Fair trade is a concept that encompasses basic principles of sustainability and equity in the economic, social, and environmental production of a good. First, of all companies must guarantee a basic minimum fee for the producers of the good to meet their basic necessities of life or what is called a “living wage.” Second they must give the producer a premium on the profits that they make to be reinvest in the producers community for infrastructures, education, etc. Lastly, companies most ensure that the production of the good is not destructive to the environment or exploitative to people.
In practices this works by producers forming cooperatives and getting certified as complying to fair trade standards by the Fairtrade Labelling Organizations (FLO). When a company wants to “go fair-trade” they get certified that all there ingredients are being sourced from these certified producers and agree to hold up their part of the bargain as far as paying the agreed upon fair trade price and premium.
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