What is the difference between Fair Trade and Direct Trade?
Fair Trade and Direct Trade are two sourcing approaches that aim to create better outcomes for producers, but they differ significantly in structure, oversight, and impact. Fair Trade USA™ is an independent nonprofit, and the leading 3rd party certifier of Fair Trade products in the US. Direct trade is a general sourcing model in which buyers purchase products directly from producers—typically with no third-party certification or standardized criteria.
Fair Trade Standards
Fair Trade USA standards require fair pay, safe working conditions, and the distribution of Community Development Funds for workers to use on projects of their choosing. Every product with the Fair Trade Certified™ label meets rigorous, independently verified social and environmental standards. As one of the most recognized and trusted sustainability certifications, Fair Trade Certified™ helps consumers cut through greenwashing and identify products that drive real impact.
Direct Trade Standards
Direct trade is the process of sourcing products “directly” from farmers. This means that suppliers are in direct communication with farmers to order their products straight from the source. This can benefit farmers by creating direct connections and helping them avoid volatile markets, but it can also isolate farmers from getting better deals within the wider market. Another risk for producers is that they otherwise would often be part of a cooperative or larger worker-body which provides a broad range of support and infrastructure to their members. By operating outside of those groups, farmers and workers operate without a safety net if the companies sourcing from them decide on a different supplier or go out of business. With no regulated set of standards, direct trade is a case-by-case model that has varying impacts and implications.
Consumer Impact
While direct trade can be an ethical model, it’s difficult for consumers to verify ethical claims without certification or consistent, transparent oversight. When consumers see the Fair Trade Certified label on a product, they know it meets strong ethical and environmental standards that are independently audited for assurance. Fair Trade Certification has a demonstrated impact in building strong and resilient supply chains, which is why so many companies and brands choose to offer products from Fair Trade Certified farmers, factories, or fisheries.