

Cotton

Cotton is the second most used textile worldwide, beaten only by polyester. Because it is mainly grown in developing countries and sold in a highly competitive market, conventional cotton comes with a whole host of issues around fair pricing, workers’ rights, water, and pesticide use. The Fairtrade Standards for textiles work along the whole supply chain to address these issues.

To be certified Fairtrade, everyone involved in the production of the cotton fabric, from the growers to the spinners, must comply with the International Labor Organization’s Conventions on equal rights, fair wages, health and safety, and minimum age limits.

Cotton growers must avoid harmful agrochemicals and not use genetically modified seeds. They must also protect the health and safety of workers and manage natural resources responsibly.

The Fairtrade certification is open to other textiles that meet the requirements set out in their Responsible Fibre Criteria.

Gold

Gold and other precious metals aren’t just used to make fabulous jewellery – they are key components in electronic devices, including your mobile phone. But gold mining has many issues, from risks to the health and safety of workers, to its links to organised crime and funding for armed conflict.

Since 2011, Fairtrade has worked with small-scale miners to certify ethical Fairtrade Gold. Their Standards aim to protect workers’ rights, put proper health and safety measures in place, and ensure that the miners offer no direct or indirect support to armed groups.

Is Fairtrade Effective?

So far, Fairtrade is looking pretty good – offering a fair price to producers, promoting human rights’ and sustainable agriculture, and encouraging a fair and transparent supply chain for materials used by the fashion industry. But is it really effective in meeting these aims?

The answer may be no, according to a 2014 report published by researchers from SOAS, University of London. The research investigated the impact of Fairtrade on coffee and flower growers in Ethiopia, and coffee and tea growers in Uganda. They found that the wages of workers on Fairtrade-certified farms was no higher than those on non-certified farms. Indeed, the research suggested that wages for the lowest paid workers were lower on the Fairtrade-certified farms.

The Fairtrade Foundation reputes many of the claims made by this report. In their statement, they point out that one of the Fairtrade-certified farms considered by the study had in fact left the Fairtrade scheme in 2011, while one of the biggest non-certified farms is actually certified, having joined Fairtrade in 2012. They also queried the selection criteria used for the assessment, noting that the study had only looked at one of a possible five Fairtrade tea producers in Uganda. The researchers themselves acknowledge the difficulty of presenting standardised daily wage rates, since there is such a wide range of methods for how payment is allocated to workers.

Fairtrade International has published several of their own monitoring and impact studies to assess the effect of Fairtrade on industries in different countries. Of particular interest to the fashion sector is their assessment of the impact of Fairtrade on cotton producers in Mali, Senegal, Cameroon and India, which found a positive effect on wages and social cohesion, especially in Mali, Senegal and Cameroon, where the scheme was more established.

However, the report, which was written in 2011, notes the impact of falling demand – the UK is the biggest market for Fairtrade cotton and sales had dropped, due to the 2008-2009 recession. The higher price charged for Fairtrade products can make them especially vulnerable to economic downturns. For many people, paying more for Fairtrade goods is a luxury that they cannot afford when times are tough.

So, is Fairtrade effective? It seems to be a difficult question to answer definitively. The underlying causes of poverty are complex and assessing the impact of any one factor can be tricky. Fairtrade items are also still vulnerable to fluctuations in global markets.

For the fashion industry especially, the complicated supply chains involved in getting from cotton seed to finished clothing makes it hard to assess the impact of Fairtrade. There are generally several different factors in play when standards increase, including organic certification schemes, labour laws, and increased scrutiny from fashion brands, making it difficult to know the contribution of any one scheme.

Fairtrade certification of textiles is also relatively new, so it will take time before it is clear whether it has been effective in raising wages and environmental standards.

What About the Fairtrade Premium?

One of Fairtrade’s claims to be superior to other accreditation schemes is the Fairtrade Premium, which is paid to the co-operative, rather than individual growers. The Fairtrade Foundation argue that this encourages growers to work together and to put funds towards projects that benefit the wider community or the environment, or to reinvest them in training or resources for the co-operative.

However, questions were raised over where the Fairtrade Premium is really spent, when Sainsburys announced in 2017 that they were removing their own brand tea from the certification scheme and setting up their own ‘Fairly Traded’ label instead. Other major retailers soon followed suit. Although there were undoubtedly a range of motives behind the companies’ decisions to set up their own labelling schemes, one of the reasons cited was uncertainty about how the Fairtrade Premium is spent. Quoted in the Guardian, sources who had worked at Sainsburys commented that there wasn’t enough transparency in where the Premium was going, just a lot of anecdotes.

Fairtrade International say that control of how the Premium is spent sits with the co-operatives, giving them fair control over their own income. But Fairtrade has also introduced greater monitoring of how the Premium is spent, including a new audit process for co-operatives earning $150,000 or more from Premiums. They’ve also begun to publish an analysis of Premium spending against the sustainable development goals laid out by the UN.

Fairtrade and Other Certification Schemes

One of the major advantages of the Fairtrade scheme is that it is a globally recognised standard for fairly traded products. Farmers can register with the scheme and then sell their produce to a whole range of different retailers. In contrast, individual company labelling schemes lock producers into a relationship with that one retailer, making it harder for them to negotiate for a fair price and leaving them vulnerable if the company goes elsewhere.

For the fashion industry though, Fairtrade is less established and more limited in its reach than it is for consumables like tea, bananas, and coffee. Fairtrade certification only really covers cotton and is rarely used for other textiles, such as linen, hemp, or viscose.

Although the UK provides the biggest market for Fairtrade cotton, it is still a relatively rare find. The Fairtrade Foundation list just 23 fashion brands selling Fairtrade cotton, although this does include major retailers Marks & Spencers and Sainsburys, as well as established ethical clothing brands People Tree and Thought Clothing.

For textiles, Fairtrade’s biggest alternative are the organic certification schemes run by the Soil Association. As well as cotton, the organic label can be applied to other natural textiles, including hemp, linen, and wool.

Like Fairtrade, the Soil Association look at the whole supply chain when certifying textiles as organic. Their main focus is on environmental impact and sustainability, but they argue this makes life better for farmers and producers too by avoiding hazardous chemicals and allowing them to command a higher price for their produce. Many Fairtrade cotton producers are also certified as organic.

Organic clothing tends to be easier to find than Fairtrade clothing. Both are concerned with environmental protection and sustainable agriculture. Arguably, the Fairtrade label goes further though when it comes to social justice and human rights issues, with their wider focus on fair wages, gender equality, and labour rights.

What’s Next for Fairtrade

This long-established ethical certification scheme won’t be going anywhere soon, but it is having to change how it works. With the growing trend for retailers to develop their own fairly traded labels, the Fairtrade Foundation now offer a partnership scheme, working with companies to develop their own standards. It is a practical response to the issue, but the proliferation of different ethical labelling schemes makes it difficult for consumers to know which options to choose.

In an ideal world, we’d have easy access to clothing that is both fairly traded and organic, giving us the certainty that we are doing the right thing for both people and the planet through our fashion choices. But the reality is that we often have to choose between one or the other. Fairtrade fashion is worth looking out for, because of its commitment to fair pay, equality, and environmental protections. Buying Fairtrade is a way to signal to fashion brands that their customers value those things and will hopefully encourage greater focus on sustainability and social issues within the industry.