Fairtrade and Branding WIPO Open-ended Forum on proposed Development Agenda Projects Paola Ghillani & Friends AG

This presentation seeks to provide some background on how the fair trade -labeling and - branding sector operates, with some examples, with a view to understanding what could be WIPO's potential role Paola Ghillani & Friends AG

„Fair trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing rights of, marginalized producers/workers-especially in the South. Fair trade organizations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade.“ Definition of fair trade (FINE) Paola Ghillani & Friends AG

FLO, Fairtrade Labelling Organisations international 1997, founded by its members organisations, the 17 labeling National Initiatives worldwide an international association with offices in Bonn, Germany Paola Ghillani & Friends AG

Mission of FLO Certify and control that the product labeled with the Fairtrade certification mark is produced AND traded according to the International Fairtrade Standards (FLO) Ensure disadvantaged producers/workers in developing countries get access to the market at Fairtrade conditions through National Label Initiatives, member organisations of FLO

Producer standards Small farmers / Hired labour Generic / Product specific Minimum requirements / Process requirements Trading standards Price Premium Medium/long term commitment The Fairtrade Standards

FLO Cert GmbH Certification company owned by FLO Follows ISO standards for certification bodies Functions Producers inspection conformity to FT standards FT benefits are used for social and economic development Certification Trade auditing to cross check reported sales and reported purchases

Producers and companies registered with FLO 24 national fairtrade labelling organisations incl. 2 associated members (Commercio Justo Mexico and Fairtrade label South Africa) 746 FLO certified producer organisations in 59 producing countries 1,5 Mio producers 6 Mio dependant/affected people 249 FLO registered companies worldwide 2700 companies in 24 countries using the Fairtrade label generating a turnover in public price of 2,3 Billions Euro

Promoting producers support Support producers to strengthen their position: – commercial performance – quality produced – institutional building Link between producers and support: – identify needs for support with producers and FLO cert – identify donors and technical expertise – bringing together the right partners and facilitate FLO Producer Support Facilitator: – closely linked to product managers in the north and producers and liaison people in the south

Use of premium money

Paola Ghillani & Friends AG The banana case in Switzerland

Sustainable Development? Unifies 3 objectives: – Economical performance – Social development – Respect of the environment Corporate Responsibility towards „Stakeholders“ Paola Ghillani & Friends AG

LOHAS (Lifestyle of Health and Sustainability): Conscious consumers towards sustainable development prefer fair traded and fair produced, as well ecological products and alternative medicines. They are ready to pay more for these kind of products. USA: 1/3 of consumers are LOHAS EU: Market share for organic food, growth up to 75% CH: Market share for organic food, growth up to 52% Turnover FSC wood between resulted 15-times higher D: Market for organic cosmetics has doubled ( )  Sustainable consumption is a Mega-Trend! Source: Inrate, rating for sustainable investments Paola Ghillani & Friends AG

Proliferation of Labels and Brands Paola Ghillani & Friends AG Challenges: credibility of the standards and independance of inspections and certification decision, traceability,without forgetting the corporate governance of their governing body.

From Fairtrade to sustainability labels/brands The coffee case: 2nd most traded commodity in the world after oil! Eliminate the worst social and environmental practices. No Price differential Professionalism including social and environmental aspects. Good agricultural practices. Corporate Responsibility program for brands. Traceability. Independent inspection/certification. Market price + premium (5-10%) Environmental and social aspects. Consumer label / Corporate Responsibility program for brands. Market price + premium Poverty reduction: economic return and support for cooperatives of small scale growers. (No Fairtrade standards for coffee plantations). Consumer label. Minimal FT price guarantee + premium CCCC Paola Ghillani & Friends AG

Labelling Branding Options for producers in LDCs Option 1: Create and put on the local and export market their own FT or sustainability certification mark Option 2: Create and put on the local and export market their own FT or sustainability Brand (ex. Patagonia, Natura, Switcher, etc.) Option 3: Qualify for an existing FT or sustainability certification mark Paola Ghillani & Friends AG

Option 1: Create and put on the local and export market their own FT or susainability certification mark Needs a strategic plan that clearly define, the differential advantage as compared to competitors, which countries and which consumers group to target at what price Needs the identification or creation of a marketing entity which will market the products with certification mark including a marketing budget Needs FT or Sustainability standards to be put in place and an independant inspection and certification body Could benefit from the facilitation of WIPO in order to protect as much as possible the certification mark as an entry barrier against competition Paola Ghillani & Friends AG

Option 2: Create and put on the local and export market their own FT or sustainability Brand (ex. Patagonia, Natura, Switcher, etc.) Needs a strategic plan that clearly define, the differential advantage as compared to competitors, which countries? and which target group at what price? Needs the creation of a marketing agency which is going to market the Brand Needs FT or Sustainability standards to be put in place and an independant inspection and certification body Could benefit from the facilitation of WIPO in order to protect as much as possible the Brand as an entry barrier against competition Paola Ghillani & Friends AG

Option 3: Qualify for an existing FT or sustainability certification mark Paola Ghillani & Friends AG Needs to fulfill the FT or sustainability standards and to be inspected/certified against these standards in order to get a certificate that is recognised by importers and buyers/retailers, who will be then ready to buy at fair prices, and promote the certification mark with the help of the national labelling initiatives towards the consumers If whished by the producer organisation, it’s possible to have an own certification mark for their domestic market under the rules of FLO for Fairtrade, or under the accreditation of IFOAM for organic labels, or other umbrella labelling organisations Could benefit from the facilitation of WIPO in order to understand better the rules of use of the certification mark dictated by umbrella organisations such as FLO, IFOAM, UTZ Certified, Rain Forest Alliance, MSC, FSC, WWF etc.

The example of Comercio Justo Mexico Created in 1999 by a cooperative of small coffee producers Are an associated member of FLO Paola Ghillani & Friends AG

WIPO as a facilitator ? part1 Ideally a new unexpected labeling/branding model, a new innovative business idea is invented by the producer organisation, and can be patented together with a new certification mark or brand. (trademark). In the preparation of the application for the certification mark/trademark protection in the chosen jurisdictions and segment of products In the certification mark/trademark protection itself in the chosen jurisdictions and segment of products Paola Ghillani & Friends AG

The advisory/consultancy role from WIPO in this process towards its Member States and, in partnership with them, to local producers, shouldn’t be underestimated; it can even play a decisive role in order to identify what can be protected and to ensure a better protection. This could improve the competitive advantage of the certification mark/trademark. WIPO as a facilitator ? part2 Paola Ghillani & Friends AG

WIPO as facilitator? Part3 Can only happen if the producer organisations, wanting to create a new Certification Mark/Brand or to be part of an existing labelling system, make their home work in terms of business analysis and strategic planing, in order to clarify and define the Basics to market their idea, ex. Positioning as compared to competition, strategy, etc. Paola Ghillani & Friends AG

” Don’t ever think that a small group of conscious and dedicated people aren’t able to change the world. In fact this is the way it always happened!” Margaret Mead Paola Ghillani & Friends AG