Do you ever stop to think about the journey behind the clothes you wear, the coffee you sip, or the food you consume? Behind it is a sprawling network of farmers, artisans, contractors, designers and retailers, all connected through a complex web of trade. With the growing consciousness to make trade between these entities just and responsible, ‘fair trade’ certified products, as the name suggests, offer a guarantee of responsible and ethical sourcing and production. They challenge the mainstream systems to make trade more equitable, human-centred and sustainable. However, this comes with its own set of challenges. Let us look into the history of fair trade and critically examine the movement of fair trade in today’s context.

The fair trade movement has its roots in the post-World War II era of the 1940s and 1950s, when social justice activism surged across Europe and North America. Religious groups and non-profit organisations from these countries sought to provide a market and better rates for handcrafted goods made by poor communities in Latin America, Africa and Asia. The goal was simple and yet radical – to create a trading system that benefits marginalised producers.
The movement gained traction in the 1960s and 1970s, with organisations like Oxfam and SERRV promoting direct trade, ethical working conditions, and fair pricing. By the 1980s, the creation of fair trade certification brought the movement to mainstream markets, allowing consumers to make a distinction. Over the decades, the fair trade movement has become a global force, advocating for fair wages, sustainable production, and ethical business practices. However, its reliance on Western markets and the challenges of scaling up have sparked ongoing debates.

Fair trade’s global impact is undeniable. In 2022, over 1.9 million producers across 70 countries benefitted from fair trade certification. The system guarantees minimum prices and offers premiums that provide financial stability to producers. For example, coffee and cocoa farmers in Latin America and Africa received wages 10–20% higher than the market average, while producers earned about $200 million in premiums in 2021. These funds were reinvested in community projects like education, healthcare, and infrastructure.
The movement has also driven “ethical consumerism,” especially in Western markets. In 2021, sales of fair trade products exceeded $10 billion, fuelled by growing consumer demand in Europe and North America. Ethical consumption is now a key element of the fair trade narrative, with more consumers willing to pay higher prices for products that are ethically sourced. Sustainability has also become a focal point—fair trade producers practising organic farming reportedly reduced CO2 emissions by over 1.5 million metric tonnes in 2021.

In India, fair trade has provided crucial support to small-scale artisans and farmers, particularly those producing handicrafts and food. The Fair Trade Forum India (FTF-I), in partnership with the World Fair Trade Organisation (WFTO), has positively impacted over 200,000 artisans—many of whom are women from marginalised communities. Fair trade has played a pivotal role in preserving traditional crafts, which contribute around $3 billion annually to India’s economy.
Yet, despite its success, awareness of fair trade within India remains low. It is reported that only 2% of Indian consumers are familiar with the movement, and nearly 90% of fair trade certified products are exported, leaving producers vulnerable to fluctuations in global demand. During the pandemic, India’s fair trade exports fell by 30%, putting many enterprises at risk.
The influx of large corporate giants into the handmade craft sector has complicated the landscape. Beyond their fast fashion brands, these companies are now launching their own handcraft lines. They demand very low prices from producers without leaving room for fair trade or handmade premiums. This has considerably undermined the local markets for fair trade goods, as handcraft producers struggle to negotiate with these profit-centred corporate brands.
The high cost of certification remains a significant barrier for many Indian producer enterprises, further complicated by inconsistent compliance with Fair Trade’s Guarantee Systems. While some enterprises offer profit-sharing with producers, others do not. Similarly, living wages and social security benefits are not uniformly implemented, leading to frustration and distrust among compliant producers.
Over the years, brands like Fabindia have supported producers, aggregating their fair trade products for the larger markets. However, with the recent entry of giants like Reliance, TATA, and Aditya Birla in this line of ethical artisanal made products, the space is highly competitive with limited capacity and readiness to pay a premium for fair manufacturing. The demand to lower production costs often results in compromised wages, lack of working capital and absence of social security for the producers, making them highly vulnerable.

Despite its successes, fair trade faces criticism for its inability to address the deeper, systemic issues that perpetuate inequality in global supply chains.

1. Systemic Disparities
   While fair trade offers a more ethical alternative to traditional trade, it still operates within a market-driven system that prioritises profit over people. The movement’s potential lies in its ability to challenge underlying trade policies and economic structures that contribute to global inequities. This potential remains unrealised.
2. Market Integration vs. Local Empowerment
   The movement’s heavy reliance on developed markets has created a vulnerability for our producers in the Global South. For instance, the COVID-19 pandemic caused demand for fair trade products to drop by 15–20%, disproportionately affecting producers across Latin America, Africa, and Asia. Furthermore, fair trade products still represent a tiny fraction of global trade—just 0.01%.
   There is an inherent tension in fair trade’s approach between integrating producers into global markets and promoting local empowerment. By focusing on international markets and certification, fair trade often overlooks opportunities for local market development, limiting community resilience.
3. Voluntary Nature of the Movement
   The voluntary nature of fair trade participation and the lack of a regulatory framework to promote fair trade limits its capacity to drive widespread change. Ethical trading remains the exception rather than the rule, and without broader adoption by governments or regulatory bodies, fair trade’s influence will remain constrained.
4. Certification Overload
   Another point of contention is the certification process itself. The cost of fair trade certification, which can reach up to $10,000 annually, poses a significant burden for small producers. In regions like Asia and Africa, where domestic sales often occur at competitive market prices, the value of fair trade certification is often diminished despite its high costs. Additionally, not all producers can sell their entire product range under fair trade terms, limiting the full benefits of certification.
   Producers also often face an overwhelming array of certifications, from environmental sustainability to ethical business practices. These competing certifications, preferred differently across European and American markets, force producers to shoulder the financial burden of compliance. Fair trade’s certification system, while valuable, can become just one more certification among many.
5. Producer Support and Expectations
   Fair trade certifiers are largely non-profit organisations and are expected to provide services of market access, skilling, and research. However, they often fall short on meeting these expectations, leaving producers with unmet needs and growing frustrations.

While the fair trade movement has improved the lives of millions of producers worldwide, its reach and impact remain limited. Reliance on Western markets, costly certification processes, and a niche consumer base are ongoing challenges. For fair trade to create meaningful change, it must evolve beyond its current model—addressing systemic inequalities, expanding its influence to domestic markets, and offering a wider range of services to producers.

Moreover, fair trade must play a stronger role in advocacy, pushing for regulatory changes that hold larger industries accountable. The movement’s future depends on its ability to create systemic shifts in trade policies and ensure that ethical practices become the standard, not the exception.