Fair-trade is based on the fair remuneration of producers. Buyers that commit to fair-trade must pay a minimum price to producers as well as a premium called fair-trade premium. This premium should enable producers to support themselves and to invest in community development. In return, producers that commit to fair-trade must comply with labour rights, environmental and social requirements. Standard setting and certification are under the control of the Fairtrade Labelling Organizations International (FLO). This organization is the worldwide umbrella organization of 20 national non-governmental organizations in Europe, America, Asia and Oceania. Other institutions unrelated to FLO are also setting up fair-trade standards.
Various Asian producer groups benefit from exports of fair-trade products. For example, the Philippines exports fair-trade bananas and sugar to Japan, Thailand exports fair-trade rice, Indonesia fair-trade coffee, India and Sri Lanka fair-trade vanilla, etc.
Fair-trade funds helped to build this children's library and play area.
To obtain certification, producer associations must function in a democratic manner. There are also rules on how the fair-trade premium has to be spent and requirements for the protection of the environment.
For plantations, there are a number of requirements related to labour rights: workers' treatment, freedom of association and collective bargaining, workers' housing and sanitation; workers' health and safety; and no child or forced labour. In addition, the producer must comply with the environmental and social laws in the producing country and demonstrate continual improvement in annual inspections (audits).
FLO fair-trade certification can be applied for by a group of producers in a cooperative, a farmer association or by large farms with an organized labour force. Local auditors inspect the farm and the certification agency Flo-Cert Ltd decides whether or not to certify the producer association. Once certified, there is a regular inspection once a year to check that the producers meet the fair-trade requirements and to examine how they used the fair-trade premium. Traders who use the FLO certification mark on their packages currently pay a license fee. Producers have to pay fees which are based on the costs of the inspection.
A producer association or a plantation can benefit from fair-trade certification since certified products normally receive higher and more stable prices. The price paid to producers is determined by production costs. It takes into consideration any additional costs that might arise from meeting the fair-trade requirements, such as providing living wages for workers. In general, the fair trade premium is meant to provide some resources to the community to improve the living conditions of its members.
A key constraint in the fair trade system is that a group of producers can only get certified if FLO finds that there is a market for their fair-trade-labelled products. In order to enter the fair-trade system, a necessary first step is to ask FLO and other fair-trade importers for information regarding market opportunities for their products. Another constraint is that when a producer association or a plantation has been certified there is no guarantee that the whole production will be sold and marketed as "fair-trade".
SA8000 is a voluntary private workplace certification programme that has been developed by the non-governmental organization Social Accountability International (SAI) with the aim to create better working conditions. The SA8000 standard is based on international workplace norms including those related to social justice, worker rights and working conditions. Some of the very large firms exporting banana, pineapple, tobacco, wine, canned fruits and processed coffee are SA8000-certified. In December 2006 there were almost 500 SA8000-certified facilities in Asia (of which 190 in India, 140 in the People's Republic of China and 58 in Pakistan).
The SA8000 certification sets minimum standards for working conditions to ensure a safe and healthy working environment, freedom of association and collective bargaining and an enterprise strategy for managing social workplace issues. Also there are rules for working hours, wages, prevention of discrimination and the use of children or forced labour.
Enterprises that operate production facilities can apply for SA8000 certification by one of the certification agencies approved by SAI. After the initial inspection and once the workplace is certified, the company is monitored to ensure continued compliance with the standards. The producing company usually pays the certification fee which includes the audit and corrective or preventative action costs. The SA8000 certification mark is not used on product labels but the company may use it in promotional activities. There is no specific price premium or market for SA8000-certified products.
The SA8000 certification is one of the most detailed workplace standards for international labour rights. It primarily benefits larger agro-industrial enterprises that can use it in their corporate public relations. The SA8000 standard can help to improve productivity and quality and can also help to recruit and retain workers. Although more common in other industries, the SA8000 standard has only slowly been taken up by the agricultural industry because it is difficult to implement in seasonal production.
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