The True Cost of Fair Trade

October 15, 2016

The True Cost of Fair Trade

Am I helping or harming the world? Like many, I struggled with really knowing the answer to that question- especially when shopping. Consumers have reached a critical stopping point every time we take an item off of a shelf. Were pesticides used? Were the workers treated fairly? Barring an extensive Google search, we never really knew the answers to questions like these. Until Fair Trade.
It started with coffee. A brand or two would pop up at my local grocery store or coffee shop next to the standard brews. It steadily expanded from there into everything from fruits and spices to clothing and bedding. Fair Trade is growing, and it’s not slowing down anytime soon. And while I’m not always happy with the price tag, I reach for Fair Trade because I know from research (and personal experience) that it’s the best, most ethical option and that my choice is really making a difference.
Despite that, I can’t help but wonder if anyone else ever really stops to think about Fair Trade. Why is the ethical choice sometimes the most expensive? Does the cost add up?

Let’s start by exploring what the label means.

What’s Fair Trade, anyway?

Simply put, Fair Trade is all about giving respect to people and the planet.

“Our rigorous social, environmental, and economic standards work to promote safe, healthy working conditions, protect the environment, enable transparency, and empower communities to build strong, thriving businesses. When you choose products with the Fair Trade label, your day-to-day purchases can improve an entire community's day-to-day lives .” Fair Trade USA

The Fair Trade label is a credible and useful way for consumers to know if their purchases meet Fair Trade guidelines. Is it ethically made? Does it help the environment? The presence of the label is designed to put your mind at ease and let you know you’re part of something bigger.

Does it actually have an impact?

From better pay to better working conditions, Fair Trade absolutely has an impact.

According to Fair Trade USA, The Fair Trade Certified Apparel & Home Goods program has seen unprecedented growth in the last few years. Community development premiums grew 225% in 2014, generating more than $215,000 to support factory workers, cotton farmers, and their communities.
Workers and farmers all get a premium for each garment sold, so they’re able to use that money to create positive change and sustainable growth. Because of the staggering growth of Fair Trade goods, factories grew over 350% in 2014 alone, earning cotton farmers over $7,000 in Premiums, and factory workers over $200,000. As to where that money goes, the choice is up to the workers. From cash bonuses to health care and community programs and even factory safety classes, the choice is theirs; and this type of empowerment is changing the industry for the better.

Why do Fair Trade items cost so much?

This is the tricky part, and is mostly why Fair Trade products have a reputation for being unaffordable. Fair Trade products cost a bit more because the companies have to pay a premium for the goods (which as we mentioned above, the workers really benefit from). But some companies go a step too far and mark up the premium further to generate even more profit. And the workers don’t see any of that.

How much am I talking? Let’s use a simple Fair Trade organic cotton sheets set as an example. I went online to do a quick search for a 300 TC king set of Fair Trade organic cotton sheets and found the below prices. The totals vary from a high of $288 to a low of $169. That’s over a hundred dollar difference for the same amount of fabric.

Why are the costs so different from brand-to-brand? Some retailers may mark up not only their cost of goods, but also the Fair Trade premium, to generate more profit.

See the below breakdown for the pricing of King organic cotton sheets. For sake of simplicity let’s say the cost of a certified fair trade 300 thread count single ply long staple organic cotton sheet is $80. To make more money on that organic cotton sheet, some brands might add an additional markup to the cost of goods at the factory level which may result in an additional markup to the Fair Trade premium (the $7.50), generating more profit on the item.

**The numbers used are for illustrative purposes only.

The same product, but for two very different prices. One can always call and ask brands, what the exact dollar amount being paid for Fair Trade.

The SOL Philosophy

Fair Trade items get a reputation for being expensive for just that reason. And the startling truth is that the more expensive the Fair Trade item is, the less impact the company is making.


The more expensive Fair Trade items are, the fewer people will buy them. If no one is buying Fair Trade, workers won’t see as many benefits as they could.
But if more brands were to price their Fair Trade goods honestly and fairly, more people would purchase them. And if more people buy Fair Trade, the industry would continue to thrive and create positive changes like we mentioned above.
SOL believes that our choices make a difference. That’s why shoppers see prices like ours above. We don’t tack on to the Fair Trade premium. We don’t charge what we can. We charge what we need to. We believe that affordability will create momentum for positive social and environmental change.

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