Paying fair prices

Fair prices have been defined and adopted by international bodies only in the case of a few commodities. Without a benchmark, the definition of a "fair price" is difficult. Traidcraft, a UK-based fair trading company has addressed the "fair price" issue in three ways: 1. All the producers visited were asked how they would define a fair price for their products and whether they thought the prices paid by the company measured up to their expectation of fairness; 2. Prices paid by the company were compared where possible with prices producers could obtain selling to other traders; 3. Products appearing in the company's catalogues were listed alongside information on cost and profit to the producer. As a result of its fair trade objectives, Traidcraft pays US$6.75/kg for bulk instant coffee from a factory in Tanzania. The factory supplies the same coffee to a multinational retailer at US$4 to 4.50/kg. At the same time, it is considered that, in 1994, coffee farmers in Tanzania generally received less that half the 'international fair price' for their coffees. Traidcraft also pays 32% more for its Tanzanian honey than the honey coop's other export customer and 55% above the local market price; the "fair price" sales provide the coop with a profit of 33%, which have enabled it to replace some of the traditional bark hive which cause damage to trees.