Globalisation and commercialisation has increased the rate of change across many agricultural and industrial sectors. Organisations and charities are trying to move with the times but need to retain their vision and focus on the World Fair Trade Organisation (WFTO) principles of fair trade and the relevant charitable objectives.They do not need to become more aggressively business like or political but world wide ‘fair trade’ has become an industry in its own life time with a raft of international assessors, promoters, branders and do betterers.
Leveraging exceptional value under WFTO principles of fair trade.
The UK based charity 1043886 – THE FAIRTRADE FOUNDATION has extremely wide objectives ‘To relieve poverty suffering and distress in any part of the world and to promote research into and education concerning the causes and effects of poverty.’ These aims are open ended such that the 100 or so Fairtrade Foundation employees have a business model for generating most of the funds required by using the ‘brand’ through activities based on licensing. This is the tip of the iceberg with a billion euro income for producers and probably more than double that for retailers and manufacturers.
More specifically Fairtrade Foundation (as part of wider fair trade) is :-
- ‘Providing an independent certification of the trade supply chain with their fairtrade mark as the consumer guarantee.
- Facilitating the market so that producers can sell to traders and retailers in order that the market for fairtrade grows.
- Raising awareness among consumers of the need for fairtrade and the importance of the fairtrade mark.’
- For a charity, licensing is a very commercial business like activity but it would be churlish to question the charitable motives which are designed to help small farmers and businesses.
Since before 2010 the charity has had steady income of around ten million pounds a year from licenses bought by retailers and producers using the Fairtrade supply chain, verification methods, reputation, and logo. It is a complex and multi-faceted business where the license income has stalled but the volume of underlying ‘fair trade products sold seems to increase’. Somewhere the money trail seems to under perform against the ideals.
Global Fair Trade is Fragmented to Divide and Rule
WFTO is the worldwide network of Fair Trade organizations and includes WFTO Europe which receives some funding from the EU and our own Fairtrade Foundation. The goals are to enable producers to improve their livelihoods and communities through Fair Trade. (see detailed principals below)
WFTO’s fair trade certification scheme and mark is verified by self-assessment, mutual reviews and external verification.
There has been growth and unnecessary competition amongst fair trade certifiers, and ‘products’ in the market including Fairtrade International , IMO, Rainforest Alliance, Make Trade Fair, Eco-Social and Fair Trade USA .
Major corporate manufacturers and retailers like Starbucks are considering withdrawing from full certification. Suchards and Cadburys have chosen to establish their own sustainability programme ‘Cocoa Life’ but have a ‘side deal’ with Fairtrade that allows a continued use of a logo.
More Concerns and Issues with Fair Trade
In recent years a greater awareness of issues highlighted by the advocates of fair trade have been a major plus. However the commercial and business world is progressively modifying the concepts, ideals and attainments to suit their own ends. Fair trade its self has become a commercial competition, power base and business. Perhaps the time is coming to refocus onto Not Unfair Trade!
- Where fair trade under performs it should return to focusing on helping the producer and their community.
- Less scrupulous retailers, importers, middlemen and consolidators who abuse ‘Fair Trade’ exclusively for their own ends need to be ‘outed’. This is ‘Unfair Trade’.
- Where potential benefits fail to filter down due to political interference fair trade needs to work in partnership with NGO’s and poverty focused charities.
- Coffee production is up to 50% of fair trade schemes yet is hostage to the commodities market and true fair trade is impractical.
- Producers complain about costs of compliance, oversupply of certification, rigid rules and failure to enforce the standards and discrimination by large producers .
- Many people volunteer to support fair trade doing unpaid work for Fairtrade in schools, towns, communities and with local governments or parliament. They may be misled if the benefit are going to businesses in rich countries or political influence in the producer countries.
WFTO Principles of Fair Trade
- Creating Opportunities for Economically Disadvantaged Producers
- Poverty reduction by making producers economically independent.
- Transparency and Accountability Involving producers in important decision making.
- Fair Trading Practices – Trading fairly with concern for the social, economic and environmental well-being of producers.
- Payment of a Fair Price – Paying producers a fixed price by mutual agreement, ensuring socially acceptable wages depending on the location.
- Ensuring no Child Labor and Forced Labor by adherence to the United Nations (UN) Convention on children’s rights.
- Commitment to Non Discrimination – Respecting trade union rights and rejecting discrimination based on gender, religion or ethnicity.
- Ensuring Good Working Conditions – Providing a safe and healthy working environment for producers and workers.
- Providing Capacity Building to help growth and prosperity.
- Seeking to develop the skills of producers and workers so they can continue to grow and prosper.
- Promoting Fair Trade – Raising awareness for the need of greater justice in world trade by trading fairly with poor communities.
- Respect for the Environment – Caring for the environment by maximising use of sustainable energy and raw materials while minimising waste and pollution.
The Fairtrade Premium is the extra payment over the market price should be paid to the exporting organization to be spent on “social projects” for social and economic development in the producing communities, Not everyone is convinced that the Fairtrade Foundation monitors how much of the extra money paid to the exporting cooperatives reaches the farmer.
The Fairtrade Minimum Price is a guaranteed price to be paid as a protection when the world prices collapse.
Is this the end… After decades of fast growth, a reversal in the fortunes of Fairtrade is apparent. This is particularly so for the Alternative Trading Organisations (ATOs) that spearheaded the movement, but which have become its first casualties. Dr Iain Davies asks what the future holds for Fairtrade blog 27/2/2017