The fair trade price covers the cost of producing the item, including social and environmental costs. It must provide producers with a decent standard of living and a margin for investment. In the case of primary commodities like coffee or cocoa, where the price is determined on international exchanges, the fair trade movement pays the international price, plus an additional margin. Fair prices to producers need not always mean higher prices for consumers. Approximately half the prices for fair trade products are higher than the market price, and half are lower.
Many products are highly competitive.
This is so for the recently launched 'fair trade' labelled bananas sold in the Netherlands and Switzerland. The absence of intermediaries in the distribution chain, and the invaluable contribution of the movement's volunteers, make this possible. Not all consumers expect to pay a price which does not guarantee a decent standard of living to the producers. Recent surveys reveal that Europeans are becoming increasingly discerning in their choices and are more willing to pay a higher price for a product reflecting criteria they believe to be important. About two thirds of Dutch and Belgians also knew about fair trade labelling.