1. FAIR TRADE Does it make sense? Carol Wills For ICEA, 21 January 2010

2. What I’m going to discuss How Fair Trade began How Fair Trade began What Fair Trade is and is not What Fair Trade is and is not The definition The definition The movement The movement Different models of Fair Trade Different models of Fair Trade Impact Impact Response to criticisms Response to criticisms Does it make sense? Does it make sense?

3. How Fair Trade began Post WW2 : Response to poverty, exploitation & injustice Post WW2 : Response to poverty, exploitation & injustice Known as “alternative” until 1985 Known as “alternative” until 1985 Phrase “Fair Trade” first coined at GLC conference in 1985 Phrase “Fair Trade” first coined at GLC conference in 1985 1988: Launch of Max Havelaar label in Netherlands, followed quickly by others 1988: Launch of Max Havelaar label in Netherlands, followed quickly by others 1989: WFTO founded (Now 400 + member organizations in 70 countries) 1989: WFTO founded (Now 400 + member organizations in 70 countries) 1994: FT labelling initiatives come together to create FLO 1994: FT labelling initiatives come together to create FLO 2004: Fair Trade Advocacy Office opened in Brussels 2004: Fair Trade Advocacy Office opened in Brussels

4. What Fair Trade is and is not Not just about standards, certification & labelling. Nor just about coffee Not just about standards, certification & labelling. Nor just about coffee Fair Trade means: paying a fair price, working together, capacity building, organizational development, transparency & traceability through supply chain, stable trading relationships, respect for environment, protection of human rights (especially women’s & children’s), support for traditional production methods, awareness raising plus monitoring & verification + regular assessment of impact. Fair Trade means: paying a fair price, working together, capacity building, organizational development, transparency & traceability through supply chain, stable trading relationships, respect for environment, protection of human rights (especially women’s & children’s), support for traditional production methods, awareness raising plus monitoring & verification + regular assessment of impact.

5. Definition (agreed 2001) 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 the rights of, marginalised producers and 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 international trade. 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 the rights of, marginalised producers and 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 international trade.

6. Fair Trade promotes sustainable development through deliberately working with marginalised producers in order to help them move from a position of vulnerability to security and economic self- sufficiency deliberately working with marginalised producers in order to help them move from a position of vulnerability to security and economic self- sufficiency Empowering producers as stakeholders in their own organizations Empowering producers as stakeholders in their own organizations Actively playing a role in the global arena to achieve greater equity in international trade Actively playing a role in the global arena to achieve greater equity in international trade

7. Methods: Strengthening small producers’ organisations Strengthening small producers’ organisations Increasing participation in decision-making by producers Increasing participation in decision-making by producers Providing support for training/ capacity building, especially for women Providing support for training/ capacity building, especially for women Encouraging better environmental practices and application of responsible production methods Encouraging better environmental practices and application of responsible production methods Market access Market access

8. The Fair Trade Movement WFTO global network of producers, exporters, importers, retailers who believe trade should improve lives of poor people without harming planet. 5 regional networks + many country level forums + EFTA & NEWS! WFTO global network of producers, exporters, importers, retailers who believe trade should improve lives of poor people without harming planet. 5 regional networks + many country level forums + EFTA & NEWS! FLO – world-wide standard setting & certification body with 24 national initiatives & 3 regional producer networks. FLO – world-wide standard setting & certification body with 24 national initiatives & 3 regional producer networks. Fair Trade Federation USA (also member of WFTO) Fair Trade Federation USA (also member of WFTO) Consumers, activists & campaigners Consumers, activists & campaigners

9. Size of Fair Trade STILL VERY, VERY SMALL – BUT GROWING STILL VERY, VERY SMALL – BUT GROWING 2008 UK Ft labelled sales grew by 43% to £700 million 2008 UK Ft labelled sales grew by 43% to £700 million 2008 world-wide Ft labelled sales grew 22% to £2.9 billion 2008 world-wide Ft labelled sales grew 22% to £2.9 billion 1 million + farmers, artisans & workers in 58 developing countries 1 million + farmers, artisans & workers in 58 developing countries 746 Fairtrade certified producer organizations 746 Fairtrade certified producer organizations 5 million people benefit directly 5 million people benefit directly

10. Products certified by FLO Bananas, cocoa, coffee, cotton, flowers, fresh fruit, honey, fruit juice, rice, spices & herbs, sports balls, sugar, tea, wine Bananas, cocoa, coffee, cotton, flowers, fresh fruit, honey, fruit juice, rice, spices & herbs, sports balls, sugar, tea, wine Composite products such as chocolate bars, cakes, biscuits. (All ingredients for which Ft standards exist must be certified) Composite products such as chocolate bars, cakes, biscuits. (All ingredients for which Ft standards exist must be certified) Audited standards also cover groups of small- scale producers & hired labour on plantations and in factories. Audited standards also cover groups of small- scale producers & hired labour on plantations and in factories. Process: application, audit, evaluation, certification, annual inspections Process: application, audit, evaluation, certification, annual inspections

11. Standards for traders buying FLO certified products Pay a price that covers cost of sustainable production: The Ft minimum price Pay a price that covers cost of sustainable production: The Ft minimum price Pay an additional sum for producers to invest in development: the Ft Premium Pay an additional sum for producers to invest in development: the Ft Premium Make partial advance payments when requested to do so Make partial advance payments when requested to do so Sign contracts with certified producers to allow for long-term planning and sustainable practices. Sign contracts with certified producers to allow for long-term planning and sustainable practices.

12. Fairtrade minimum prices and premiums See 22 page table on FLO website: www.fairtrade.net See 22 page table on FLO website: www.fairtrade.net www.fairtrade.net Examples: Examples: Organic fresh bananas from Bolivia $3 per kg FOB + 45 cents premium Organic dried bananas from Costa Rica per kg FOB $4.20 + 80 cents premium Dried organic apricots from Pakistan per kg ExW $0.31 + 7 cents premium Non organic dried apricots, Pakistan per kg ExW $0.29 + 7 cents premium Arabica conventional washed coffee per lb FOB $1.25 + 10 cents premium Arabica organic washed coffee per lb FOB $1.45 + 10 cents premium Robusta conventional coffee per lb FOB $1.05 + 10 cents premium If world market price exceeds FLO minimum price, the world market price must be paid If world market price exceeds FLO minimum price, the world market price must be paid

13. WFTO’s Sustainable Fair Trade Management System still under development New Standard for independent certification of Fair Trade organizations complementing the FLO product label approach New Standard for independent certification of Fair Trade organizations complementing the FLO product label approach Organisations applying for certification must demonstrate that they: provide market access for marginalised producers/ foster capacity building & empowerment/ are transparent & accountable/ promote environmental sustainability Organisations applying for certification must demonstrate that they: provide market access for marginalised producers/ foster capacity building & empowerment/ are transparent & accountable/ promote environmental sustainability

14. SFTMS audit Independent 3 rd party auditing required plus validation of a published report. Independent 3 rd party auditing required plus validation of a published report. Following this, products may carry label communicating that they were sourced & produced under Fair Trade conditions & practices. Following this, products may carry label communicating that they were sourced & produced under Fair Trade conditions & practices. Likely to apply mostly to handcrafts for which FLO has no standards. Likely to apply mostly to handcrafts for which FLO has no standards.

15. Different models of Fair Trade Some FTOs choose to develop as Brands e.g. Traidcraft, PeopleTree, Divine Chocolate, cafedirect. Some FTOs choose to develop as Brands e.g. Traidcraft, PeopleTree, Divine Chocolate, cafedirect. AlterEco, France, set up as specialist sourcing co. for supermarkets’ own label Ft products. AlterEco, France, set up as specialist sourcing co. for supermarkets’ own label Ft products. CTM, Italy, owned by network of 250 coop FT shops & is their supplier CTM, Italy, owned by network of 250 coop FT shops & is their supplier Traidcraft’s growth due to network of 1,000s of volunteer Fair Traders & church groups supplied at wholesale rates via mail order catalogue Traidcraft’s growth due to network of 1,000s of volunteer Fair Traders & church groups supplied at wholesale rates via mail order catalogue

16. Impact: Does FT make a difference? Producers themselves say so: more food, better houses, children going to school, improved health, women’s empowerment Producers themselves say so: more food, better houses, children going to school, improved health, women’s empowerment More efficient organizations More efficient organizations Greater self-reliance, self-confidence Greater self-reliance, self-confidence Can be a stepping stone to other things Can be a stepping stone to other things But everything depends on regular orders

17. Impact at consumer level Greater awareness of the need for trade justice Greater awareness of the need for trade justice Consumers want to know how products were grown/ made. They support FT with their purchasing Consumers want to know how products were grown/ made. They support FT with their purchasing Fair Trade remains small but impact on conventional business world is big: ETI, CSR etc. etc. - transforming business behaviour Fair Trade remains small but impact on conventional business world is big: ETI, CSR etc. etc. - transforming business behaviour

18. Common criticisms FT14 a marketing exercise intended to maintain predominance of Ft mark in competitive market-place. Agree FT14 a marketing exercise intended to maintain predominance of Ft mark in competitive market-place. Agree Fair Trade is unfair: It offers small no. of farmers a higher, fixed price for products and excludes majority (who are left even worse off). Misunderstanding of how Ft’s open system works. Prices not fixed. No one excluded. Fair Trade is unfair: It offers small no. of farmers a higher, fixed price for products and excludes majority (who are left even worse off). Misunderstanding of how Ft’s open system works. Prices not fixed. No one excluded. Most farmers helped by FT are in Mexico. Incorrect Most farmers helped by FT are in Mexico. Incorrect FT does not aid economic development. It keeps “the poor in their place”. Further misunderstanding of how system works. FT does not aid economic development. It keeps “the poor in their place”. Further misunderstanding of how system works. FT only helps landowners & denies labourers opportunity of permanent employment. FT standards also cover employed labour FT only helps landowners & denies labourers opportunity of permanent employment. FT standards also cover employed labour

19. Further criticisms from “Unfair Trade” 4/5 th of produce sold by Ft certified farmers ends up in non-Ft goods. FT market remains small. FT farmers negotiate for best possible prices with all buyers. 4/5 th of produce sold by Ft certified farmers ends up in non-Ft goods. FT market remains small. FT farmers negotiate for best possible prices with all buyers. Just 10% of Premium goes to farmers. Retailers pocket the rest. Full premium paid direct to farmers. Just 10% of Premium goes to farmers. Retailers pocket the rest. Full premium paid direct to farmers. FT arose from coffee crisis of 1990s. FT labelling began as a result of this & came to attention of development comunity. FT started in 1940s FT arose from coffee crisis of 1990s. FT labelling began as a result of this & came to attention of development comunity. FT started in 1940s FT movement believes that free trade harms the poor. Not so. FT believes that free trade is not free until the playing field is level for all. FT movement believes that free trade harms the poor. Not so. FT believes that free trade is not free until the playing field is level for all.

20. Does Fair Trade make sense? What do you think?