Why do we need a fair trade pricing tool for crafts?
Any Westerner who has traveled internationally and seen the beautiful handmade and recycled products that are available in villages, street markets, and small roadside shops and then returns to their home country to see these same products sold in retail stores varying from museum shops to big box retailers cannot help but wonder how the artisan was compensated and how the benefits to the producers can be improved. The Fair Trade movement is a system of trade designed to: create transparency in the supply chain, guarantee that a fair price in the local context is paid to the artisans, and ensure trading relationships which are beneficial to the producers, businesses, and the environment.
The fair trade commodity market (coffee, tea, chocolate) has experienced widespread adoption. One of the main reasons that commodities are widely available is that the products are certified fair trade on the product level. The fair trade handicraft market, on the other hand, is identified on the organization level making it more difficult for handicrafts to scale. The fair trade pricing tool aims to solve this problem by creating a method for product level labeling for the fair trade handicraft sector.
Many fair trade craft organizations are interested in working together to develop clear standards for pricing which can help to strengthen the movement and further empower artisan groups. The key challenge is to develop an easy, accessible method for helping fair trade producers and traders to use more uniform, transparent standards at the product level. Essentially, it is this cost of labor that we want to be certain, at a minimum, is treated fairly. We believe it is possible to create a standard method of floor pricing – not a price which values the art, or is a maximum price, but a price which ensures that the labor has not been exploited. We want to ensure that every producer has the information to ask for a fair price and every buyer has the information to pay a fair price.
We believe that through the use of technology and information, we can help create a system where handicraft products are identified on the product level allowing them to scale creating increased employment for artisans around the world.
What is the fair value of the labor? How is this decided?
There is no simple, correct answer to this question. The goal of the fair trade movement as outlined by FLO, IFAT and FTF is to “pay a fair wage in the local context.” Currently, producers and trading organizations have defined this by looking at comparative local wages and cost of living on a case by case basis. Handicrafts are produced in the informal economy which makes the artisans vulnerable to low compensation. Without the guarantee of fair wages artisans are often paid far below the minimum or national average wages in a country.
Despite the challenges, we believe that the collective group of non-profits who are guiding the development of the Fair Trade Wage Guide can work together to define a strong, clear measure for fair minimum labor compensation. The Fair Trade Wage Guide compares several economic indicators that may represent a possible definition of a fair compensation for the artisan’s time. We are currently testing out the following international economic comparisons: local country minimum wage and international poverty levels, and various other measures. We also distinguish between rural and urban to account for the significant differences in cost of living.
