The Fairtrade Price

The trading conditions in many commodity markets, such as tea, coffee, cocoa, sugar, cotton make it very difficult for producers to earn a living. Farmers are often paid prices which don’t begin to cover the cost of production. By requiring companies to pay sustainable prices for commodities, Fairtrade seeks to address the injustices of conventional trade, which traditionally discriminates against the poorest, weakest producers.

Fairtrade is about better prices, decent working conditions, local sustainability, long-term contracts and fair terms of trade for farmers and workers in developing countries.

Fairtrade supports the development of thriving farmer and worker communities that have more control over their lives and it’s also about protecting the environment in which they live and work.

The Fairtrade Premium

On top of a fair price, a Fairtrade Premium is paid, and this is what makes Fairtrade unique. It is an additional sum of money paid on top of the Fairtrade price that farmers and workers can use to invest in development projects to help their communities and businesses. The use of the Fairtrade Premium is decided upon democratically by producers within farmers’ organisations or by workers on plantations. This is done annually, and projects include: schools, healthcare, clean water, sanitation, improvements to roads and bridges, new tools, improvements to increase yield and quality, and mills for processing products, such as drying tea or washing coffee beans. Most projects funded by the premium are communal and so the wider community often benefits from the Fairtrade Premium.

An example the Fairtrade Premium

Oromia Coffee Farmers Co-operative Union represents over 200 coffee co-operatives in southern Ethiopia. Oromia manages to sell 65% of its coffee beans to the Fairtrade market.

Here is a list of infrastructure projects built at Oromia with the Fairtrade Premium from 2006 – 2013.

25                             Primary schools

6                               High schools

35                             Additional class rooms

3                               Kinder gardens

1                               Library

9                               Health posts

7                               Dry Latrine schemes

86                             Spring development schemes (for clean water)

3                               Bore holes (for clean water)

5                               Road improvement schemes

8                               Bridges

5                               Flour mills

4                               Coffee processing mills (for washing and drying coffee beans for export)

1                               Warehouse

So there we have an example of how Fairtrade and the Fairtrade Premium in particular is making a real difference to the lives of poor producers in developing countries. The success of Fairtrade depends on market demand. You and I can make choices to buy Fairtrade Marked products and in doing so increase the demand for Fairtrade, and make a real difference to the lives of poor producers in developing countries. So buy Fairtrade coffee and tea and sugar and chocolate and bananas etc. You and I can change the world for the better one cup of coffee at a time!