The Fairtrade requirements that land on procurement, not the technical desk

Coverage of the Fairtrade Trader Standard v3 has been almost entirely about traceability and human rights due diligence. Reasonable enough, since that is where the technical work sits.

But the standard has five chapters, and the last one is about money. Contracts, prices, premiums, payment timing, pre-finance, and a section that exists specifically so the certification body can sanction sharp practice. Almost none of it belongs to the person who owns your Fairtrade file.

If your site buys Fairtrade ingredients, someone in procurement or finance is currently making decisions that are audited against this chapter, quite possibly without knowing the chapter exists.

First, work out which one you are

Nothing in this chapter applies to everyone. It applies to Fairtrade payers, Fairtrade conveyors, or first buyers, and which of those you are is decided by product category, not by preference.

A Fairtrade payer is the trader responsible for paying at least the Fairtrade Minimum Price and the Fairtrade Premium to the producer. A conveyor receives that money from the payer and passes it on. A first buyer is whoever buys directly from the producer.

The general rule is that the first buyer is the payer. The exceptions are where the Fairtrade Minimum Price is set at Free on Board level and an exporter is involved, in which case the importer becomes the payer and the exporter acts as conveyor. Annex 1 of the standard sets this out product by product, and it varies more than you would expect. In coffee and cocoa, selling through an exporter makes the importer the payer. In flowers and plants, the importer is always the payer. In cane sugar, the buyer of the sugar is the premium payer by default. In cotton, a ginner buying seed cotton may act as conveyor, pushing payer status to the next buyer.

Get this wrong and you are either failing requirements that apply to you or building processes for requirements that do not. The standard says plainly that buyers must check their potential status as Fairtrade payer with the certification body.

The contract that now has to contain seventeen things

Requirement 5.1.2 is new and applies from 1 January 2027. If you are a Fairtrade payer, your purchase contract with the producer must clearly indicate, as a minimum:

the FLO-ID and name of the producer organisation, agreed volumes, quality specifications, price, applicable price differential, the amount of Fairtrade Premium indicated separately from the price, who is responsible for paying price and Premium, a transparent and traceable form of payment, the date of the exchange rate where payment is in a different currency to the price table, the terms and amount of pre-finance where applicable, procedures for quality problems, delivery terms using Incoterms, payment terms per the product standard, a definition or mention of Force Majeure, the applicable jurisdiction, and an alternative dispute resolution mechanism.

And then a sentence that is easy to skim past: both contracting parties have equal contract termination rights.

Conveyors have their own version at 5.1.4, which adds the payment modalities for the price differential and the Premium, including timelines and the reporting system.

That is a contract template rewrite, and it is a legal review rather than a technical one. If your Fairtrade purchases currently run on a standard purchase order and an emailed spec, you do not have a contract that meets this.

Conveyors also owe the producer a quarterly report under 5.1.5: for each purchase contract, the exact volumes sold, the price differential and Premium due, and the FLO-ID of the buyer it went to.

Price is a floor, not a target

The pricing rules are mostly carried over, but they are worth stating plainly because they constrain negotiation in ways commercial teams may not expect.

You pay at least the relevant market price. If that sits below the Fairtrade Minimum Price, the Minimum Price applies. The Minimum Price is an absolute minimum and quality discounts cannot be taken from it. You agree the source of the market price with the producer, and if what you pay deviates significantly from it, you have to be able to justify why.

Where the Minimum Price is set at a different point in the chain than where you are buying, you adjust it, and the calculation has to be transparent and reflect real costs. You may only deduct costs that are actually included in the Minimum Price. If the producer carries a cost that is not included, packing being the standard example, you add it.

The Premium sits on top of the price and no discount can be taken from it at all. Where it goes depends on the producer set-up: to the organisation for a small producer organisation, to the Fairtrade Premium Committee in a hired labour situation, and to a separate account under the Promoting Body in contract production.

Three clocks, and one of them is already running

Conveyors, 15 calendar days. Requirement 5.3.2 applied from 1 July 2026. If you are a conveyor, you pay the price differential and the Premium to the producer no later than 15 calendar days after you receive payment from the Fairtrade payer. You can agree a different timeframe in writing with the producer, in which case payment is no later than 30 days after the end of each quarter. This is live now, not next January.

The organic differential, 15 calendar days. Requirement 5.3.3 is new and applies from 1 January 2027. The organic price differential goes to the producer no later than 15 calendar days after receipt of the documents transferring ownership. Late payment is permitted only in a narrow case: where the need for a laboratory test was agreed and written into the contract, and payment follows no later than 30 calendar days after the product arrives in the destination country.

Payers, "timely". Requirement 5.3.1 says payers pay in a timely manner and points you at the product standards for the actual number. So the specific deadline for your commodity is in a document this standard does not contain.

Pre-finance, on request, at 60 percent

This one is new from 1 January 2027 and it is a cash flow commitment, not a policy statement.

Under 5.4.1, if you are a first buyer and the producer requests it, you pre-finance at least 60 percent of the Fairtrade contract value, or facilitate that a third party does. The exemption is narrow: you are excused only where pre-finance is not legally allowed in the country you operate in. And you must not pressure the producer into declining, for instance by making the refusal a condition of signing.

If you provide it directly, 5.4.2 requires a written agreement covering the amount, the duration, payment terms, any interest, any other charges, what happens if there are quality problems or non-delivery, and repayment terms if the producer loses certification. The guidance says interest must be on terms more advantageous to the producer, and that zero interest is best practice.

If you facilitate it through a lender instead, 5.4.3 expects real effort: acting as a reference for the producer, confirming the Fairtrade contract is valid and usable as collateral, and agreeing how the contract payment will be routed. The evidence expected is a support letter confirming the relationship, the contract, the volume or value, and the payment terms.

Sourcing plans

Requirement 5.5.1, new from 1 January 2027. On request from the producer, payers and conveyors provide a sourcing plan and relevant market information.

The guidance sets a low but real bar: at minimum a realistic estimation of future purchases. If future purchases are genuinely hard to plan, you say so in the plan, and the requirement still applies. You cannot answer it with silence.

Trading with integrity, which is where the teeth are

Section 5.8 exists, in the standard's own words, to give the certification body the capacity to sanction practices that create unfair competition but are not caught by a specific requirement.

The catch-all at 5.8.1 is not new, but the examples list is worth reading with your payment terms in front of you. It includes late payments more than 30 days after delivery, returning or cancelling deliveries without full compensation, imposing marketing or wastage costs on the producer, unilaterally changing contract conditions, refusing written contracts, retaliating against a supplier after a complaint, exclusivity and non-competition clauses, demanding prices below cost, charging for services that were not asked for or are above value, misuse of confidential information, and poaching members from producer organisations.

Three requirements underneath it are new from 1 January 2027, and two of them reach further than people will expect.

No tying. Under 5.8.2 you cannot buy Fairtrade certified product on the condition that the producer organisation also sells you non-certified product at a discount, or at a price significantly below what it normally gets for non-Fairtrade.

The price floor follows the product down the chain. Requirement 5.8.3 applies to all traders, not just payers: you do not buy from your suppliers or sell to your customers below the Fairtrade Minimum Price and Premium set at Ex Works and Free on Board level, or the equivalent at Free on Truck or Cost Insurance and Freight level. That is a constraint on mid-chain trading and on what you can quote a customer, and it applies whether or not you have any direct relationship with a producer.

Payment terms can themselves be the breach. Under 5.8.4 you must not demand payment terms that push financial costs onto the producer organisation in a way that erodes the Minimum Price and Premium. You must also include all deductions from the invoice amount transparently in your payment information.

Extended payment terms are ordinary commercial practice in food manufacturing. Under this requirement, applied to a Fairtrade producer, they are a compliance question.

Two things the document itself gets wrong

Worth knowing so you do not think you have missed something.

The chapter has no section 5.7. It runs 5.6 Sharing risks, then jumps to 5.8 Trading with integrity, in both the contents page and the body.

And requirements 5.3.2 and 5.3.3 carry the same title, "Timely transfer of Premium and price differential by conveyors", despite covering different things. 5.3.3 is the organic differential. The shared guidance note under both is written for 5.3.2 and does not describe what 5.3.3 actually requires.

Your Monday morning list

1. Establish whether you are a payer, a conveyor or a first buyer. Check Annex 1 for your commodity and confirm with your certification body. Nothing else in this chapter can be scoped until this is settled.
2. Send chapter 5 to procurement and finance. Most of it is not a technical requirement and will not get done by the person who holds the Fairtrade file.
3. Put your Fairtrade purchase contract next to the seventeen-point list. Anything missing is a January 2027 gap, and contract templates go through legal, which takes months.
4. If you are a conveyor, check your payment timing now. Fifteen calendar days from receipt has applied since July.
5. Ask whether any producer has requested pre-finance. Sixty percent on request lands in January 2027 and it is a treasury question, not a compliance one.
6. Review your standard payment terms against 5.8.4. If your terms push financing cost onto a producer organisation, that is now a named unfair trading practice.
7. Check nothing you sell mid-chain is priced below the Minimum Price and Premium. Under 5.8.3 that applies to your sales, not only your purchases.

Information, not advice. Always check the Fairtrade Trader Standard before making decisions that matter.