FAIRTRADE 

OVERVIEW

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 their rights of, disadvantaged producers and workers - in the developing and underdeveloped countries. Fair Trade organizations (backed by consumers) are actively engaged in supporting producers in awareness raising and in campaigning for changes in the rules and practices of conventional international trade.

Fairtrade is ensuring a fair price to its producer along with a premium.

In 1997, these organizations jointly created Fairtrade Labelling Organizations International (FLO), an umbrella organization whose mission is to set the Fairtrade standards, support, inspect, certify disadvantaged producers and harmonize the Fairtrade message across the movement.

In 2002, Fairtrade Labelling Organizations launched a new international Fairtrade Certification Mark. The goals of the launch were to improve the visibility of the Mark on supermarket shelves, convey a dynamic, forward-looking image for Fairtrade, facilitate cross border trade, and simplify procedures for importers and traders.

At present, over 20 Labelling Initiatives are members of FLO International. There are now Fairtrade Certification Marks on dozens of different products, based on FLO's certification for coffee, tea, rice, bananas, mangoes, cocoa, cotton, sugar, honey, fruit juices, nuts, fresh fruit, quinoa, herbs and spices, wine and footballs etc. Mark

 

FUNDAMENTALS OF FAIRTRADE

 

 

Fairtrade Minimum Price

A producer sho uld get a minimum price for his product which should cover all the cost of production. This price has been already set for FLO for different countries. However, if the market price is higher, the producer gets the market price. In cotton, the minimum price is decided for seed cotton (Cotton with the seed ie before Ginning).

Fairtrade Premium

This is the additional money which a producer gets "over and above" the Fairtrade minimum price. This premium varies between 5-30% of "FOB" or "Farmgate" price of the commodity. This premium is set by FLO and varies for different products. This premium is purely used for improve business (training facility or getting new equipments) , community (School, Hospital or Road etc.) and environment. It is a sole decision of the group members where to spend this money.

A joint body

No individual can become Fairtrade producer. It has to be a group of small producers and this group democratically elects a joint body representing the interest of members. This joint body makes the final decision of managing the premium earned. There are set guidelines by FLO regarding functioning of this joint body which is periodically monitored.

A general assembly

It is a forum where all the members of the group meet and elect their joint body and decide how to spend their premium.

Pre-financing

For some of the products, the buyers are obliged to pay an advance to the producer group. This advance can run upto 60% of product value, depending upon the product. This gives producer groups, an access to cash, who are otherwise not able to arrange funds for production.

Long-term relationships

Buyers of Fairtrade products are encouraged to develop long-term and stable relationships with producer groups that help them in planning their production in advance. This gives a consistency and credibility to business model and producers are more secure for disposal of their produce and income thereof.

 

 

 

WHY FAIRTRADE COTTON?

Cotton is one of the oldest commercial crop and is one of the most important fiber crops in the global textile industry. It accounts for about 50% of the global textile market. Cotton cultivation dates back 3000 years ago in India, Egypt and Peru. It played a very important role in Industrial revolution and development of many western countries. Even today, it plays a vital role in economic and social development of deve loping and underdeveloped countries. Cotton export generates around 4% to 7% of GDP in some of the African countries like Benin, Chad, Mali, Burkina Faso and Togo.

Falling cotton prices:
Global cotton prices are steadily coming down. From 60's to 84, the cotton prices were stable around US$2.62/kg. There followed a sharp decline in 83/84 season when prices almost halved from US$1.93/Kg. to US$1.07/Kg. in 85/86. During 90's prices stabilized around US$1.59/Kg. subsequently falling to US$0.92/Kg. in 01/02 its lowest level in 30 years. While some of the overall long-term decline in prices can be explained by reductions in production costs as a result of technological advances, slow demand growth and strong competition from synthetic fibers, still a direct relation can be established with the subsidies granted by rich cotton producing countries to its farmers.

Subsidies
More than 70 countries produce and export cotton. In 2004 Only 10 countries accounted for 85% of total production of 20.7 million tons which were US, China, India, Turkey, Pakistan, Uzbekistan, Brazil, Greece, Australia and Syria. Out of total production, about 33% of cotton is traded internationally with and export value of US$8 bn in 2003. Compare it with US$4.2bn subsidy that US farmers receive and 60% of their cotton is exported. Cotton trade and production are highly distorted by the domestic policies of rich countries and the case of cotton demonstrates how western agricultural subsidies can have catastrophic impacts on farmers in developing countries.

Domestic support, greatest in US, EU and China has caused a depression in prices, damaging those developing countries which rely on cotton exports for vital foreign exchange earnings that could be allocated to health, education and other social development projects. US is the 2nd largest producer of cotton in the world and dumping 60% (02/03) (about 39% of global trade) and 78% (03/04) of its produce in global markets. Though EU is not a major player in cotton production but there are about 100,000 farmers in Spain and Greece which produce just 2.5% of Global cotton production but receive 17% (US$1bn) of world cotton subsidies. It has put a great pressure on global prices. It is assumed that global cotton prices would be 15% higher if all subsidies were eliminated. There are about 100million rural households globally involved in cotton production.

The economic strain on farmers caused by falling prices and low value received by them due to subsidies by developed nations, they are under pressure to use more andmore chemicals in an attempt to increase yields and thus income. Cotton now uses 10% of the world's pesticides and 25% of the world's insecticides. Also there is a great pressure of using genetically modified cotton (GM cotton) (BT Cotton). Fairtrade offers and alternative vision of how trade can be undertaken and what it can achieve. The success of Fairtrade model in other products clearly demonstrates that trade can play and important part in contributing to poverty reduction and achieving sustainable development.

Synthetic Fibers
There is a significant competition from synthetic or man-made fibers such as polyester, nylon and acrylic. It started in 40's with the introduction of man made fibers. At that time the total share of synthetic fibers in global fiber consumption was just 12% which has raised to about 50% currently. Production of synthetic fibers is growing even faster than ever before building more and more pressure on cotton prices.

BENEFITS OF FAIRTRADE COTTON

Social and Economic Benefits

  • Increased Income
    Fairtrade guarantees farmers a better price for their cotton. This means they are more able to support their families and invest in their farms. Housing can be improved, children can stay in school, and farmers can choose to stay on their land instead of being forced to migrate to cities.
  • Community development
    The Fairtrade price includes a premium that is set aside to invest in social and environmental projects. This ensures that communities have the ability to fund long-term improvement. Elected farmer committees decide democratically how these premiums are spent. In India, farmers have agreed to spend the premium on health insurance, water conservation and income generating schemes.
  • Strength in togetherness
    Fairtrade certification requires farmers to organize themselves into associations or co-operatives. This leads to the pooling of resources and puts them in a stronger position when selling their cotton

Environmental Benefits

  • Responsible Farming
    The pressure to increase yields by using more chemicals in conventional cotton farming threatens human health and environmental sustainability. Fairtrade farmers are committed to reduce chemical use and protecting the environment.
  • Reducing impact
    Fairtrade cotton farmers reduce and replace conventional pesticides and fertilizers with natural alternatives. Many can then co one step further and convert to organic production
  • Non GM Cotton
    Fairtrade standards prohibit the use of genetically modified cotton seed.
  • Crop diversification
    Farmers introduce other crops into rotation patterns, diversifying income and improving soil fertility.

In 2005, the Fairtrade system benefited approximately 1 million workers and farmers in 58 developing countries in Africa, Asia and Latin America. Including their dependents, 5 million people were benefited.

FREQUENTLY ASKED QUESTIONS
 


In Why are Fairtrade Cotton / Product expensive?


Will Fairtrade prices will be same as conventional in a longer run ?


Global Fairtrade market


Brands promoting Fairtrade products


In Why are Fairtrade Cotton / Product expensive?
Fairtrade is not based on popular economic principles of demand and supply and hence the price of cotton is not worked out conventionally. The pricing of Fairtrade cotton is based on "minimum Fairtrade price (MFP)" which is normally equal to the cost of production of that commodity. FLO has worked out a MFP for each commodity, for each country. Hence the price of Fairtrade cotton from India may differ from West Africa due to different cost of production.

Production costs can sometimes be higher due to the organic farming practices. Economies of scale can also have a significant impact in pricing: production of smaller quantities can often cost producers and processors more at every turn (packaging, transport, etc) because they cannot benefit from a large enough scale to use as a bargaining position

In addition to this, there is a Fairtrade premium paid on purchase of every kilogram of seed cotton which makes the price even more expensive. The farmers and workers themselves decide how these funds are to be spent. It is generally used for improvements in health, education or other social facilities, although it may also be used for certain development projects to enable growers to improve productivity or reduce their reliance on single commodities.

 


Will Fairtrade prices will be same as conventional in a longer run ?
The sole purpose of Fairtrade is to make the small farmer independent and give him freedom from the clutches of money lenders and traders.

Gradually with the support of customers, as the small farmer groups start growing big and achieve economies of scale, the cost of Fairtrade cotton will also come down. Hence in a longer run, the Fairtrade cotton products will not only become more and more competitive but also create a fairer environment of trade.


Global Fairtrade market
In 2005, Fairtrade sales amounted to approximately €1.1 billion worldwide, a 37 % year-to-year increase over 2004. As per December 2005, 508 Certified Producer Organizations in 58 developing countries were Fairtrade Certified. That represents more than one million producers and five million people, including dependents, benefiting directly from Fairtrade.
 

 

The Oeko-Tex system: Worldwide. Consistent. Reliable.

Transparency for producers, retailers and consumers

Towards a product optimised for human ecology

The textile chain is strongly characterised by being based on the division of labour between the raw material and the finished textile product, often every individual production stage is carried out in a different part of the world. From one country to another, there are very different environmental standards for production, and the importance attached to testing textiles for harmful substances varies widely. Since, at the same time, the expectations of the retail trade and the end user regarding the properties and quality of the products they buy are becoming ever higher, testing the materials used in production processes is becoming more and more important. "Confidence in Textiles" is synonymous worldwide with responsible textile manufacture - from the raw materials to the finished product on the shelf. This is just as true for production companies and retailers along the textile chain as it is for the wearers of fashionable, functional and colourful textiles.

What led to the development of the Oeko-Tex Standard 100

Until the early 1990s, there was no reliable product label by which consumers could judge the human ecology properties of textiles. Nor was there a standard benchmark for safety which could be used by companies in the textile and clothing industry, allowing them to assess the harmful substances in textile products in a practical, i.e. realistic, use-based way. It was against this background that the Austrian Textile Research Institute (ÖTI) and the German Hohenstein Research Institute worked together to develop the Oeko-Tex Standard 100, on the basis of their existing test standards.

Tough and compulsory

Oeko-Tex certification is not merely a declaration of a desire to make products that are optimised for human ecology. Products can only be endorsed with the "Confidence in Textiles" label after they have been thoroughly tested to ensure that they comply with the extensive list of criteria.

Therein lies the reliability.

Among the first companies to gain Oeko-Tex certification were manufacturers of underwear, baby clothing and domestic textiles in Germany, Austria and Switzerland. Just one year after the launch of the product label, there were already 214 companies in these countries, at all stages of textile processing, which were taking part in the Oeko-Tex certification system. Today, over 7500 companies all around the world are involved in the Oeko-Tex certification system.

The Oeko-Tex system: Worldwide. Consistent. Reliable.

Modular principle to meet individual requirements

A modular concept for success:

Components of the Oeko-Tex system

Exactly how are the objectives of the Oeko-Tex system achieved? How is it guaranteed that the standards for testing for harmful substances remain consistent for textile and clothing manufacturers? And what reliable safety standards does the Oeko-Tex label offer consumers?

Thanks to its modular structure, the unique Oeko-Tex system can cope with all the complex requirements of textile production, and comprises:

  • test criteria that are consistent worldwide and based on science (relevant to textile and human ecology)
  • annual reassessment and further development of the defined limit values and criteria
  • testing and certification of textile products by independent test institutes with appropriate specialist expertise
  • compliance with legal requirements for chemicals relevant to textile production
  • testing of textile raw materials and intermediate and end products carried out at all stages of processing (modular principle)
  • using Oeko-Tex certificated preliminary materials. As a consequence, testing costs are reduced along the textile chain.
  • operational quality management at production companies
  • product monitoring by regular random checks in the market and factory inspections by independent auditors of the Oeko-Tex Association

With over 60,000 certificates issued and millions of textile products endorsed with the "Confidence in Textiles"  label, it is the world's most well-known quality mark for textiles tested for harmful substances.

The Oeko-Tex system: Worldwide. Consistent. Reliable.

Benefits for all concerned

Benefits for consumers:

Aid in decision-making:

  • With the Oeko-Tex label, the consumer has a reliable product endorsement which helps with making purchasing decisions.

Quality:

  • Consumers who are deliberately looking for textiles that are not harmful to their health value the combination of high-quality, modern, functional textiles with safety from the health point of view.

Confidence:

  • Product testing by independent members of the Oeko-Tex Association who are well-known test institutes makes it entirely trustworthy.

Benefits for industry and retailers:

Transparency:

  • The fact that the criteria are internationally applicable makes for transparency and comparability, leading to improved safety

standards in production and a more rapid flow of information.

Convenience:

  • Manufacturers and retailers wishing to provide their customers with textile products that are not harmful to health benefit from having simplified, consistent conditions for delivery.

Safety:

  • The fact that the test criteria are constantly being further refined ensures continuing improvements in product safety.

Success:

  • Certification opens up new markets and selling opportunities.

Efficiency:

  • The ideal supplement to manufacturers' and retailers' own quality control systems.

Economy:

  • The modular system offers great potential forcutting costs, by using preliminary products that have an Oeko-Tex certificate.

Trustworthiness:

  • The Oeko-Tex label is an additional selling point

The Oeko-Tex certificate opens doors worldwide and gives companies right along the textile chain access to world markets.

Oeko-Tex Standard 100:

One language - one world. Oeko-Tex unites.

Oeko-Tex Standard 100:

The safety concept for textile confidence

The Oeko-Tex Standard 100 is a test and certification system for textile raw materials, intermediate and end products at all processing stages that is consistent worldwide. The tests for harmful substances include testing

for legally banned and controlled substances, and chemicals that are known to be harmful to health, as well as  parameters serving a  precautionary purpose. Products and groups of articles that have been tested successfully can be endorsed by the manufacturer with the Oeko-Tex label and advertised accordingly. Once a certificate has been issued, it is valid for one year, and can be extended on request.

The key objectives of the Oeko-Tex Standard

100 are...

  • to produce textile products of all kinds that are safe from a human ecology point of view
  • to simplify and speed up terms of delivery for manufacturers and retailers who want to offer their customers textile products that are not harmful to health
  • reliable product endorsement for consumers who deliberately look for textiles that are not harmful to health

Success through international cooperation

Thanks to the Oeko-Tex label, all companies involved internationally speak with a common language. Manufacturers who have their end products certificated can work with suppliers such as yarn, fabric and  knitwear producers, dye-houses and accessories manufacturers all over the world who are equally proactive when it comes to human ecology. The manufacturers of dyes and producers of textile auxiliary products also incorporate the Oeko-Tex requirements into their product development. This progress in development is  contributing to the growing internationalism of the Oeko-Tex network. The test institutes support this through

their intensive work on merchandise testing and research

With the Oeko-Tex system, possible sources of problem substances can be identified and eliminated at every stage of processing, from the raw materials to the finished product.

Oeko-Tex Standard 100:

Open up brands and markets - worldwide.

Important commercial advantages

The option of having products tested according to the Oeko-Tex Standard 100 at all processing stages allows manufacturers to cut costs, because it is easier to choose suppliers and to avoid duplicate testing. Using certificated preliminary products in this way, for example, saves garment manufacturers as the last link in the

textile chain the expense of numerous materials tests, since sources of possible harmful substances have already been excluded at earlier stages.

Oeko-Tex inside - Transparency for the user

For many consumers in target markets such as Europe or Japan, evidence that textile products are not harmful to health is playing a more and more important role in their buying decisions. The spread and increased  recognition of the Oeko-Tex Standard 100 also help ensure that the Oeko-Tex label is now almost like a brand name and is actively sought after by consumers.

Against this background, endorsing their goods with the Oeko-Tex label offers all textile and clothing  manufacturers an effective way of drawing attention to the fact that their products are optimised for human ecology. Manufacturers of branded articles can also benefit from this added value.

At www.oeko-tex.com, consumers can see for themselves

  • which products have been tested for compliance with the Oeko-Tex Standard 100 - even if they do not visibly bear the label
  • which companies take part in the Oeko-Tex system
  • which brand-name articles also offer the security of Oeko-Tex

Companies taking part in the Oeko-Tex system benefit from the knowledge that they are producing textiles that are not harmful to health, and so are offering consumers a real aid in decision-making when they are

purchasing textiles.

The reliable way to certification:

Consistent test standards worldwide

  • banned MAK amines in specific AZO dyes
  • other carcinogenic and allergenic dyes
  • formaldehyde
  • pesticides
  • phenols
  • chloroaromatic compounds
  • extractable heavy metals: Ni, Cd, Cr III, Cr VI etc.
  • colourfastness
  • pH value
  • phthalates in baby articles (Product Class I) and textiles worn next to the skin (Product Class II)
  • organic tin compounds (TBT and DBT)
  • emissions of volatile components
  • odour
  • biocides and flame-retardant treatments are regulated separately

Testing by product class

The testing for harmful substances under Oeko-Tex Standard 100 is always determined by the particular purpose of the textiles. This is why the rule is: the more closely a textile is in contact with the skin (and the more sensitive the skin), the stricter the criteria for human ecology which must be met.

The main focus: practical evaluation

The aim of the comprehensive Oeko-Tex laboratory testing is to arrive at a realistic and practical evaluation

of how the products can be optimised for human ecology.

Textile products are assigned to one of four different product classes:

PRODUCT CLASS I

Textiles and textile toys for babies and toddlers:

underwear, romper suits, bed-linen, bedding, stuffed toys etc.

PRODUCT CLASS II

Textiles where a large part of the surface area is in direct contact with the skin:

underwear, bed-linen, towels, shirts, blouses, tights etc.

PRODUCT CLASS III

Textiles which do not come into contact with the skin, or for only a small part of

their surface area:

Jackets, coats etc.

PRODUCT CLASS IV

Furnishing materials for decorative purposes:

Tablecloths, curtains, upholstery, mattresses etc.

The Oeko-Tex Standard 1000:

confirmation of more environmentallycompatible

production

Supplementing the product-related Oeko-Tex Standard 100, the Oeko-Tex Standard 1000 is a system for testing, auditing and certificating environmentally-friendly production facilities along the textile chain.

For certification under Oeko-Tex Standard 1000, companies must comply with set criteria in relation to their environmentally-compatible manufacturing processes and provide evidence that at least 30 % of their total output is already certificated under Oeko-Tex Standard 100.

The necessary criteria include:

  • excluding environmentally harmful auxiliary products and dyes
  • keeping to guideline standards for purification of waste air and water
  • using energy economically
  • avoiding noise and dust
  • taking specific measures to guarantee safety in the workplace
  • no use of child labour / socially responsible employment
  • existence or introduction of basic elements of an environmental management system

The factory is inspected by an independent  auditor from one of the member institutes of  "Oeko-Tex International - Testing Association for Environmentally Friendly Textiles". The certificate is valid for three years and can be renewed on request.

Benefits

Certification of their production processes under Oeko-Tex Standard 1000 offers textile and clothing companies

  • documentation proving effectively that the ecological measures taken at a production site have been objectively verified
  • more efficient production leading to reduced costs
  • waste reduced to a minimum
  • better acceptance of their products in the market

Putting the dot on the i: Oeko-Tex 100plus

The product label Oeko-Tex Standard 100plus gives textile and clothing manufacturers the opportunity to demonstrate to consumers not only that their products are optimised for human ecology but also that they are making efforts in terms of ecological production methods.

Companies can be awarded this endorsement if the articles they make have been successfully certificated under Oeko-Tex Standard 100 and they can also prove that the entire production chain - i.e. all production facilities involved in the manufacture of an article - complies without exception with the requirements of the Oeko-Tex Standard 1000.