Fair­trade or fairly traded?

Eth­i­cal food scheme in cri­sis

The Guardian Weekly - - Front page - John Vi­dal

When four ex­ec­u­tives from Sains­bury’s su­per­mar­ket met farmers from some of Africa’s big­gest tea-grow­ing co-op­er­a­tives in a ho­tel in Nairobi last month it should have been a mu­tual cel­e­bra­tion of Fair­trade, the gold stan­dard of eth­i­cal trad­ing and the world’s most trusted and best-known food cer­ti­fi­ca­tion scheme.

But in­stead of back­slap­ping, the world’s largest re­tailer of Fair­trade prod­ucts pre­cip­i­tated the great­est cri­sis in the scheme’s 25-year his­tory by telling the 13 ma­jor tea groups and their 228,000 co-op­er­a­tive mem­bers that it in­tended to drop the Fair­trade mark for their pro­duce, and re­place it with the phrase “fairly traded”.

In place of the strict rules de­vised by farmers’ groups work­ing with in­de­pen­dent devel­op­ment ex­perts to guar­an­tee con­sumers that small-scale farmers are be­ing re­warded with de­cent pay and bonuses, the $29.7bn-ayear re­tailer said it planned to set up its own in-house cer­ti­fi­ca­tion scheme, set new eth­i­cal stan­dards and in­tro­duce a dif­fer­ent way to pay the groups.

From this month on­wards the com­pany will no longer la­bel its Gold, Red and other best­selling own-brand teas as “Fair­trade” but will call them “fairly traded”. Of­fi­cially it is a pilot, but the sus­pi­cion is that Sains­bury’s will then roll out the new stan­dard across other prod­ucts in­clud­ing ba­nanas and cof­fee.

To add to the woes of the Fair­trade brand, it was re­vealed last month that Tesco will move all its own-la­bel cof­fee from Fair­trade to an­other eth­i­cal cer­ti­fi­ca­tion scheme, the Rain­for­est Al­liance. Ac­cord­ing to the Gro­cer, a UK-in­dus­try mag­a­zine, this is likely to hap­pen in 2018 and fol­lows a sim­i­lar an­nounce­ment by the re­tailer ear­lier this year that it will do the same with its own-brand tea.

The farmers at the meet­ing with Sains­bury’s, mostly from Malawi, Rwanda and Kenya, were non­plussed. “Why change a sys­tem that has worked well for 25 years for both poor farmers and large su­per­mar­kets?” asked one. Had not the su­per­mar­ket reaped tens of mil­lions in profit and huge moral ku­dos by pi­o­neer­ing Fair­trade and invit­ing cus­tomers to pay a bit more for their pro­duce?

And in re­turn for meet­ing Fair­trade’s high so­cial, labour and en­vi­ron­men­tal stan­dards, the small farmers have also ben­e­fited to the tune of mil­lions of pounds from the Bri­tish con­sumer’s sense of fair play. “Has not ev­ery­one gained?” the tea farmers asked.

But the Nairobi meet­ing was sig­nif­i­cant be­cause Sains­bury’s is just one of many large food and drink com­pa­nies re­think­ing their sup­ply chains, look­ing to cut costs and de­vis­ing their own en­vi­ron­men­tal and labour poli­cies.

Be­cause Sains­bury’s is so im­por­tant for Fair­trade, the com­pany’s move could be the be­gin­ning of the end of the scheme, say some devel­op­ment and eth­i­cal trad­ing groups.

“This move by Sains­bury’s rep­re­sents a tip in the bal­ance back to the pow­er­ful re­tail­ers,” says Sophi Tranchell, man­ag­ing direc­tor of Di­vine Choco­late, the highly suc­cess­ful eth­i­cal trad­ing com­pany part-owned by tens of thou­sands of co­coa farmers in Ghana.

Fair­trade took off as an idea in the 1980s as aware­ness grew in Europe that small farmers in de­vel­op­ing coun­tries were be­ing ripped off by a global com­mod­ity trad­ing sys­tem that per­pet­u­ated poverty and pe­nalised the poor­est. In 1992, a group of Bri­tain’s lead­ing in­ter­na­tional char­i­ties, in­clud­ing Ox­fam and the World Devel­op­ment Move­ment, picked up on a small Dutch ini­tia­tive and set up the Fair­trade Foun­da­tion.

Twenty-five years later, the cer­ti­fi­ca­tion scheme, which guar­an­tees a min­i­mum price to farmers as well as a fi­nan­cial bonus, has grown from the com­mer­cial mar­gins to the re­tail main­stream. Fair­trade, world­wide, is now a $2bn-a-year global op­er­a­tion, backed by gov­ern­ments, char­i­ties, churches, the Women’s In­sti­tute, celebri­ties and su­per­mar­kets. In Bri­tain, where it is most pop­u­lar, nearly 80% of peo­ple are said to recog­nise its dis­tinc­tive logo. It has been a ray of op­ti­mism for mil­lions of peo­ple con­cerned about in­equal­i­ties be­tween rich and poor coun­tries and de­te­ri­o­rat­ing hu­man and labour rights.

“Fair­trade is grow­ing world­wide, es­pe­cially in south-east Asia and eastern Europe. It now ben­e­fits 1.6 mil­lion farmers world­wide, has 1,240 Fair­trade-cer­ti­fied pro­ducer or­gan­i­sa­tions in 75 coun­tries and last year a record £150m [$194m] was sent as so­cial pre­mium pay­ments to pro­ducer groups,” says Darío Soto Abril, the Colom­bian chief ex­ec­u­tive of the In­ter­na­tional Fair­trade or­gan­i­sa­tion.

“The need to change a global food sys­tem that ex­ploits both peo­ple and planet is greater now than ever,” says Abril. “There are new chal­lenges. Cli­mate change is mak­ing life harder for small­holder farmers, there is child ex­ploita­tion, and many work­ers in de­vel­op­ing coun­tries are paid well be­low even the ex­treme poverty level. Fair­trade is chang­ing to take these new chal­lenges into ac­count.”

Mean­while, eth­i­cal trad­ing that cov­ers non-food items from cloth­ing to crafts has grown steadily in Europe

and the US and is now thought to be worth bil­lions more a year and a va­ri­ety of cer­ti­fi­ca­tion schemes have sprung up, which re­tail­ers are in­vited to join, for a price.

For a while the cor­po­rates were happy to pay and have their sup­ply chains in­de­pen­dently au­dited, but in re­cent years some of the big­gest have de­cided to go it alone. Chains in­clud­ing Costa, Star­bucks and McDon­ald’s, and pro­duc­ers such as Unilever, Marks & Spencer and Mon­delez/Cad­bury, have de­vised their own schemes. But their stan­dards vary and con­sumers have to trust the com­pa­nies.

The frac­tious Nairobi meet­ing made clear the de­spair felt by small farmers at the global trad­ing sys­tem, in which su­per­mar­kets and ship­pers make big prof­its from im­port­ing raw pro­duce from de­vel­op­ing coun­tries but barely any­thing goes to the farmers. It also showed how valu­able a good eth­i­cal trad­ing scheme can be for small farmers.

Ac­cord­ing to peo­ple at the meet­ing, the more the Sains­bury’s chiefs promised them con­tracts, ad­vice and ac­cess to data, and told them the new in-house scheme would match their present in­come, the more wor­ried they be­came. Their fears cen­tred on the “so­cial pre­mium”, the money that Fair­trade pro­vides to farmers on top of the guar­an­teed min­i­mum price they get for their pro­duce. This money goes straight to the farmers who agree to spend it on so­cial schemes such as pen­sions, sick pay or ed­u­ca­tion which they them­selves choose and con­trol.

The pre­mium money, it emerged at the meet­ing, was in fu­ture go­ing to have to be ap­proved by a new Sains­bury’s foun­da­tion. “We feel be­trayed. We are ex­pected to cross our fin­gers and hope that Mr Sains­bury helps us. The power to give you money or not de­pends on them. It is good if they are plan­ning to re­ally help us but not at the cost of dis­em­pow­er­ing us,” said one man, who asked not to be named and who rep­re­sents thou­sands of tea farmers. “We feel that our rights are be­ing taken away from us, this feels like colo­nial­ism,” said a sec­ond at the meet­ing. “We want to be part­ners and friends. You want to con­trol me. I don’t un­der­stand how a big re­tailer is chas­ing the pre­mium go­ing to poor peo­ple,” said a third.

Sains­bury’s apol­o­gised for giv­ing the tea-grow­ers such short no­tice of the changes. But it has re­fused to con­sult fur­ther.

Sains­bury’s se­nior ex­ec­u­tives in­sisted last month that the new scheme was a pilot that would build on Fair­trade stan­dards. “By pro­vid­ing farmers with ad­vice, skills, re­sources, fund­ing and op­por­tu­ni­ties along­side ac­count­abil­ity, as well as lis­ten­ing and learn­ing from them, we be­lieve we can help em­power them to se­cure a bet­ter qual­ity life for them­selves, their work­ers, fam­i­lies and broader com­mu­ni­ties,” said Ju­dith Batchelar, direc­tor of brand at Sains­bury’s.

Com­pa­nies set­ting up their own eth­i­cal trad­ing schemes all say they want to im­prove work­ers’ con­di­tions and pay. Some, such as Mon­delez/ Cad­bury which pulled out of the Fair­trade scheme last year, have promised to in­vest over $400m in their co­coa sup­ply chain, but it has been sug­gested that oth­ers are choos­ing cut-price schemes that do not guar­an­tee bet­ter terms or more money.

Devel­op­ment groups ques­tion their mo­tives. “Why would a com­pany like Sains­bury’s that has been such a mas­sive cham­pion of Fair­trade de­cide to take the trusted mark off their tea prod­ucts, and in the process take power and value away from small African pro­duc­ers who al­ready have so lit­tle? At a time when sus­tain­able devel­op­ment and hu­man rights are go­ing up the cor­po­rate agenda, it’s hard to fol­low the com­pany’s rea­son­ing,” said Rachel Wil­shaw, Ox­fam’s eth­i­cal trade man­ager.

A state­ment signed by Ox­fam, Cafod, Chris­tian Aid, the Women’s In­sti­tute and sev­eral ma­jor UK-based eth­i­cal trad­ing and co-op­er­a­tive groups to­gether rep­re­sent­ing mil­lions of con­sumers, urged it to re­think its plans.

“The Fair­trade mark has be­come syn­ony­mous with eth­i­cal trade and qual­ity for UK con­sumers. Sains­bury’s new scheme risks un­der­min­ing all that has been achieved over the last 25 years. The stan­dards are un­clear, and farmers and pro­duc­ers may no longer be able to de­cide them­selves di­rectly how the money raised is spent to help their com­mu­ni­ties,” said the groups.

Con­ver­sa­tions with the farmers and Sains­bury’s sug­gest it has been plan­ning to pull out of Fair­trade for two years. Sales of Fair­trade prod­ucts are said to be slip­ping and the com­pany feels it is not get­ting value for the $77.6m which it says it has “in­vested” in eth­i­cal trad­ing since 1994.

Al­though it sells over $258m of Fair­trade pro­duce a year, over­all com­pany prof­its dropped 8% last year and in a fierce re­tail en­vi­ron­ment it now wants more credit for in­vest­ing in poor farmers. It also sug­gests that it wants its money to be seen by the pub­lic to be bet­ter spent.

Sains­bury’s chief ex­ec­u­tive Mike Coupe is now on the de­fen­sive. “We most cer­tainly don’t pre­tend to have all the an­swers – far from it – and that’s why this project is about test­ing and de­vel­op­ing g new ap­proaches, col­lab­o­rat­ing with th ex­pert part­ners rs and lis­ten­ing too our farmers and nd pro­duc­ers – find- ing out what works, and what can be taken to scale and adopted to se­cure a sus­tain­able sup­ply chain that ben­e­fits both our sup­pli­ers and our cus­tomers,” he said.

“The prin­ci­ple of a com­pany set­ting its own stan­dards is fine, but the ex­e­cu­tion here is flawed,” said Mike Gid­ney, chief ex­ec­u­tive of the Fair­trade Foun­da­tion in Lon­don. The group is funded by the li­cences it is­sues to com­pa­nies and stands to lose tens of thou­sands of pounds a year from Sains­bury’s with­drawal from tea – and far more if the re­tailer drops all its other lines.

“We have al­ways been sup­port­ive of com­pa­nies who want to set up in­house schemes and cre­ate their own stan­dards. Mon­delez are adding to what we have done, putting $400m into co­coa. Oth­ers, like Sains­bury’s, are sub­sti­tut­ing their own schemes and risk rev­ers­ing the gains. Some in­de­pen­dent schemes are good, but oth­ers are not.”

Fair­trade is in real dan­ger but it has come un­der fierce at­tack many times. Free-mar­ket think­tanks, in­clud­ing the In­sti­tute of Eco­nomic Af­fairs, claim it is a bar­rier to free trade which they say has led to many mil­lions of peo­ple emerg­ing from poverty. Aca­demics have shown that it some­times fails to im­prove the lives of very lowwage work­ers, and jour­nal­ists have ex­posed how some com­pa­nies and pro­ducer groups can abuse it. But its big­gest test is likely to be Brexit. New taxes on im­ports from the world’s poor­est coun­tries could cost small pro­duc­ers bil­lions of dol­lars.

“Too of­ten in the past, new trade deals have harmed, not helped, the poor­est peo­ple. Leav­ing the EU’s sin­gle mar­ket and cus­toms area with­out putting in place mea­sures sim­i­lar to the ones which cur­rently pro­tect farmers in the poor­est de­vel­op­ing coun­tries would pun­ish mil­lions of farmers,” said Gid­ney. He wants to keep talk­ing with Sainsb Sains­bury’s. “We are ope open to change. We wa want com­pa­nies to ow own their sup­ply ch chains and take resp re­spon­si­bil­ity for the so­cia so­cial and en­vi­ronme men­tal im­pacts they are hav­ing. There is no sin­gle route to a bet­ter trad­ing sy sys­tem. We will sur­viv vive this. We have to wo work to­gether.”

‘Be­trayed’ … African­frican tea pro­duc­ers stand d to lose out if Fair­trade ends

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