The Impact of Fairtrade Certificate: What Do We Actually Buy?

2016 01 29

Rahel Mhabuka, a tea plantation worker at Kibena, Tanzania, describes how her children can now attend school – because Lihogosa elementary school was built with the funds of Fair Trade premium. Approximately 170 children study at the school. Before the school was built, children had to walk 10 km to attend classes.

In Naardi village, India, an organic farmers’ cooperative “Sunstar” made use of the premium to establish a computer class for the girls of Naardi and a neighboring village. In the evening, girls were not allowed to walk around by themselves. The closest computer class used to be 7 km away – off limits and expensive for girls. Additionally the premium pays for the salary of the teacher.

In The Dominican Republic the premium was used to issue passports and visas for workers coming from Haiti to provide them with a legal status in The Dominican Republic.

On the islands of Windward, Western India, a Fair Trade cooperative has renovated street lighting, procured wheelchairs for the elderly and organized trainings on occupational health and safety for supermarkets and workers.

What links schools in Tanzania, street lighting at a Western Indian archipelago and the Fairtrade certificate?

Fairtrade certificate is issued for products for which the growers and processors have received a worthy pay that enables them to ensure a standard of living for themselves and their community. This is achieved through two important principles: farmers and workers are guaranteed a fixed minimum price for their produce and additionally a premium is paid to be used for the social development and planning for future of the community. We call it the Fairtrade Premium. This money is earned by the Fairtrade certified producers in addition to the fixed prices. According to the local needs, they either support the workers or invest to improve the economic and environmental conditions and the quality of living of the communities.

What enables the children of Rahel to go to school and girls of Naardi village to pick up computer skills is the Fair Trade premium. With it, we not only compensate the production costs but also contribute to the community development of the producers.

How is Fairtrade premium calculated?

Firstly, the minimum Fairtrade price is fixed that covers all costs of sustainable production. Composition of the costs is monitored and negotiated with producers and experts. In addition to the production costs an additional Fairtrade Premium is set. The amount of the premium is determined by standards of Fairtrade International similarly to the minimum price.

Decisions regarding the use of Fairtrade premium are made democratically by the Fairtrade producers at cooperatives or by a designated plantation workers’ committee. They determine what is most important to them: be it a healthcare-related need; education for children; building schools or hospitals; business development facilitated by new investments; availability of low or 0-intrest rate loans; construction of water sanitation plants; or roads and bridges built for the benefit of their own community. Fairtrade cooperatives are required to prove the premium is used for intended outcomes and international certification organization FLO-CERT that monitors Fairtrade certification has to keep track.

This is the principle that allows us to be confident that the growers, producers and processors of Fairtrade labeled products have received a worthy pay for their work and an income that enables them – by their own work – to enable themselves and their communities a decent living standard.

By the data of Fair Trade Foundation 2012-2013 around 95 million of Euros was handed out to communities involved in fair trade organizations. An estimated 6 million people: farmers, producers, workers with families in more than 70 countries are beneficiaries of the Fairtrade system.

The lives of millions of people depend on our purchase of a pack of tea, coffee or sugar

For responsible consumers, Fairtrade creates the opportunity to purchase products that have been produced in accordance with their values. Thus, it becomes possible to contribute to the struggle against inequality and poverty while receiving high quality products in return. Also, the natural environment benefits due to minimal pesticides (the most toxic ones are banned alltogether), herbicides and pollutants used in the production of Fairtrade certified products. Organic farming is used instead.

When buying something, in addition to receiving the product, one also becomes the owner of the raw materials, environmental impact and the conditions that workers are subjected to when creating the product. Thus, it should concern us as citizens what components make up the price – are the producers compensated merely for direct production costs (this characterizes conventional trade) or whether the producer guarantees environmentally friendly production, social justice and gender equality. Ergo, the wellbeing and life quality of millions depends on each purchase decision, because good merchandise and fair price affects more than the 6 million involved in production, but also the consumers who buy Fairtrade certified quality products.

Always more expensive – a myth it is

One of the myths about Fairtrade is the more expensive price of their products. This is not so – Fairtrade products are generally not more expensive than regular products of the same quality.

If one always opts for the cheapest tea or sugar, then a Fairtrade certified product is more expensive. If quality is sought after, then Fairtrade products are definitely very competitive and what sets them apart from non-certified products is the transparency of price composition and how it has been produced.

Sure, there are skeptics harboring doubts if the benefits reach the producer and the workers; and whether the decisions on how to use the premiums are always good. That is why it is important to bear in mind the importance of trust – current fair trade policy does not dictate the use of premium, except for the prohibition of misuse and waste of money. Farmers and workers are treated with trust because they have firsthand knowledge of what their communities need and what would be the best purpose for this money. This approach can be considered a quintessential bottom-up empowerment. No doubt, premium allocation and implementation committees and other decision-making processes can always be improved and made more effective. Fairtrade communities are provided with relevant support and training. Premium, however, belongs to the farmers and workers who have earned it and decisions have to be made based on their own strategies, workshops or needs assessment, not to be devised by an international Fairtrade system.

A wise consumption decision leads to a better future

Via Fairtrade products, we purchase a better future, because the Fairtrade products contribute directly to the economies and societies of the developing countries. In the long run it benefits global stability and development. During 2015, the European Year for Development Cooperation, both products and other means for poverty reduction have been discussed a lot. Premium is a strategic approach that stands out by the decision makers being the consumer – by purchasing Fairtrade certified products; and the producer who makes proper use of their earned income – neither has to wait for governmental or international grants and support.

Acknowledging this, it would be wise to give a thorough thought to one’s purchase decisions and to prefer products that have been produced in Estonia or as close as possible. In case of the products locally not produced and imported from afar, it is reasonable to prefer those produced in a fair and ethical way – such as Fairtrade certified products.

Facts by Fairtrade International:

  • In 2013 the sales of Fairtrade products totaled 5.5 billion Euros and the amount of Fairtrade certified products grew in 2012-2013 by 15%. 95 million Euros of this amount was distributed as premium for communities involved in fair trade organizations.

  • Approximately 1.5 million farmers and workers from 74 countries in Africa, Asia and South-America benefit from the Fairtrade system. Including families and communities, the beneficiaries total around 6 million people.

  • Globally there are 1210 Fairtrade certified producers’ organizations.


Since August 2013 NGO Mondo carries out a fair trade project in Estonia: “Fair Trade: Raising Awareness”, aiming to raise public awareness about the topics of Fair Trade and development mainly through non-formal education. Fairtrade premium is among the topics of this project.

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