What exactly is Fair Trade | Why does it matter?

what is fair trade

You may have come across products labeled 'Fair Trade,' often from many brands, while shopping. A fair trade certification label lets you know that a brand engages in fair trade practices with its production partners, keeping exploitation out of the manufacturing process. 

What is 'Fair Trade'? 

Fair trade is a model of long-term, ethical business operations that prioritize people and the environment. It is an important part of agricultural sustainability, economic development, and social justice. The global movement aims to assist producers in establishing long-term, fair trading ties. It focuses on commodities that are typically exported from historically disadvantaged countries to wealthy countries like the US (it can also be applied in domestic markets). Fair trade organizations and certifiers create awareness of the need for fairer trade practices and advocate for reforms to the laws and practices of international commerce with consumer support.

what is fair trade

By definition, 'fair trade' is a trading partnership built upon dialogue, transparency, and respect and strives for fairness in the international market. The movement also emphasizes ethical and sustainable production practices that support farmers in the face of climate change challenges and help to negate negative environmental impacts. 

At the heart of the movement is the well-being of the farmers and workers. Fairtrade International, for example, works to ensure farmers and workers can earn and expect a stable income to plan for their future. Their unique Fairtrade Minimum Price – evaluated and set regularly for a variety of commodities - protects farmers' and workers' income in the face of volatile global markets. And Fairtrade also provides the 'Fairtrade Premium', an additional sum of money that the farmers/workers use to invest in their chosen projects. 

Fair Trade History

The current fair trade movement was shaped around the 1960s in Europe. But the origin can be traced back to the 1940s when businesswoman Edna Byler was visiting a women's sewing group run by the Mennonite Central Committee (MCC) in Puerto Rico. She began to sell their crafts to friends and family. There is no clear consensus on when the movement started except for noting Edna Ruth Byler's work. During the 1950s, Americans and Europeans visiting different countries saw that the local farmers and artisans could not make up the costs of running their businesses, and thus, they would buy these products, return home and sell them at higher prices and bring them back to the locals. But it wasn't until the1980s that the first trade labeling organizations came about, greatly spreading consumer awareness about the non-fair trade products sold in the markets. The International Federation of Alternative Trade (IFAT), later renamed as World Fair Trade Organization, was established in 1989. It brought together 38 fair trade organizations under its roof. This was followed by the European Fair Trade Association (EFTA) in 1990. Following the persistent appeals of Mexican small-scale coffee farmers for fair trading, the Fairtrade Foundation was established by CAFODChristian AidOxfamTraidcraft, the World Development Movement, and the National Federation of Women's Institutes in 1992. Then, in 1998, FINE was established by a concurrence of the FLOIFATNEWS (Network of European World Shops), and EFTA to take fair trade awareness to a wider global stage.

Related: A brief look at the history of fair trade

Why is fair trade important? 

Ever since its inception, the fair trade movement continues to provide opportunities for the world's most marginalized workers. Farmers, artisans, and workers have historically been the most vulnerable and exploited group in society. The industrial revolution only added to this problem by paying dirt-cheap wages for grueling hours, and today much hasn't changed. Worker exploitation and massive environmental degradation are still prevalent in our modern world. 

The fair trade movement strives to ensure workers get paid fairly for their labor and farmers for their produce, to improve their livelihoods and ability to decide on their own futures. Fairtrade International works with nearly 2 million farmers and workers and markets certified products in 131 countries. The movement helps deliver Sustainable Development Goals and aims to end poverty in all its forms. 

Benefits of Fairtrade Certification

  • Income Stability: The Fairtrade Minimum price as well as Fairtrade Premium support farmers in getting a fair deal for their hard work.

  • Safe working conditions: Fairtrade Standards protect workers' rights to safe working conditions, contracts, the ability to organize and they help protect against workplace discrimination.

  • Economic Growth: Fairtrade Standards rebalance the terms of trade so farmers and workers can experience the benefits of trade and grow their businesses

  • Sustainability: Fairtrade Standards aim to minimize environmental impact and support climate-resilient farming practices that help reduce the loss of biodiversity. Fairtrade also prioritizes organic farming where possible, offering higher minimum price differentials for farmers who grow organic crops. 


Fair trade is as much about ensuring long-term sustainability as it is about raising living standards and reducing risk and vulnerability for farmers and workers. Climate change is a great challenge for farmers and workers— pests, soil erosion, weather pattern changes, diseases, and decreasing crop yields are increasing problems. This leads to decreased and more unpredictable income, food insecurity, and increased costs for adaptation and mitigation. 

Fair trade organizations, like Fairtrade International, help farmers to adopt more sustainable farming practices to mitigate the deteriorating effects of climate change. Fairtrade also helps consumers turn their attention to sustainable alternatives with their trustworthy label, leading the charge for a better world.

For more information, visit FairtradeAmerica.org.

Terra Thread and its commitment to Fair Trade:

Terra Thread is a sustainable bag brand with a mission; to lead a transformation in organic cotton farming, and give consumers better, more planet-friendly choices for everyday essentials. Here at TERRA THREAD, all of our products are made using Fairtrade cotton and are produced in a Fair Trade Certified Factory.

We have sustainability built into our bags at every stage of production. That means fair pay for farmers as well as workers and no toxic chemicals, no synthetic fibers, and no unnecessary packaging. Working directly with organic cotton farmers in India, we’ve gone to every length to ensure that from start to finish our bags are being made in factories that meet the highest ethical and Fair Trade Standards. And because we want sustainable and ethical fashion to become the norm, we are committed to keeping our products affordable, making them as accessible as possible.

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Related blog:

2023 Consumer and Brand Trends from Fairtrade America

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