What is fair trade?

In simple terms, fair trade is about improving the income that goes to the farm workers at the beginning of a supply chain. You might be shocked to learn how little of the £2.50 that you pay for your tall, ultra-skinny, frothy mocha cappuccino goes to the farmer in Costa Rica who harvested the coffee beans that made it. What's worse is that many of the commodities that poor people across the developing world depend on to make a living - such as coffee, cocoa or cotton - are vulnerable to sharp drops in their global price. A fall in the price of a product like coffee by even just a few pence can put a family in the developing world out of business, which would mean that they'd be unable to pay for food, water, shelter, health care, education and much more.

Fair trade products seek to address this vulnerability by paying poor producers more than they'd normally receive. This 'premium' provides them with greater economic support when world prices fluctuate, as well as extra funds for investment in land, shelter, education and health care.

The Fairtrade mark

The Fairtrade Foundation was established in 1992 by CAFOD, Christian Aid, New Consumer, Oxfam, Traidcraft and the World Development Movement (and later joined by the Women's Institute). Its Fairtrade mark is placed on products that have met their strict standards in order to offer a fair deal for farmers in developing countries. These standards ensure that:

• Farmers receive a fair and stable price for their products;
• Farmers and plantation workers have the opportunity to improve their lives;
• Producers have greater respect for the environment;
• Small-scale farmers gain a stronger position in world markets;
• A closer link is formed between consumers and producers.

Fair trade products seek to address this vulnerability by paying poor producers more than they'd normally receive. This 'premium' provides them with greater economic support when world prices fluctuate, as well as extra funds for investment in land, shelter, education and health care.

Fair and ethical trade

In strict definitions, fair trade is different to ethical trade. Ethical trade is about improving the conditions in which goods are produced. For example, ethical trade can ensure that workers are able to join a union, have contracts for their jobs, work reasonable hours in safe conditions, and get adequate breaks and holidays. High-profile campaigns against the 'sweatshop' conditions of factories in Asia belonging to global corporate giants have raised public awareness about the need for ethical trading standards.

The Ethical Trading Initiative (ETI) is a partnership of high street companies, non-governmental organisations (NGOs) and trade unions, with support from the government. The ETI's aim is to ensure that internationally recognised labour standards, including human rights in the workplace, are observed at all stages in the production of high street goods sold in the UK.

Although fair trade and ethical trade are based on different principles, they go hand-in-hand for those who want to shop with a conscience, since both aim to benefit the lives of workers in some of the world's poorest countries.

Buying fair trade products

The future looks bright for fair trade sales in the UK, where recognition of the Fairtrade mark has doubled since 2002. What's more, the British love of coffee, bananas, tea and chocolate has meant that the country is now the biggest market for Fairtrade products in the world.

The Fairtrade logo can be found on over 250 different products sold in high street shops, supermarkets, online stores, cafés and restaurants. To find your nearest fair trade supplier, contact the British Association for Fair Trade Shops.

Updated: 16/10/2008

Researched by Sarah White