 Hi, I'm Jane. I'm the Editor-in-Chief here at Food Unfolded and today we're going to break down how the fair trade model is different from conventional trade. The Fair Trade Certification System aims to tackle inequities in the trading system. The Fair Trade Model requires companies to pay fairer prices to small-scale producers while also holding producers accountable to higher social and environmental standards. Today Fair Trade focuses on creating a framework together with small-scale producers and workers in low-income regions. This framework gives them access to international markets, but more importantly a stable income. So how exactly does it work? Small-scale producers on their own with just a few hectares of land can find it challenging to access international markets. Under the Fair Trade Model different farmers group together to organize into local cooperatives, which strengthens their bargaining power in trade negotiations. The cooperatives have a democratic system and decisions are made together based on majority voting. The concept is not too far from classic labor unions, in which organized labor groups have wider influence over their own wages and working conditions through collective bargaining power. By combining all those producers, by organizing them in a cooperative actually makes them a lot stronger, a lot stronger to trade, but also a lot stronger to develop their agronomical practices and to develop their communities. Because also organizing farmers in cooperatives enables them to, for instance, build schools, build clinics, sometimes even construct roads. Those are all real examples that happen in the Fair Trade family. So the Fair Trade impact already starts before any trade is made. Within the certification system you have Fair Trade certified buyers and producers. To receive Fair Trade certification both groups must abide by their respective Fair Trade standards. For buyers, their Fair Trade standards are set to ensure the protection of producers and include long-term contracts with small holders and pre-harvest advanced payments. This is meant to create a more reliable framework and establishes steadier relationships between smallholder producers and their buyers or traders. Perhaps what's most unique about the Fair Trade system is their minimum price and additional Fair Trade premium model, which aim to counteract the impact of volatile markets on small-scale producers. Fair Trade certified buyers must pay farmers a minimum price for their products or the current market price, whichever is higher. Different products have different minimum prices, all of which are voted on and set together with Fair Trade producers, who actually own 50% of the Fair Trade organization. On top of the minimum price, Fair Trade buyers must also pay producers an added Fair Trade premium. Each product has its own respective premium amount and they serve as additional funds to be invested in the community. For example, roads, schools, water pipes, business operations like training and resources. This money is put in a pot for smallholder cooperatives to democratically vote on what and how they would like to invest their premiums. All transactions between Fair Trade buyers and producers must be recorded in a form of a contract. These transactions are regularly audited by a third party to ensure that producers have been fairly paid the minimum price and Fair Trade premium on their products. You may have noticed that we've really only discussed how Fair Trade impacts smallholder farmers. What about its impact on farm workers? Higher laborers are the most marginalized group in the food chain, earning the lowest income and are often subject to unfair working conditions. It's important to distinguish here that farm workers are usually found on larger farms, plantations or states, not so much on small scale farms because those are typically owned and worked by its families. On plantations and estates, Fair Trade standards create an infrastructure to protect and empower the hired laborers. Fair Trade certified plantations or states must have contracts for hired workers, pay rates equal to or higher than legal minimum wages, allow their workers to unionize to collectively bargain for their rights and they must meet Fair Trade standards for worker, health and safety. In addition to following national labor and environmental laws, Fair Trade standards prohibits any form of abuse, discriminatory employment practices and any form of illegal labor, forced labor or child labor. Fair Trade premiums are also reserved for hired laborers on Fair Trade certified plantations or estates. These premiums are usually given to a joint committee which are managed by the workers. They themselves can collectively decide on what they want to do with the premiums without any say or intervention by the plantation owners. Specifically for hired labor, these premiums can be used to supplement pay as additional wages as often there can be a gap between the paid minimum wage and the living wage. Now that you know a little bit more about the Fair Trade model, does it really work in practice? It's too big of an answer to explore right now, but we'll dive into this in our video tomorrow.