What does 'advance credit' mean in Fair Trade?

What does 'advance credit' mean in Fair Trade?

Sam Bills (Manager) gives expert video advice on: Are there Genetically Modified Organisms (GMOs) in Fair Trade products?; Do governments support Fair Trade? and more...

Advance credit is an important part of fair trade, because often in working in places with disadvantaged producers, one of the major obstacles that these producers face is having some sort of capital to begin to form a business with. It takes different shapes for different fair trade organizations. For Ten Thousand Villages, the advance credit means a payment of 50% of the order up front. With that 50%, the co-op is able to purchase the raw materials that they need to fill that order. It is giving some of the resources up front that a business needs in order to get things going, and sometimes helping them overcome that obstacle of not having access to credit and not having capital to work with