Fairtrade Minimum Price
A producer sho uld get a minimum price for his product which should cover all the cost of production. This price has been already set for FLO for different countries. However, if the market price is higher, the producer gets the market price. In cotton, the minimum price is decided for seed cotton (Cotton with the seed ie before Ginning).

Fairtrade Premium
This is the additional money which a producer gets “over and above” the Fairtrade minimum price. This premium varies between 5-30% of “FOB” or “Farmgate” price of the commodity. This premium is set by FLO and varies for different products. This premium is purely used for improve business (training facility or getting new equipments) , community (School, Hospital or Road etc.) and environment. It is a sole decision of the group members where to spend this money.

A joint body
No individual can become Fairtrade producer. It has to be a group of small producers and this group democratically elects a joint body representing the interest of members. This joint body makes the final decision of managing the premium earned. There are set guidelines by FLO regarding functioning of this joint body which is periodically monitored.

A general assembly
It is a forum where all the members of the group meet and elect their joint body and decide how to spend their premium.

Pre-financing
For some of the products, the buyers are obliged to pay an advance to the producer group. This advance can run upto 60% of product value, depending upon the product. This gives producer groups, an access to cash, who are otherwise not able to arrange funds for production.

Long-term relationships
Buyers of Fairtrade products are encouraged to develop long-term and stable relationships with producer groups that help them in planning their production in advance. This gives a consistency and credibility to business model and producers are more secure for disposal of their produce and income thereof.