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Climate-ABC: Fairtrade

Fairtrade is one of the standard setting organizations in various production sectors. It awards the Fairtrade seal for compliance with its minimum standards of social and environmental sustainability.

These standards usually include a minimum wage as well as a bonus payment, which secures the livelihood of the people, but does not protect them from poverty. The bargaining position of the lower segments of the value chain, such as farmers, is very weak in contrast to globally operating companies. A bonus payment per ton of cocoa, for example, puts additional pressure on farmers.
Inserted in an unequal system of global commodity chains, individual companies, organizations and businesses have different negotiating positions. Prices are therefore usually not determined by the producing segments, but rather by the retail trade and the food industry. The pressure on prices puts farmers in a difficult situation that promotes poverty and makes it difficult for them to make investments that secure their livelihood and protect the environment. Standards-setting organizations such as FairTrade, Rainforest Alliance, GEPA, UTZ, etc. guarantee compliance with their self-imposed socio-economic and ecological standards. However, there is also a competitive pressure among the organizations awarding the seals of approval.

Fountain, A., & Hütz-Adams, F. (2018). Cocoa Barometer 2018. Cocoabarometer.