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Prompt and Fair Pay–Fair Trade Principle #5

Malia artisans2

Photo courtesy of Malia Designs.

If the average consumer knows anything about fair trade, it’s that the farmers and artisans producing the products are paid fairly.

But what consumers probably don’t know is when they buy fair trade they’re supporting
a well-thought-out and equitable process that determines exactly what fair wages should be:

  1. For commodities like coffee and cocoa, Fair Trade certifying organizations set a fair price. This price guarantees farmers can meet their living needs, with enough left over to improve their communities. The fair trade price discussion starts from a minimum, which is typically 3-4 times the conventional market price for that commodity in the local economy.
  2. For fashion accessories and other handicrafts, artisans are paid a living wage based on the artisans’ local economy and what is needed for them to live comfortably within that economy. In most cases, fair trade wages are higher than the average wage, often as much as 4-5 times more.
  3. In all cases, whether agricultural or handicraft, wages are discussed and agreed on through dialogue and participation between buyer and producer. Producers have a place at the table and work with buyers to decide how they’ll be compensated for their work.

    CEPICAFE: Piura, Peru

    Juan Francisco Calle, vice-president of his local co-op that produces  cocoa in Peru. Photo by James Rodriguez for Fair Trade USA, Peru, March 6, 2013.

  4. In the producer-buyer discussions, the price determined is not only to cover basic production costs, but to cover production strategies that are socially just and environmentally sound.
  5. Without exception, wages adhere to the principle of equal pay for equal work by women and men.
  6. Prompt payment must be an integral part of the wage equation.
  7. Finally, fair pay also means producers receive interest-free advance payment for the materials needed to create handicrafts or for pre-harvest production requirements for farmers.
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