FAQ to the topic of fair trade

„Fair“ – a commonly used word – what does it actually mean?

In the context of fair trade several different terms have been established:

“fair trade” this term generally describes the fair exchange of goods. This includes issues such as worker’s rights, custom duties, and subventions and above all the fair treatment of the business partners and producers.

“Fair Trade” this term covers the entire Fair Trade-movement, also the organizations and companies that carry another type of fair logo (there are aside from FLO other Fair Trade organizations) and also those who have no certification but that abide by the principles of Fair Trade. Important is that they follow the essential Fair Trade criteria, such as the reforming of the conventional world market and producer empowerment.

“Fairtrade”: stands for the activities of the organization Fairtrade International (FLO, national Fairtrade organizations, Fairtrade marketing organizations, and Fairtrade producers’ networks. Fairtrade is a system that identifies and certifies products and distributors who meet the Fairtrade standards of FLO (Fairtrade International).

And what does Fairtrade mean?

The main focus of Fairtrade are the people living under the extreme poverty rate because of systemic social inequaltities, often in countries around the equator. The aim is to support small-scale producers and workers and to boost their position on the international market. Only products that meet the requirements of the international Fairtrade-standards are granted the Fairtrade-seal. Some crucial standards are following:

Workers, harvesters, and producers receive a guaranteed minimum wage. This contributes to improving their living and working conditions in a sustainable way.
The producers have the guarantee of being able to sell their products at fair prices.
The Fairtrade-prices must, at the minimum, cover the cost of production and allow the producers to live above the poverty line.
Harmful practices, compulsory labor, discrimination and exploitative child labor are prohibited.
The producer groups receive a Fairtrade-premium through which they can finance and carry out social projects such as construction, education, medical care, etc.
Producers can more easily plan the future thanks to the long-term trade relationships.
Fairtrade-producers benefit from the conversion to organic farming as a surcharge is paid for organically grown produce. Environmental-friendly standards lower the use of pesticides and chemicals and prohibit genetically modified crops.
Fairtrade promotes greater equality in international trade through dialogue, transparency, and mutual respect.
Consumers contribute through their purchase to fairer trading environments and thus to the overcoming of poverty as well as economic inequalities.

The goal is to contribute to a more responsible consumption and through that to fight poverty. Fairtrade stands for ethical actions and trade, sustainability, and transparency building a bridge between the producers and the consumers. People who buy Fairtrade-products contribute directly through their purchase to a sustainable improvement of small-scale farmers and their families. At the time being, 1.3 million small-scale farmers and workers in over 70 countries are profiting from Fair Trade.

Why are some products labelled as “fairly traded” without carrying the Fairtrade-seal?

Some organisations have for a long time been campaigning for Fair Trade. Many of these organisations were founded long before the Fairtrade certifications even came to life. Some companies offer products for which there are no set Fairtrade standards, for example handicrafts.

Fair Trade or “fairly traded” is not a protected term. Many producers claim that their products are fairly traded, by such cases it is important to ask on what this claim is based and demand validation.

What is the Fair Label Organisation?

Fairtrade International, short FLO, is the umbrella organisation of the national Fairtrade organisations. The association was founded 1997 in Bonn, Germany, with the purpose to unite the many different labels and standards of fair trade. FLO consists of two branches:

FLO e.V. develops the conditions and principles that need to be met to obtain a Fairtrade-certification
FLO – CERT (FLO Certification) controls the compliance with these principles. It is important to ensure that the meaning of the word “fair” is not just a marketing claim, but actually translates to its true meaning where the label is used.

Today, the international Fairtrade-system consists of three producer networks, 25 national Fairtrade-organisations, FLO e.V. and FLO-CERT. The Fairtrade-organisations allocate the seal in the respective countries. In Germany for example the TransFair Association. In Switzerland the Max Havelaar Foundation and in Austria it is carried out by Fairtrade Austria. The producer networks represent the many different groups of producers in Latin America, Africa and Asia (CLAC: Coordinadora Latinoamericana y del Caribe de Comercio Justo, AFN: African Fairtrade Network and NAP: Network of Asian Producers).

The Fairtrade seal of FLO is according to the opinion of the Fairtrade-forum the most famous and one of the strictest quality marks of fair trade. The products being certified are products that are being produced under fair conditions or that contain ingredients that have been produced under fair conditions. Ingredients such as coffee, bananas, cotton, cosmetics, jewelry, as well as wood and gold.

What exactly does Fairtrade do?

The Fairtrade standards apply to all Fairtrade producers and workers. The traders and companies who label their products with the Fairtrade seal need to abide to the Fairtrade standards. The same goes for the other actors of the production chain, such as imports, exports, and licensees. Fairtrade International is working hand in hand with the producers to meet the requirements to achieve the Fairtrade certification and in creating new chances on the market for farmers and cooperatives.

Fairtrade International also works together with so-called “liason officers” who are located on site. They join forces with the producers to tackle topics like education, certification consulting, and contact with traders.

What are Fairtrade standards?

Economic and social aspects are the pillars of the Fairtrade standards. They create the rules of Fairtrade. All producers and traders must abide by the standards, only then can their products be permitted to be labelled with the Fairtrade seal.

The standards were developed to change the quality of life of small-scale farmers and plantation workers living below the extreme poverty line for the better. The development of standards is carried out by the Department of Standards of Fairtrade International. They are developed together with producers, distributors, and experts. The Fairtrade standards consist of core indicators and so-called development indicators. The core requirements must be met by each producer group to receive Fairtrade certification. After the initial certification, the producers must also meet the development requirements. These are more extensive and have among other things the goal to improve the organization and working conditions of the producers, but also to implement long-term measures to protect the environment.

What is Fairtrade in FAIR SQUARED products?

All ingredients of a product, which is available in a Fairtrade variant, must be added as a Fairtrade certified ingredient to the product. By cosmetics this means that if a formula for example calls for apricot oil, the used apricot oil has (if possible) to come from a Fairtrade producer. However, there are cosmetic ingredients that are not yet covered by the FLO system. This does however not mean that they are not or cannot be fairly produced. But because they are not covered by the FLO, they are not included in the Fairtrade percentage value that is declared on each product. Products that remain on and are absorbed by the skin (e.g. lotions) must have a Fairtrade percentage of at least 5%. For products that are rinsed off (e.g. soaps) is the minimum requirement at least 2%. At first glance, this does not look particularly “fair.”

However: There is no fair trade water, which by cosmetic products often make up about 90% of the content, and the Fairtrade content is measured by its wet weight. If the water was not counted, the Fairtrade percentage would naturally be much higher. That is unfortunate, but so are the Fairtrade regulations. Without water, the FAIR SQUARED cosmetics have an average Fairtrade percentage of more than 35%. The other percentages naturally make out other ingredients that are needed for qualitative cosmetics and that are not labelled by FLO. We stick to these ingredients, because our goal is to have the highest possible percentage of Fairtrade ingredients without loss of quality.

How are Fairtrade producers and traders controlled?

After the producer organisation has received the Fairtrade certification, it is annually controlled. The Fairtrade certificate must be renewed every three years, which comes with an extensive examination.

The certification FLO-CERT checks on site whether producers and traders comply with the Fairtrade standards and if the social, economic, and environmental standards are met. It also controls that the producer organisations are paid the fixed minimum price as well as a Fairtrade premium.

FLO-CERT is the independent certification company of Fairtrade International. The company certifies producers and distributors by the Fairtrade standards in over 115 countries. Inspectors are regularly on site and verify that the Fairtrade standards are adhered to.

Does the money reach the producers?

FAIR SQUARED obtains all available Fair Trade ingredients from Fairtrade producers who are regularly monitored by the Fair Label Organization (FLO). Through that not only a minimum price is paid, but also an additional premium which enables the workers and their families to improve their living conditions.

The external monitoring by Fairtrade (FLO) is important for all parties to ensure that the consumer can be sure that the Fairtrade premium actually gets to the people concerned. Unfortunately, there are also so called fairwashers (freeriders) who advertise with “Fair Trade” or “fairly traded” although they cannot validate these claims. The Fairtrade-seal, however, ensures trustworthiness.

In addition, we visit our producer partners personally and are always deeply impressed after each trip by how Fairtrade really can make a change and create an impact to the quality of life.

Is fair trade really fair?

Since there are different Fairtrade Labelling Initiatives and since fair trade is fundamentally affected by the always ongoing and changing world political circumstances, it is inevitable that consumers are wondering how fair Fair Trade really is. Here is an up-to- date collection of the most common thoughts / criticisms. There are no fitting shorter answers. We also are happy to refer to the websites of FLO / Max Havelaar:

The certification costs for producers are too high and have to be paid although there are no customers yet. Beneficiary is the certifier, who still very often invents their own new seal. Our answer: There are funds in the Fairtrade system for financially weak producers / cooperatives that fill this financial gap and that make the certification financially possible.

The farmers receive only a fraction of the Fairtrade surcharge. Our answer: One can naturally complain about that the trade in Europe requires a high net margin for its distribution to function. However, it does not matter to the Fairtrade farmers because they want to sell as much as possible of their raw materials. And for that, they need the European traders. It is not very easy for traders in Europe, unless they are not a well-organised chain store, because when they count their costs together, there is generally not much left from their turnover anyways.

Fairwashers can only certify a product rather than an entire production or series. Our answer: Yes, but it is fundamentally up to the customer themselves what provider they choose to trust.

There are also migrant workers who cannot benefit from the Fairtrade minimum wage. Our answer: Yes, that is a gap in the Fairtrade system that is being worked on. This does, to our present knowledge, not apply to the FAIR SQUARED partner companies.