Fair Trade, Untangled: A Look Behind the Labels

By: Megan Minnick

In Sumatra, the Kokowagayo women’s coffee cooperative is creating a new model for how farmer co-ops can be run. The co-op elevates women from their traditional subservient roles and acknowledges them as managers of their farms. Members receive financial education, leadership opportunities, increased income, and a better quality of life. Formed in 2014, Kokowagayo now includes 394 women-led farms.

In Togo, 456 cacao farmers have banded together to form the SCOOPS Ikpa cooperative. The word “Ikpa” means “together we are strong” in the Kposo language, and this cooperative is truly a manifestation of the word. Together, the members are working to increase their quality of life by transitioning their entire region to organic agriculture, combating pests that impact their cacao production, and offering increased services to their members—including a micro-finance system that gives loans to members at competitive rates.

In Guatemala, the Asociación Chajulense Va´l Vaq Quyol cooperative grows coffee for export. But that wasn’t always the case. The association was born from the devastation of the Guatemalan Civil War in the 1970s and 80s, and it began as a union of citizens to “support survival in the midst of war.” In 2010, it turned its attention to coffee production as a way to bring wealth to the community. Since then its members have thrived. They’ve become excellent coffee producers, and together, they survived the devastation brought by the coffee leaf rust fungus. 

What do these groups have in common?

All three are devoted to working together to make their world a better place—and all three are part of the Fair Trade system. The above-market prices, long-term contracts and pre-harvest financing that go along with Fair Trade are what makes their work possible. 

Additionally, all of their delicious end-products are available at your Co-op.

What is Fair Trade?

Unlike “organic,” “Fair Trade” is not a legally regulated term. Anyone can use it on any product, no matter how or where it was produced. Consequently, the original meaning of the term is often lost behind layers of glossy—and at times misleading—advertising.

Here’s the definition agreed upon by the World Fair Trade Organization in 2019:

Fair Trade is a trading partnership, based on dialogue, transparency, and respect, that seeks greater equity in
international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers—especially in the South. Fair Trade Organizations, backed by consumers, are engaged
actively in supporting producers,
awareness raising, and in campaigning for changes in the rules and practice
of conventional international trade.

To actualize this lofty vision, Fair Trade systems utilize the following methods:

• Direct relationships between buyers, small farmers, and farmer cooperatives.
• Buyers pay producers more than the conventional market price, through the use of premiums and price floors. 
• Buyers extend affordable, pre-harvest credit to producers.
• Producers meet mandated environmental, wage, and working condition standards.
• A third-party certification system verifies all the above.

At least, that’s what the original international Fair Trade standards aspired to. Since then, things have become a bit more complicated.

As Fair Trade has become more popular in the United States and Europe, the movement has shifted—or rather splintered—leaving consumers with multiple certifications, seals, and standards to wade through.

What’s a conscientious shopper to do? How do you know what’s behind all that pretty packaging, and all those Fair Trade symbols? 

Which products are truly fair? Let’s start with a history lesson.

A Brief History of Fair Trade

The idea that consumers in the global North can use the power of their purchases to uplift producers in the South isn’t new. It can be traced back to the nineteenth century, when abolitionists in England and the United States organized boycotts of sugar and other goods produced by enslaved people. 

But it wasn’t until after World War II that the modern Fair Trade movement really began. In the late 1940s and 50s, SERRV International and The Mennonite Central Committee began building trading networks for artisans in developing countries to sell their wares (mostly handicrafts) at fair prices in the United States and Canada.

In the late 1980s, global coffee prices crashed, devastating many producers. Out of this crisis, several “Alternative Trade Organizations” (ATOs) emerged. The ATOs were nationally based, and they gave a means for concerned coffee buyers to band together and purchase coffee at above-market prices, in order to sustain their growers. 

In 1997, 17 ATOs came together to create the FLO (Fair Trade Labeling Organization). FLO was—and still is—dedicated to setting and maintaining international Fair Trade standards, supporting small farmers, and growing the international Fair Trade movement. With FLO to create and maintain standards, the Fair Trade system was able to expand beyond coffee, to chocolate, sugar, tea, bananas, and other commodities—each with their own unique standards and price floors, specific to the country and means of production.

In the United States, the FLO Fair Trade seal was certified by an organization known as TransFair USA.

In 2004, FLO split into two independent entities: FLOCERT, a third-party certifying agency, and Fairtrade International, which sets the standards and assists producers.

In 2006, Fairtrade International lost its monopoly on Fair Trade certification with the addition of a new label, Fair for Life, which was created by the Swiss organic certifier Institute for Marketecology (IMO). 

There are many differences between Fair for Life and Fair Trade International standards (see the chart below), but the biggest is that while Fair Trade International focuses solely on the farmer and producer, Fair for Life certifies the entire supply chain, from farm, to production facility, to importer, to the brand that offers the product for sale. 

Additionally, Fair for Life requires companies to maintain a minimum level of Fair Trade purchases as a percentage of their overall purchases. This ensures that large corporations can’t dabble in Fair Trade, subsidizing the cost of their Fair Trade products with others acquired at exploitative prices (a phenomenon known as “fairwashing”).

In 2012, the Fair Trade landscape became even more fractured when TransFair USA (which in 2010 had changed its name to Fair Trade USA) made the decision to split from Fair Trade International and create an independent, USA-based certifying agency.

Fair Trade USA (formerly TransFair) used many of the same standards that Fair Trade International had instituted—including the mandated “price floors” that must be paid for each commodity. The biggest difference (and the reason for the split) was that Fair Trade USA staff believed the movement should be broadened to include products produced on plantations—not just small farms and co-ops. They reasoned that by opening up to plantations, Fair Trade systems could scale up, grow beyond the capacity of small farms, and also help farm-workers who didn’t have the resources to buy their own land. 

Fairtrade International countered by setting up a new certification agency in the United States, dedicated to maintaining the existing international standards. This new agency is known as Fairtrade America. 

In 2023, Fair Trade USA took another step away from international standards. When Fairtrade International increased the price floor of several types of coffee based on growing conditions and inflation, Fair Trade USA decided to continue paying the old, lower price, and not to adhere strictly to Fairtrade International pricing. Their reasoning was that by increasing the price floor for Fair Trade, there would be less demand overall, and farmers would lose out.

That’s a lot of information—a lot of name changes, and a lot of acronyms. But where does it leave us? What’s behind those labels now, in 2025?  

You might have noticed that some of our most popular Fair Trade brands don’t appear on the chart below: Equal Exchange, Just Coffee, Wonderstate Coffee, Rishi Tea. 

All of these are well known for their commitment to Fair Trade, but none sport any of the certification marks listed above. 

Why is that?

It’s because these companies, strengthened by their small size and their deep-seated commitment to the spirit of Fair Trade, have turned away from the ever-shifting landscape of certification and toward a more direct form of Fair Trade—a way of doing business that’s closer to the vision of the original Alternative Trading Organizations. 

It’s known as Authentic Fair Trade, or Direct Trade.  

Authentic Fair Trade works on the premise that the certification systems, while still beneficial and necessary, have in large part become a tool for big companies who don’t have the capacity to maintain direct relationships with their suppliers, but still want to do the right thing and maintain Fair Trade status.

Small companies like Just Coffee and Rishi Tea see themselves as different. They are able to maintain real, close relationships with their producers—and what’s more, they want to. Those relationships are integral to their business.

These companies adhere to Fair Trade standards—and in most cases go above them—but they don’t pursue certification. Instead, they’ve committed themselves to extreme transparency, so consumers know, without a doubt, that they are walking the walk.

Just Coffee publishes the minimum price they pay their farmers, and it’s well above the international Fair Trade standard. Every bag of their coffee has a code, which can be typed into their website and traces that particular coffee back to the farm. 

Rishi Tea is committed to paying farmers 5-10 times more than the conventional commodity prices. Their website features an interactive world map, where consumers can see exactly where each ingredient is sourced, along with stories about the farmers who grow it. 

It’s worth noting that Authentic Fair Trade puts the onus on consumers—you must do some research to determine if a given company is truly practicing Fair Trade or simply “fairwashing.” In most cases, it’s obvious after a few minutes of digging. Companies that practice Authentic Fair Trade give detailed information on their websites and packaging. If a product relies only on pretty pictures and vague statements, that’s a bad sign.

So, what is the fairest kind of Fair Trade? 

As it turns out, there’s not one answer to that question. It depends on the context, the particular product, and what kind of Fair Trade you want to support. In the end, all types of Fair Trade—whether Authentic or certified—signify a better deal for the farmer. 

Whichever you choose, you’ll be buying a product that in some small way helps make the world a better place.