Fair Trade Schemes


Ethical Consumer looks at the full range of fair trade and alternative ethical trading standards 



As we approach the UK’s Fairtrade Fortnight 2007, we can see that fair trade has come a long way since the first UK certified Fairtrade product entered the market in March 1994.(1) We now have a choice of over 2,000 Fairtrade-marked retail and catering products in this country, ranging from tea, coffee and bananas to beer, jeans and footballs.(2)

In 2005 we spent £195 million pounds on certified Fairtrade products in the UK, compared to only £16.7m in 1998. Bananas were not available with the Fairtrade mark in 1998 but in 2005 made up the second biggest Fairtrade market sector with £47.7m of sales, second only to coffee with £65.8m. The UK is now the largest Fairtrade market amongst the 20 countries worldwide that follow the Fair Labelling Organizations International (FLO) rules.


Retail value in the UK (£ million)*






































Honey products





































* assumes a margin of 40% for retailers (30% on bananas)



On 12th December 2006, Sainsbury’s supermarket pledged that in 2007 ‘it would be the first UK retailer to convert its entire banana range to 100% Fairtrade’, while the company’s retail price for the fruit would remain unchanged.[3]

The company claimed that the ‘Fairtrade banana market [would] double as a result of this move’.[3]

However, with a wide range of ethical verification standards, companies applying their own systems of ‘fair’ trade to production models, and criticisms being made of the Fairtrade economic model, is Fairtrade still the pick of the fair trade bunch?



The Benefits of Fairtrade


A key difference between the Fairtrade-marked standards of the FLO and other fair trade certification bodies is that, for the former, producers must be smallholders or organised into workers’ cooperatives. These groups must be managed democratically, have transparent administration, and be politically independent.

Another key feature of the Fairtrade mark is the minimum price it pays to farmers and a fixed premium to prices. This covers the costs of implementing economic, social, and environmental regulations, including those of the International Labour Organisation.(4) According to the FLO, the additional fixed premium on top of market prices enables producers ‘to narrow their backlog in trade and invest in the development of their cooperatives’.(5)

The FLO also encourages the adoption of organic practices among small producers,(5) and the Fairtrade Foundation is a founding member of the UK’s Trade Justice Movement.(6) Overall, the organisation uses a combination of regulating prices given to producers, political lobbying, and increasing consumer awareness of development issues in its efforts to make trade fair.



Fair trade glossary 


Fair Trade The term is used to 'refer to the Fair Trade movement as a whole' and to 'describe both labelled and unlabelled goods, the work of Alternative Trade Organizations (ATOs), Fair Trade federations and networks'.

fair trade A term which often describes one or many of the entries under Fair Trade, 'but can also be used to refer to trade justice issues. In such cases, it can be as broad as to describe general fairness in trade, such as tariffs, subsidies, worker rights and other issues'.

ethical trade According to the UK's Ethical Trading Initiative this term implies 'the assumption of responsibility by a company for the labour and human rights practices within its supply chain'.



FLO-certified items by various FLO member organisations:


Fairtrade & FAIRTRADE: Australia, Austria, Finland, Ireland, Italy, Japan, New Zealand, Spain, Sweden, the UK

Fair Trade Certified: Canada

Fair Trade Certified™: USA

FAIRTRADE Max Havelaar: Belgium, Denmark, The Netherlands, Norway

FAIRTRADE TransFair: Canada, Germany, Luxembourg

Max Havelaar: France, Switzerland



New fair trade schemes


Since the creation of the Fairtrade certification process, new ethical standards have emerged. The Common Code for the Coffee Community Association (4C Association) is an umbrella group of coffee producers, workers engaged in the coffee sector, rural communities, trade & industry and NGOs.(8)

At its core is the ongoing development of a Code of Conduct which includes a “traffic light system” on economic, social and environmental sustainability categories in the production, post-harvest processing, and trading of green coffee. This system requires employers to do the following in relation to these categories depending on the rating they receive:

Unlike the certified Fairtrade process, the 4C does not specify a fixed premium, nor does it require producers to be smallholders or cooperatives. Hence, global food and beverage companies such as Kraft Foods and Nestlé[8] can be partners to 4C.

Another certification process which does not solely work with smallholder and cooperatives is Utz Kapeh, meaning ‘good coffee’ in a Guatemalan Mayan language. Central to its work is the improvement of producer terms of trade, but it does not intervene in the market through what it refers to as ‘distorting competition... rather than working with a minimum price or a guaranteed premium Utz Kapeh is a market driven system’.[4]

However, independent third party auditors do check producer compliance with the organisation’s baseline standards of its Code of Conduct. The Code requires ‘good agricultural practice in coffee production, worker welfare including access to education, and healthcare’.[9]



The unfairness of fair trade?


Research has recently suggested that fair trade certification “reinforced” producer-consumer differences and dominant power relations.[10] Issues raised included the amount of influence producers in developing countries have within fair trade networks located outside monitoring systems in their own countries.

For example, while the FLO states that producer organisations participate in its Standards Committee,[11] the research also suggested that ‘in order to nurture equitable trade partnerships, fair trade must expand to accommodate a substantially higher degree of producer participation in administrative decision-making and goal setting’.[10]



New ethical standards


Consumers can now choose from products with an array of ethical credentials which overlap with fair trade certification.  Download a pdf table which clarifies the differences between the main certification schemes.

Some incorporate specific environmental requirements as a method of improving producer livelihoods, whilst others have adopted different approaches than that of the FLO to making trade fair.

For example, the Equitrade label guarantees that ‘the total added value generated by the sale of the finished, or part-finished product, from a poor nation into a richer nation, is being shared with a local partner in such a way that the local partner can invest in the transfer of market knowledge and technology, and the development of new products’.[12]

Equitrade claims to enable its partners to receive a more equitable amount of the profits, as a higher proportion of the income from the more profitable aspects of the end product (such as the production process and retail) goes to the partner country.

The Rainforest Alliance aims ‘to conserve biodiversity and ensure sustainable livelihoods by transforming land-use practices, business practices and consumer behaviour’.[13]

Rather than focus on how products are traded, it addresses how farms are managed. It works with various stakeholders, from large multinational corporations to small, community-based cooperatives and ‘sets standards for sustainability that conserve wildlife and wildlands and promote the well-being of workers and their communities’.[13 ]

However, concerns have been raised.  Craig Bennett, Head of Corporate and Trade Campaigns for the Friends of the Earth questioned the ‘strength of the Rainforest Alliance’s scheme compared to that of Fairtrade’.[15]

In Ethical Consumer’s last product report on coffee, the Rainforest Alliance was criticised for not guaranteeing a minimum price or a significant fixed premium.

To its credit, freedom to join a trade union is a key element of the Alliance’s platform. However, it has also been scrutinised for improving the image of big corporations which sell its certified items. For example, from 10th January 2007, all of McDonald’s UK and Irish outlets will sell exclusively Kenco coffee, containing 100 % Rainforest Alliance Certified beans.[13]

Other standards have also been criticised. In 2004 Starbucks Coffee Company developed a Coffee and Farmer Equity code (C.A.F.E.), which aimed to ‘pass on an equitable share of coffee revenues...to coffee farmers and processors’.[9]

However, Starbucks’ recent opposition to Ethiopia’s trademarking of its three regional coffee varieties has brought accusations that the company is preventing local producers from increasing the income generated from coffee sales.

Finally, one must ask if focusing on the export of primary goods is sustainable when they are subject to ever-decreasing prices. Criticisms have been made that the higher price of Fairtrade coffee encourages its overproduction and lowers its price.[16]

In response, the FLO has stated that ‘producer communities are all too aware of the risks of over-reliance on one commodity, and quick to seize on the new opportunities that involvement in the Fairtrade scheme may open up.

Far from increasing production (unless responding to specific additional demands), Fairtrade farmers’ groups frequently invest in developing their market knowledge, in building up their export or processing capability, or in diversification programmes’.[2]



Can ethical consumerism make trade fair?


The common theme linking the various ethical certifications is the need to instil a fairer and more equitable model of production within their supply chains compared to non-certified goods.

Despite the criticisms of the Fairtrade scheme, buying Fairtrade products is clearly better than purchasing items from companies which cannot guarantee that any kind of equitable trade has occurred between themselves and their suppliers.

Fairtrade goods allow consumers to make purchasing decisions knowing that the item has met rigorous verification standards and guarantees the farmers a much better price than they would normally receive in the commercial market.

Admittedly, buying ethically-sourced and socially-responsible products will not in isolation change the presently unjust Northern-dominated global trading system.

However, the Fairtrade certification system, plus other independently audited fair and equitable trade approaches have made companies and politicians aware that when consumers purchase goods, an increasing number do consider whether a product contains evidence of ethical sourcing.

Moreover, with ratings such as those created by Ethical Consumer, consumers can purchase certified Fairtrade and ethically traded goods from a company which has these concepts at the core of its business ethos.

Although some argue that only ‘difficult political choices’ can change the global trading system,[16] the decision made by one of the UK’s biggest food retailers to only sell certified Fairtrade bananas shows that people can move towards making trade fair even in the absence of political intervention.





Fairtrade Foundation
020 7405 5942
Fairtrade Labelling Organizations International
0049-228-949230 (Germany)
Utz Kapeh
0031 20 530 6390 (The Netherlands)





1 Green & Black’s Maya Gold organic chocolate www.fairtrade.org.uk/about 9/1/07
2 www.fairtrade.org.uk 10/1/07
3 www.j-sainsburys.co.uk 9/1/06
4 ’Fairtrade and Utz Kapeh – An explanation about two leading programmes in coffee certification’ 2006 www.utzkapeh.org/ 10/1/01
5 FLO International, ‘Generic Fairtrade Standards for Small Farmers’ Organisations’, December 2005
6 www.tjm.org.uk 10/1/07
7 www.ethicaltrade.org 17/1/07 
8 www.sustainable-coffee.net 5/12/06
9 Consumers International and the International Institute for the Environment and Development, ‘From Bean to Cup: how consumer choice impacts upon coffee producers and the environment’, December 2005 
10 Lyon, S., ‘Evaluating fair trade consumption: politics, defetishization and producer participation’, International Journal of Consumer Studies, September 2006
11 www.fairtrade.net/standards.html 10/1/07
12 www.equitrade.org/ packaging_guide.php 11/1/07
13 www.rainforest-alliance.org 11/1/07
14 Phone conversation with a representative from Equitrade 17/1/07
15 Quoted in www.marketwatch.com 11/1/07
16 The Economist, ‘Food Politics: Voting with your trolley’ December 9th 2006
17 Email from Equitrade received on 30/11/06
18 Rainforest Alliance, ‘Sustainable Agricultural Standard’, November 2005
19 Starbucks Coffee Company, ‘C.A.F.E. Practices Generic Evaluation Guidelines’, November 2004
20 www.scscertified.com/csrpurchasing/ starbucks.html 17/1/07
21 www.utzkapeh.org 17/1/07
22 Mike Brady, Baby Milk Action campaigner quoted in Which?, March 2006


First published Ethical Consumer issue 105, March\April 2007