One of the most important benefits of the Fairtrade model has nothing to do with the price floor and is thus perfectly compatible with a free market system: the requirement to work directly with producers, whether they are farming co-operatives, plantations, or small-scale craft manufacturers. Fairtrade importers must, wherever possible, buy directly from a farming co-operative, a farming estate, or local producer group. While estates, plantations, and large-scale farming groups have historically enjoyed access to export markets, small-scale producers are typically isolated from direct export access unless organized into co-operatives or similar group-selling structures. The organization of small-scale producers into co-operatives or larger trading groups addresses several of the market failures outlined above. Simply improving the trading standards already increases producer income, by allowing them to capture more of the prevailing market price, even if they are unable to sell at the higher Fairtrade price. The major microeconomic market failures, and how the Fairtrade requirement to work with co-operatives addresses them, are outlined below.

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Thriving in a hostile envrionment.pdf	79.84 KB