According to Fair Trade USA’s founder, President and CEO Paul Rice, “Fair Trade makes free trade work for the world’s poor.”
Free trade is the economic theory that the market should be allowed to flow without government intervention. Purists want to get rid of all trade tariffs, subsidies, and protectionist economic policies. However, it is these very regulations which stop commodity prices from fluctuating uncontrollably. This laissez-faire theory aims to reach market equilibrium - where supply meets each demand. What free trade supporters fail to consider is the fact that, sometimes, the means to get that supply is not all that fair.
Historically, free trade has left small-scale producers behind as large subsidized companies start to take over their industries. While large contracted farms can afford to sell commodities at lower prices, local farmers, who have traditionally supplied these products, are driven into debt. The only way these farmers can compete with subsidized farms is to lower their product prices to the point where labor is free and quality of life is unsustainable.
In the case of coffee growers, these producers lack information on the real market value of their commodity, which easily makes them victims to unfair market deals that take advantage of their inexperience. Additionally, these farmers often lack access to credit and are forced to take quick cash from buyers who offer to pay a fraction of what their crop is worth.
Fair Trade helps level the playing field by equipping the farmers with tools—information and training—they need to receive fair prices for their products. The Fair Trade system aims to provide greater market access to farmers, which gives them a larger say in how much their product is worth.We say that Fair Trade is “market-based” because it relies on socially-conscious consumers support the movement by purchasing Fair Trade products. Through their conscious purchases, consumers tell companies that they care about the farmers and workers who produce their products. Fair Trade aims to address the underlying inequities caused by poverty and lack of access to market information that free trade ignores.