Ending poverty is core to fair trade

We break down the systems that trap farmers in cycles of poverty through changing the financial game.

The foundation of the Fairtrade system is our unique pricing model. It has two parts:

  1. The Fairtrade Minimum Price is a floor price that we set (and periodically update) that aims to cover the costs of sustainable production. It is established through an intensive consultation process with farmers, workers, traders and businesses. Think of this as a safety net for farmers and workers when the market price falls below a sustainable level.
  2. The Fairtrade Premium is an additional lump sum that Producer Organizations receive. Members democratically decide how to spend the money. The key here is that we believe local communities know best what they need—so neither Fairtrade nor companies they sell to can instruct them how to spend their Premium. The results are incredible. We have seen Producer Organizations invest in making their businesses organic, updating farming equipment, building schools, providing scholarships, creating clinics and other social services—just to name a few.

There is power in organizing

Fairtrade promotes workers organizing into trade unions as part of our Standards. We have seen how this ability to collectively bargain for better wages and working conditions can have a drastic impact on the lives of workers.

The average prevailing wage for banana workers in Colombia covered by the collective wage bargaining agreement is about 3% more than the estimated living wage.

At the same time, the average prevailing wage for non-unionized banana workers is around 16% less than the living wage.

Read the results of this living wage study

Man with hat stands near bananas being cleaned at farm in Colombia.

Moving from fair to living incomes 

Poverty still exists in Fairtrade farming communities. The structures that create it are deeply embedded, historic and ever-changing, which is why we continuously collaborate with producers and companies to improve. In many cases, like in cocoa, the gap between the current income and the price it costs to actually live are wide.

We consider a living income is the amount needed to provide for farm costs, their household needs like food, healthcare, housing and education, plus some discretionary funds (for opportunities and emergencies). This is also different for farmers (people that own small family farms) and workers (people who work at farms they don’t own).

How we are evolving

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