If you feel that the world of Fair Trade has its very own language – do not worry! With this glossary we would like to guide you through the specific technical terms used by FLOCERT, Fairtrade International and the World Fair Trade Organization (WFTO).
The term contract production has a different meaning within WFTO and Fairtrade. It is therefore important to distinguish the meaning in relation to its context.
In Fairtrade contract production is a production set-up (regulated by Fairtrade Standards) which involves small producers who don’t have a formal structure, or who are organized into structures without legal status. These can join Fairtrade if they partner with an intermediary organization such as an exporter, processor, private enterprise or non-governmental organization (NGO) (see promoting body) to which they contract for the production and sale of a product. The intermediary organization contributes to the producer’s social and economic development with the aim of helping them become autonomous and, over time, comply with the Fairtrade Generic Standards for small producer organizations.
In contrast to the above, WFTO uses the term contract production to refer to a production set-up where producers have an agreement with a buyer, sometimes before harvesting and most often before starting cultivation. Defined conditions might concern prepayments, delivery inputs by the buyer, cultivation methods, delivery period and price. The (small) producers either don’t have a formal structure or are organized into structures without legal status.