About Fair Trade | Fair Trade Myths

About Fair Trade

Content courtesy of the Fair Trade Federation

What is Fair Trade?

Fair Trade is an economic partnership based on dialogue, transparency, and respect.

This system of exchange seeks to create greater equity and partnership in the international trading system by:

  • Creating Opportunities for Economically and Socially Marginalized Producers
  • Developing Transparent and Accountable Relationships
  • Building Capacity
  • Promoting Fair Trade
  • Paying Promptly and Fairly
  • Supporting Safe and Empowering Working Conditions
  • Ensuring the Rights of Children
  • Cultivating Environmental Stewardship
  • Respecting Cultural Identity

FTF members foster partnerships with producers, because they know these connections are a highly effective way to help producers help themselves. To learn more about how these Principles live in practice, visit our Case Study Gallery.

Fair trade is not about charity. It is a holistic approach to trade and development that aims to alter the ways in which commerce is conducted, so that trade can empower the poorest of the poor. Fair Trade Organizations seek to create sustainable and positive change in developing and developed countries.

What Does This Mean?
To better understand how these principles live in practice, visit FairTradePrinciples.org and consult the Fair Trade Federation Code of Practice to understand how retailers, wholesalers of handmade goods, wholesalers of agricultural-based goods, and cafes live these nine Principles.


Fair trade traces its roots to 1946 when Edna Ruth Byler, a volunteer for Mennonite Central Committee (MCC), visited an MCC sewing class in Puerto Rico where she discovered the talent the women had for creating beautiful lace and the extraordinary poverty in which they lived despite their hard work. She began carrying these pieces back to the United States to sell and returning the money back to these groups directly. Her work grew into Ten Thousand Villages, which opened its first fair trade shop in 1958 and is now the largest fair trade retailer in North America. In 1949, Sales Exchange for Refugee Rehabilitation and Vocation (SERRV International) began helping refugees in Europe recover from World War II. Today, they support artisans in more than 35 countries.

In the late 1970s, US- and Canadian-based entrepreneurs who defined their businesses with the producers at heart began to meet regularly, exchange ideas, and network. This informal group would evolve into the Fair Trade Federation and formally incorporate in 1994. In 1989, the World Fair Trade Organization (formerly IFAT) was founded as a global network of committed fair trade organizations, aiming to improve the livelihoods of disadvantaged people through trade and to provide a forum for the exchange of information and ideas.

In 1988, as world coffee prices began to sharply decline, a Dutch NGO, Solidaridad, a farmer organization, UCIRI, created the first fair trade certification initiative. Named after a best-selling 19th century book, the Max Havelaar label initially applied only to coffee in the Netherlands, but similar labeling initiatives grew up independently across Europe within a few years. In 1997, these organizations created Fairtrade Labeling Organizations International (FLO), an umbrella organization which sets the fair trade certification standards and supports, inspects, and certifies disadvantaged farmers. In 1997, FLO affiliate TransFair Canada opened, followed soon after by TransFair USA in 1999.

Since 2000, fair trade sales and consumer awareness have increased tremendously, as the range of fair trade products has also expanded. From the early days of lace and home décor, handmade items now include clothing, sports equipment, toys, and other items. From its initial focus on coffee, fair trade product certification has expanded to tea, chocolate, sugar, vanilla, fruit, wine, and much more. In 2002, the first World Fair Trade Day was celebrated to heighten consumer awareness and to strengthen connections among fair traders and interested citizens around the globe. In 2006, IFAT reported that total fair trade sales topped $2.6 billion.

From its early days in Pennsylvania, fair trade continues to move forward across the globe, because of the efforts of consumers, entrepreneurs, non-governmental organizations, and other communities.

For More Information About Fair Trade:

Fair Trade Federation: About Fair Trade

Fair Trade Resource Network: Fair Trade Q & A



Global Exchange: Our Fair Trade Campaigns

Myths about Fair Trade

Content courtesy of the Fair Trade Federation

As awareness of fair trade grows, so do many misconceptions about fair trade.
Below are some popular myths about fair trade and the realities behind them.

Myth: Fair Trade is about paying developed world wages in the developing world.

Reality: Fair wages are determined by a number of factors, including the amount of time, skill, and effort involved in production, minimum and living wages in the local context, the purchasing power in a community or area, and other costs of living in the local context. Wages are determined independently from North American wage structures and are designed to provide fair compensation based on the true cost of production.

Myth: Fair Trade siphons off American jobs to other countries.

Reality:  Fair trade seeks to change the lives of the poorest of the poor who frequently lack alternative sources of income. As North American fair trade organizations grow, they employ more and more individuals in their communities. Most fair trade craft products stem from cultures and traditions which are not represented in North American production. Most fair trade commodities, such as coffee and cocoa, do not have North American-based alternatives.

Myth: Fair Trade is anti-globalization.

Reality: International exchange lies at the heart of fair trade. Fair trade organizations seek to maximize the positive elements of globalization that connect people, communities, and cultures through products and ideas.  At the same time, they seek to minimize the negative elements that result in lower labor, social, and environmental standards which hide the true costs of production.

Myth: Fair Trade is a form of charity.

Reality: Fair trade promotes positive and long-term change through trade-based relationships which seek to empower producers to meet their own needs. Its success depends on independent, successfully-run organizations and businesses - not on handouts. While many fair trade organizations support charitable projects on top of their work in trade, the exchange of goods remains the key element of their work.

Myth: Fair Trade results in more expensive goods for the consumer.

Reality: Most fair trade products are competitively priced in relation to their conventional counterparts. Fair trade organizations work directly with producers, cutting out exploitative middlemen, so they can keep products affordable for consumers and return a greater percentage of the price to the producers.

Myth: Fair trade production results in substandard goods for the consumer as compared to      conventional production.

Reality: While handmade products naturally include some variation, fair trade organizations continuously work with their producer partners to improve quality and consistency. Through direct and long-term relationships, producers and fair trade organizations dialogue about consumer needs and create high quality products. Fair traders have received awards at the international Cup of Excellence competitions, the New York Home Textile Show, and other venues.

Myth: Fair trade refers only to coffee.

Reality: Fair trade encompass a wide variety of agricultural and handcrafted goods, including baskets, clothing, cotton, footballs, furniture, jewelry, rice, toys, and wine. While coffee was the first agricultural product to be certified fair trade in 1988, fair trade handicrafts have been on sale since 1946.

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