Fair Trade Practices for Small Business

As the operation of business becomes increasingly global, fair trade practices are more important than ever. Fair trade is defined as a way of doing business that honors communities, consumers, the environment and producers. This system of exchange works through direct partnerships and business relationships between the global north and developing countries. Some organizations involved in fair trade standards and regulations include:

• Fair Trade Federation (businesses committed to fair trade practice)
• Fair Trade Labeling Organization (an organization that sets base prices for products and provides fair trade certification
• TransFair USA (ensures fair trade prices).

Advantages of Fair Trade Practices for Business

Both small businesses and large corporations can benefit from fair trade practices. Fair trade helps producers such as farmers and artisans:

• have direct involvement in the marketplace
• maintain environmental standards
• receive a fair price for their products
• work in safe conditions with labor rights.

Fair trade countries and practices build lasting relationships for the benefit of all. Direct involvement of producers allows them to bypass large corporate monopolies and form relationships with smaller companies. Businesses with fair trade practices increase growth potential since consumers often prefer products that do not harm the environment or exploit laborers.

Fair Trade Companies and Practices

Fair trade companies exist around the world, producing everything from fair trade clothing to coffee and sports equipment. Here are some examples of fair trade companies and practices:

• Fair Trade Bananas: Fair trade banana farmers enjoy a direct connection to the marketplace. They are able to set prices, allowing them to cover their costs and provide a living wage without the use of dangerous agrochemicals. ASOPROBAN, a fair trade banana cooperative in Colombia has been able to provide health services, and create an organic conversion program. They have also implemented a plastic recycling program and a reforestation project.
• Fair Trade Sports Balls: In 2002, Sports balls were the first non-food product to be certified by the Fair Trade Labeling Association (FLO), helping to eliminate child labor. Fair Trade Sports, Inc. distributes fair trade sports balls and clothing in the United States. All their merchandise is certified to be made by adults working in healthy conditions and earning fair wages.
• Fair Trade Sugar: Fair trade sugar farms maintain strict standards to manage erosion, and protect forests and water supplies. Fair trade sugar cooperatives such as ACOZC in Paraguay give free technical assistance and organic certification to members in addition to providing low-interest loans. ACOZC also created a reduced cost healthcare system for its members.
• Fair Trade Tea: Tea can now be fair trade certified. This means that the product was grown by adults without forced labor, and that tea pickers earn at least a legal minimum wage. Certification also ensures that laborers enjoy safe working conditions and are free to associate with organizations of their choice. The Makaibari Tea Garden in India, a free trade company, has created a community loan fund, scholarship fund and brought electricity to homes and villages.

Fair Trade Tips for Small Business

Any new business venture brings both growth potential and risk. Fair trade businesses are no exception. To increase your chances for a successful fair trade experience:

• Avoid commodities with many substitutes.
• Avoid competition with international traders on price.
• Choose products that consumers can easily identify as ethical.
• Look for niche markets
• Understand that the benefits of fair trade for small business usually come from shortening the internal market chain.