The Fair Trade Revolution

John Bowes

• Publisher: Pluto Press
• Year: 2010
• Print ISBN:
  9780745330785
• Edition: 1
• eBook ISBN:
  9781783713905
• Topic: Business
• Subtopic: International Business
• Index: Business

From Sainsbury's to Cadbury's, the Fair Trade campaign made sustainability a cornerstone for food conglomerates. Built around the experiences and perspectives the key individuals who kick-started the social movement, this book examines the challenges ahead now that Fair Trade has 'gone mainstream'. Fair Trade has come a long way in the last 20 years, celebrating one of the most successful social movements; the authors set their sights on their next goals. Emphasising the importance of ensuring that farmers and other producers remain the main beneficiaries; examining the tensions between large and small operators; the impact of a recession; changing environmental policy; and the danger of large operators embracing Fair Trade as a marketing exercise, rather than a practice: some of the leading lights of the Fair Trade movement assess Fair Trade's future. With chapters from Executive Director of the Fairtrade Foundation Harriet Lamb, and the founder of the first Fair Trade Town, Bruce Crowther, this book will inspire activists and consumers to keep making fair choices.

1

Introduction
A Brilliant Idea

John Bowes

It is perhaps a little predictable to start a book about fair trade by referring to its dramatic growth over recent years. But the results have been truly impressive. The FAIRTRADE Mark is now almost ubiquitous and recognised by more than 70 per cent of adults in the United Kingdom.¹ And, in a decade, sales of Fairtrade products have increased more than forty-fold to a staggering £800 million in 2009.²

This is a spectacular achievement. It is a level of success which few can have anticipated.

Fair trade’s remarkable progress reflects the innate decency and instinctive humanitarianism of the UK consumer; the enthusiasm and commitment of thousands of active supporters; the focused and determined leadership of the Fairtrade Foundation; and the visionary, and sometimes courageous, strategic determination of key actors in the UK retail business.

Ordinary people, anxious to make a positive connection with, and in support of, impoverished farmers in the developing world, have embraced the concept of fair trade. The development of the FAIRTRADE Mark, and the determination of the Fairtrade Foundation to keep pace with rapidly accelerating customer demand, has played a critical role in providing consumers with a simple mechanism through which to give a practical manifestation of their desire to support the poor and under-privileged. The Co-op’s pioneering role in introducing the FAIRTRADE Mark onto own brand products; Tesco’s introduction of a comprehensive own brand range in 2004; and Sainsbury’s decision to stock only Fairtrade bananas – all represent seminal moments in establishing momentum for the fair trade revolution.

With all of this activity, and the spin and hype which has surrounded it, a disinterested observer might be excused for concluding that some kind of fundamental and irrevocable change has taken place and that the world trading system was being seriously challenged by a consumer-led revolution. Unfortunately this is still far from being the case.

It has been estimated that fair trade may, currently, be benefiting more than 7 million people in the developing world.³ This is an impressive achievement but set in the context of the sheer scale of world poverty it still represents only a relatively small contribution towards addressing an enormous problem.

It is estimated that 1.4 billion people, one fifth of the world’s population, are trying to survive at or below the World Bank’s official poverty line of just $1.25 a day. And 2.6 billion people, about 40 per cent of humanity, are living on less than $2 a day.⁴

These astonishing numbers are so large that it is difficult to fully comprehend them. They reflect the appalling collective failure of human society. And the scale of the failure becomes even more dramatic when we consider disparities in world income. The poorest 40 per cent account for just 5 per cent of global income whilst the richest 20 per cent take three quarters of the pot.⁵ The truth is that fair trade is still very much in its infancy. Those who are committed to making a real difference in the developing world will recognise that we are not at the end of a process, or anywhere near the end, but really only at the very beginning. If we strip away all of the commercial spin, and occasional wishful thinking, we might be left with the uncomfortable conclusion that, far from capitalising on a consumer movement, we have perhaps not yet recognised its full potential and have so far failed to put mechanisms into place to ensure that its momentum can be fully realised.

There have been a number of surveys on ethical consumers in recent times and what they broadly conclude is that about 5 per cent of UK adults take ethical issues very seriously while around another 20 per cent have an empathy with the ethical agenda.⁶ Fair trade has a strong appeal to both of these groups and, therefore, it doesn’t take a degree in advanced mathematics to conclude that fair trade ought to appeal to about a quarter of all adults. If we consider that the UK grocery market is estimated to be worth around £140 billion it is clear that sales of Fairtrade products still have a long way to go. With annual sales of £800 million they still account for less than 1 per cent of total grocery sales.

The concept of fair trade has been around since the 1960s when growing concern about neo-imperialism, the growth of multinational corporations, and the plight of producers in the developing world gave birth to the concept of ‘Trade not Aid’. In 1965 Oxfam launched ‘Helping-by-Selling’ – a programme which sold imported handicrafts, from cooperatives and community enterprises in the developing world, through its mail order catalogue and its high street stores. In 1969 the first Worldshop, a business dedicated to selling handicrafts produced under fair conditions, was launched in the Netherlands; it was successful and further shops were subsequently introduced in other Western European countries. In 1985 Twin (Third World Information Network) was founded with the support of the Greater London Council; politically subversive in its early days it initiated its distinguished record as a fair trade pioneer by importing cigars from Cuba and rocking chairs from Nicaragua.

The initial development of fair trade products was not based on any conception of mainstream market potential but on the genuine concerns of a relatively small number of activists about poverty-stricken farmers in the global south. These pioneers sought to establish new trading models whereby producers achieved improved market access and received a fairer reward for their products. However, with the marketing focused on alternative trading organisations, sales were dependent upon a narrow but committed activist base. As important and well-intentioned as these people were, a fundamental sea change was required if these products were ever going to have a material impact in the marketplace.

In 1988 Solidaridad, a Dutch Christian development agency, established Max Havelaar, the first fair trade label, and began selling fair trade coffee to Dutch supermarkets.⁷ The initiative offered disadvantaged producers a fair price for their crop and independent certification allowed the goods to be sold into the mainstream for the very first time. This was a brilliant idea and a groundbreaking innovation. Within a few years it had been replicated across Europe and North America and its success led to the establishment of the Fairtrade Labelling Organizations International (FLO) in 1997. Based in Germany, its primary task has been to bring all of these national initiatives together behind universal fair trade standards and a single mark.

The development of the FAIRTRADE Mark not only offered the customer a simple shorthand, implicitly communicating proof of audit and accreditation, it also opened up major new distribution opportunities by providing retailers with a credible and recognisable vehicle through which to focus and deliver on their own ethical credentials. In addition, its resultant ubiquity has helped to reinforce the fair trade message and the universal recognition of the central issues involved.

The FAIRTRADE Mark represents a visual guarantee that a product has met international Fairtrade standards. These include a guaranteed minimum price set at a level which ensures that the producer is able to cover all costs necessary for sustainable production. This is not a fixed price. If the market price for a product increases beyond the Fairtrade minimum then the producer will receive the higher of the two prices. The minimum price is set by FLO and ensures that, even when world prices fall, the farmer always receives enough money to cover costs and stay in business.

The mark also guarantees the Fairtrade premium. This is a sum of money, in addition to the product price, which is paid for investment in social, environmental or development projects. The premium is fixed by FLO and its use is determined democratically by producers and/or workers within the farming business. It might, for instance, be invested in healthcare, education, or be used to support commercial projects which support the sustained viability of the farming enterprise.

The standards also recognise that importers in the north will, under usual circumstances, have much better access to credit than producers in developing countries. Accordingly, importers are required to be prepared to pre-finance up to 60 per cent of the purchase value of seasonal crops. This can sometimes be critical for producer cooperatives as they often need to pay their members at time of delivery in order to compete with private traders.

The Fairtrade standards also emphasise the importance of partnership between trading partners. Long term trading relationships allow producers to plan with the confidence that they have a secure market for their products. This allows them to build capacity, invest in technology and strengthen their organisations. Indeed, there is substantial evidence to suggest that sustainable market access is as important as Fairtrade premium prices for many marginal producers in the developing world.⁸

Producers also have to demonstrate that they are adhering to specific economic, environmental and social requirements. The initial standards were established with the intention of establishing criteria for small-scale farmers and, therefore, focused on cooperatives or similar associations. These organisations are required to have a democratic structure and a transparent administration; facilitating effective control of the management by empowering their members. Discrimination on the basis of race, colour, sex, religion, political opinion, national extraction or social origin is strictly outlawed.

Separate standards have been established to apply to companies who employ hired labour. Where workers are employed they must have the right to freedom of association and collective bargaining, be free from any form of discrimination, have fair conditions of employment, and operate in a safe working environment. Children under 15 cannot be contracted for employment.

Producers’ organisations must ensure that their members limit their impact on the natural environment by making environmental protection an integral part of farm management. New planting in virgin forest areas is strictly prohibited. Organic production is encouraged but, where this is not socially and economically practical, the use of pesticides has to be minimised. FLO publishes a list of agrochemicals which are strictly prohibited. The use of genetically modified organisms are also banned.

Clearly, these standards have important implications for both producers and traders; both have obligations to fulfil if the integrity of the FAIRTRADE Mark is to be protected. In order to ensure that these obligations are being met, a comprehensive auditing process has been put into place.

FLO-Cert is an international certification company which is owned by Fairtrade Labelling Organizations International but which is effectively autonomous and operates independently. All processors and exporters in the producer countries must have their products certified by FLO-Cert. The process is simple. Producers who apply for certification are visited by an inspector who assesses their level of compliance with Fairtrade standards. The inspector’s report is then considered by the FLO-Cert certification committee which will only issue a certificate if the required standards have been met. Producers already in the system are re-inspected on an annual basis in order to ensure that the standards are being maintained.

The products of importers and companies outside of the producer country are certified by either FLO-Cert or by the local labelling authority. The Fairtrade Foundation is responsible for certifying products entering the UK. It is their role to provide an independent certification of the trade chain. In effect, they license the FAIRTRADE Mark to companies for use on products which comply with Fairtrade standards. They set up a licensing agreement with each company specifying the products which may carry the mark, approve every separate use of the mark, and audit each licensed company’s Fairtrade activities.

The Fairtrade Foundation’s mission is to work with businesses, community groups and individuals to improve the position of producers in the south. One of their key activities has been to raise public awareness of the need for fair trade and the importance of the FAIRTRADE Mark. In this, they have been remarkably successful.

They have tapped the potential of the activist movement by encouraging local campaigns in support of fair trade, most notably through the concept of Fairtrade towns. This idea first drew breath in the small town of Garstang when, in 2001, a small group of activists persuaded local businesses, and the local authority, to make an active and positive commitment to fair trade. There are now 400 Fairtrade towns, 1,500 Fairtrade schools and 4,000 faiths groups, all actively supporting fair trade within their communities. These initiatives had the dual impact of raising an awareness of the fair trade concept and, initially, helping to create a small but growing market for Fairtrade products.

However, the Foundation’s most important contribution has resulted from the effective way it has leveraged the potential of the FAIRTRADE Mark. Whilst the early marketing of fair trade products focused on alternative trading organisations like Oxfam, the development of the FAIRTRADE Mark opened up dramatic new opportunities for these products. The 1990s witnessed the development of a number of specialist businesses, committed to fair trade, which, together, represented a sea change in the marketing of fair trade products. They recognised the need to improve the public’s perception of the quality of fair trade products. Whatever the intrinsic quality of the basic raw materials some of the earliest products were not well profiled for European tastes and for some the initial product experience created a lingering prejudice. Low levels of customer satisfaction were bound to inhibit market penetration. If fair trade was to break into the mainstream it had to reposition its product offer on a much stronger quality platform. The respective introductions of Cafédirect, Divine chocolate and OKE bananas represented pivotal moments in a shift towards the mainstream. The development of specialist brands was a determined attempt to reach an emerging ethical market via the shelves of high street retailers.

But the introduction of the FAIRTRADE Mark also paved the way for own brand development and with this fair trade was well set on the growth pattern with which we are now so familiar. The Co-op led the way when it introduced the first Fairtrade own brand product in the millennium year; a milk chocolate bar, marketed in conjunction with the Day (Divine) Chocolate Company, and carefully profiled to match UK tastes.

While the Co-op was the early pioneer, real volume progress could not be made without engaging the big four multiple retailers – Tesco, Asda, Sainsbury’s and Morrisons – who dominate UK food retailing and together account for about 75 per cent of the grocery market. All four of these retailers put an early toe in the market but the real breakthrough came in 2004 when Tesco, by far the largest UK retailer, introduced a comprehensive range of Fairtrade products.⁹ And it was the multiple retail trade which has subsequently driven the growth of fair trade in the UK. They have provided critical access to millions of customers and been proactive in developing new Fairtrade products. What started as a small business based on the sale of a few handicrafts, and a little bit of coffee, now encompasses a great many different products including bananas, pineapples, melons, mangoes, grapefruit, chocolate, tea, cotton, honey, juices, nuts, rice, wine, flowers, and footballs.

But for some these changes presented a dilemma. Many activists and campaigners were concerned that this leap from ...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Foreword by Mary Robinson
• Preface by John Bowes
• Contributors
• 1 A Brilliant Idea
• Colour Plates
• Part I – Producers
• Part II – Consumers
• Part III – Future Challenges
• Conclusion
• Index