Consultation Results Synopsis · 30/09/2014 · Standards Consultation Results Synopsis Trade Standard 03.09.2014 Consultation Results Synopsis Information to Stakeholders on the

1 Standards Consultation Results Synopsis Trade Standard 03.09.2014

Consultation Results Synopsis

Information to Stakeholders on the Outcome of the

Draft Standard Consultation

Review of the Trade Standard 2nd Consultation Round

To All stakeholders

Consultation Period 15.07.2014 – 22.08.2014

Standards Committee Meeting for Decision 26.11. 2014

Project Managers Contact Details Ruth Fernandez Audera, Senior Consultant on

Standards, Fabienne Yver, project manager,

[email protected]

TABLE OF CONTENT

PART 1 Introduction 2

1.1. General Introduction 2

1.2. Background and objectives 2

1.3. Methodology and participation 3

1.4. Executive summary of consultation results 4

1.5. Project timelines and way forward 6

1.6. Abbreviations 6

PART 2 Draft Standards Consultation - Outcome 8

2.1. Section 1 – new model 8

2.2. Section 2 – Labour 12

2.3. Section 3 – Environment 15

2.4. Section 4 – Fairtrade Payer and Fairtrade eligible 17

2.5. Section 5 – Advanced Payment and access to finance 21

2.6. Section 6 – Sourcing plan and market information 25

2.7. Section 7 – Sharing risks 27

2.8. Section 8 – Support to producers 30

2.9. Section 9 – Trading with integrity 32

2.10. Section 10 – other comments 34

ANNEXE 1: final Standard Committee decisions after consultation 36

mailto:[email protected]


PART 1 Introduction and executive summary

1.1. General Introduction

Fairtrade International’s Standards & Pricing would like to thank all stakeholders for the time and effort

they have put into participating in the consultation on the review of the Fairtrade Trade Standard. The

consultation concluded on the deadline for submission with a total of approximately 400 participating

stakeholders who gave Fairtrade International’s Standards & Pricing their views and perspectives.

Thanks to these replies, Standards & Pricing has gained a good understanding of critical issues and

concerns including potential solutions. Together with the results of the research carried out by

Standards & Pricing, this information provides the basis for our recommendation to the Standards

Committee. The Standards Committee’s decision on the final standards will be taken in full knowledge

of stakeholders’ comments.

Should you have any queries or remarks concerning this report, please contact the project manager:

Fabienne Yver, Project Manager, at [email protected]

1.2. Background and objectives

The background of the Fairtrade Trade Standard Review:

The review of the Trade Standard started in 2012, with pre-consultations of selected stakeholders. It

led to a proposal of a Core (compulsory) and Advanced (voluntary) sections, which was consulted

upon in the summer of 2013. However, the feedback was mixed and inconclusive, so the team had to

conduct further research, and come up with a revised proposal.

This led to a second round of consultation, which ran from July 15th to August 22

nd, 2014.

This synopsis paper presents the outcome of the 2nd

consultation round.

The objectives of the Fairtrade Trade Standard Review are to:

Solve technical problems that have been identified during the monitoring period;

Ensure that the Standard is clearer and easier to understand;

Promote increased communication, collaboration and trust between operators and producers to

enable producers to better plan their production and to better estimate their volumes of Fairtrade

sales;

Encourage operators to go beyond a minimum compliance to create even fairer trading conditions,

to deliver enhanced development assistance to producers, and to further improve operators’ own

business practices; and

Create fairer competition among all types of Fairtrade operators.

The project scope of the Fairtrade Trade Standard Review:

The project covers all regions and all products.

mailto:[email protected]


The Trade Standard review applies mainly to the Fairtrade price and Premium Payer (in general the

first or second buyer) and the Conveyor, but some proposed new requirements are also targeted at

other actors in the supply chain.

The review focuses on chapters which deal with benefits to producers, i.e.: ‘contracts’, ‘sourcing

plans (sustaining trade)’, ‘pre-finance’, ‘pricing’ and ‘payment terms’. Minor amendments are

proposed in the chapters related to the integrity of the label, i.e.: ‘certification’, ‘use of the Fairtrade

Trademark’, ‘traceability’ and ‘product composition’.

This second consultation round mainly focuses on the topics that were not conclusive in the first

round, and where new proposals were formulated after a second research phase, i.e. Certification

model, Labour, Environment, Eligibility and contracts, Advanced payments, Sourcing plans and

market information, Sharing risks, Producer support and Trading with integrity.

1.3. Methodology and participation

More than 4,000 stakeholders received the public consultation document on the second round of

Trade Standard review which was published in four languages, English, Spanish, French and

Portuguese. During the consultation period, approximately 400 (10%) responded to the questions

via the questionnaire online or in PDF format or through other means such as workshop minutes,

emails and calls. Responses mainly came from producers, traders, NGOs, national Fairtrade

organizations, Fairtrade International and FLO-CERT. In total, we have received 323 individual

complete questionnaire responses worldwide plus six regional workshop reports which gathered

more than 80 producers and internal stakeholders. The workshops took place in six different

countries: Guatemala, Honduras, Mexico, Peru, Colombia and Costa Rica with Panama.

Overall more than 400 stakeholders participated in the consultation. 113 producers, 173 traders and

37 other (Fairtrade internal staff or other NGOs) responded to the questionnaire. Additional

feedback from producers came in the form of workshop reports. These were taken into account in

the analysis, but are not included in the graphs presented in this paper.

Some of the respondents have several functions in the supply chain, as shown in the graph below.

The responses come from all continents, more than 66% of responses are from Europe, Latin America

and Caribbean followed by Africa, Middle East and Asia.


Amongst products, banana, cane sugar, cocoa and coffee accounts for nearly 40% of responses, with

each of the remaining products supplying ≤ 5% of responses.

Not all stakeholders responded to each question, so that the number of responses may vary from

one question to the other.

1.4. Executive summary of consultation results

The 2nd

round of consultation in July-August 2014 led to a very satisfactory rate of response, despite taking place during the holiday period in Europe: around 400 stakeholders participated in the consultation, representing about 10% of all stakeholders. Overall, the feedback was very positive; the proposals are supported by the vast majority of operators. However, in the narrative feedback, stakeholders raised very pertinent comments. Below is a summary of the feedback topic by topic.

1a. Model with aspirational requirements: There is a clear support for the proposed new model

though with a recurrent concern about added costs.

1b. Publication of audit results: In sum there was support to some form of publication in the interest

of the objectives of the proposal as explained in the consultation paper, however divided between the

degree of disclosure preferred, but also a relevant number of voices against it concerned mostly about

confidentiality and a possible risk to Fairtrade’s image.


2. Labour section: There is overall strong support to go ahead with including labour requirements for

processors although there is a concern about the increased costs this would bring and the potential

effect as an access barrier to producers who depend on independent processors. It was suggested by

some to only apply it to the global South in order to: not deviate from Fairtrade’s objectives; focus on

producers and workers’ rights in the South; and in order to address unfair competition arising from

compliance with different requirements for producer-owned and non-producer owned processing

facilities in the South.

3. Environment section: the consultation feedback showed strong support to the proposal to include

environmental requirements for traders but also important concerns, especially about costs and

deviation from Fairtrade’ priorities.

4. Fairtrade Payer and Fairtrade Eligible:

There is overall agreement with the proposal and the majority of the stakeholders see the need for

clarification of the distribution of roles in the value chain. On section A: although there is overall

agreement with the proposal, many product specific risks have been identified by different

stakeholders. On section B, the over 30% disagreement with the proposal demonstrates the many

concerns with it, for opposite reasons. The risks mentioned are mainly regarding the integrity of

Fairtrade and the percentage chosen.

5.1. Pre-finance / Advanced Payment: A majority of the respondents sees pre-finance as an integral

part of Fairtrade that should be reinforced. On the other hand, a large number of traders do not

provide pre-finance, and argue they cannot do it. The main argument being the risk involved, or that it

is not the traders' role. In that sense, they welcome the option of facilitating access to pre-finance via a

3rd party lender. However, there is still the question what happens in case the 3rd party lender does

not provide pre-finance, which may happen if the producer does not have sufficient financial systems

in place. There are a lot of concerns regarding the lack of know-how on paying in advance.

5.2. Other forms of financial support: The survey concluded that as long as this requirement

remains aspirational / voluntary, there is no important opposition. However, it was also highlighted that

it may not have much impact on trader practices, and there was concern expressed about generating

dependencies.

6. Sourcing plans and market information: There is overall agreement on this topic. Most producers

are generally very supportive as it is considered a valuable tool. The critical comments, however, point

out that several traders depend on receiving the retailer/processor’s own forecast to be able to provide

an adequate one, which, even if encouraged by the new aspirational requirement, will not be

guaranteed.

7. Sharing risks: In general, the section receives strong support, many express positive comments on

the general idea of risk-sharing. But, the comments made on the requirements themselves

demonstrated some concerns and criticisms. Overall, there is support for improving rules around

quality claims, but there are concerns about the idea of quality control before export. Price risk

management and price volatility are seen mainly as coffee-specific issues while the topic of the

country of jurisdiction is criticised as not being realistic. Some agree with the proposed requirements

as long as they remain aspirational. On all topics, there is a recommendation to focus on capacity

building through guidelines and training.

8. Producer support: The consultation feedback on this section was in vast majority supportive of this

proposal, even if some did not see this as the role of the traders.


9. Trading with integrity: the consultation feedback showed there was very strong support (over 90%

of respondents) for the proposed requirements, but some concerns about the implementation and a

request for clarification and more detail on the requirements.

Based on this feedback, the TS team revised the proposals, and submitted them to the Standards

Committee for final decision in November 2014. More information about the decisions taken on each

of the topics is provided in Annex 1.

1.5. Project timelines

The timelines of the Fairtrade Trade Standard Review:

March – July 2012 Research

Sept. 2012 – Mar. 2013 Pre-consultation, engagement with selected stakeholders, research.

July – Oct 2013 Public consultation on the Core and the Advanced sections, and regional

workshops with producers.

Sept. – Dec. 2013 Analysis of consultation results

Jan. – June 2014 Further research, engagement with key stakeholders, and revision and

proposal

July – August 2014 2nd round of Public Consultation on the revised proposal

August – Sept. 2014 Analysis and presentation of results of the 2nd round of consultation to

the Standards Committee and partial approval

November 2014 Ratification of final text of Trade standard by the Standards Committee

January-July 2015 Preparation for implementation

Sept. 2015 Validity date of the new Standard (except for labour and environment

sections)

Jan 2017 Validity date of the labour and environment sections

1.6. Abbreviations

List and explanation of all abbreviations used in this document

CP

Contract Production

FOB

Free On Board

FSP

Fairtrade Sourcing Program

FTMP

Fairtrade Minimum Price


FTO

Fair Trade Organizations

GMO

Genetically Modified Organism

HL

Hired Labour

ILO

International Labour Organization

NFO

National Fairtrade Organization

PML

Prohibited Material List

PN

Producer Network

S&P

Standards and Pricing

SC

Standards Committee

SPO

Small Producer Organization

TS

Trade Standard

WRAC

the Workers Rights Advisory Committee to Fairtrade


PART 2 Draft Standards Consultation - Outcome

Please find below:

The proposals and questions as presented in the consultation documents

A numeric analysis and the responses

A detailed summary of the feedback received from stakeholders

The order of the sections follows the structure of the consultation document.

Section 1. New model

Proposal presented during the consultation

a) Structure of the standard:

- One single standard with mandatory Core and non-mandatory Aspirational requirements.

- Current existing topics of the Trade Standard will be maintained as Core, with amendments

and additions.

- New Aspirational requirements that reflect steps beyond minimum compliance are added, both

in existing and new topics.

b) Certification and scoring system:

- A scoring mechanism for auditing consistency is introduced. This is similar to the approach

used in Fairtrade Standards for producers.

- Certification is achieved and maintained only when each Core requirement is fulfilled.

- Aspirational requirements are not mandatory, but are nevertheless audited in all cases, and an

informative score of audit results is calculated.

c) Motivation towards best practices:

- The standard and the audit can be considered an awareness-raising/engagement mechanism

in itself for traders. Best practices will be reflected in the standard

Additional elements:

- Potentially, operator scores can be made public to promote a race to the top among traders.

Alternatively, they could be internally used by NFOs to support best-in-class operators to find new

business.

- The model can be linked to other projects, using the score as a validation tool to access

special programmes, for example traders with good scores could benefit from specific partnerships

with Fairtrade (for instance special communication or marketing partnerships).


Question 1.2. Do you agree with the model as presented?

Feedback received

Around 80% of the respondents agreed or mostly agreed with the new model. 11% of the answers

disagreed fully or mostly with the new model proposed.

The group of producers was more supportive (90%) than the group of traders (73%)

Rationale Those who agreed supported the rationale explained in the consultation paper: they welcome the

consistency that a scoring system will bring, the aspirational requirements will raise awareness and

will promote continuous improvement. There were several comments specifying that they agreed with

aspirational requirements as long as they remained non mandatory.

One of the arguments for disagreeing refers to the assurance mechanism of the aspirational

requirements, arguing that if they are not mandatory they do not belong in the standard. Others are

also concerned of the added time and costs that auditing new aspirational requirements would bring,

which may drive traders out of the Fairtrade system, or drive audit time away from core principles (this

concern about cost was also raised by several respondents who agreed with the proposal). It was

30%

51%

11%

4% 4%

Q1.1. Do you agree with the new model as explained above?

Yes, I completely agree

Yes, I mostly agree

I dont know, I don’t agree or disagree

No, I mostly disagree

No, I completely disagree

38%

21%

46%

54%

52%

35%

4%

15%

11%

3%

4%

8%

1%

7%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Producer

Trader

Other

1.1

Yes, I completely agree Yes, I mostly agree

I don’t know, I don’t agree or disagree No, I mostly disagree



suggested by some to use other type of mechanisms rather than the standard to reach the same

objectives.

A few respondents questioned the value, and the incentives, that the aspiration requirements would

bring, provided there is no differentiation given to those with better practices. Particularly highlighted

were the cases of intermediaries and processors on whom the producers rely.

Two respondents disagreed with aspirational requirements for not being strong enough and they

would like to see them mandatory as in the case of other Fairtrade standards.

It was also mentioned that aspirational requirements is not an appropriate name for their stated

purpose, as they should not be referred to as requirements if they are not mandatory, and aspirational

has the connotation of impossible to achieve. Alterative terms, such as additional voluntary practices,

are suggested.

Conclusions There is a clear support for the proposed new model though with a recurrent concern about added

costs.

Question 1.2. Do you want to make the results public?

Feedback received

19% of the respondents to the questionnaire considered that the results should be made visible to the

general public and 33% that they should be visible only for certified producers and traders. In total

52% asked for some form of disclosure of the information. 31% were against any kind of external

communication and 17% were unsure.

22%

36%

27%

15%

Q1.2. Do you want to make the results public?

Yes, to the general public

Yes, but only to othercertified organizations(producers and traders)

No, the results must not bemade public

I don’t know


Traders were less supportive (around 50%) than producers (around 70%)

Rationale

The reasons provided by those who supported external communication were: transparency that it will

build trust in the standard, confidence in the Fairtrade system and an incentive for improvement. It was

argued that once we have decided to implement a scoring system it seems rational to make use of it,

but with a positive message, praising those who do extra rather than shaming those who stick to the

minimum.

Those who preferred that the results are shared only with certified producers and traders:

Considered the mechanism to be a good incentive for continuous improvement, but that

sharing the results with a wider audience, outside of Fairtrade, would not be relevant, as the

system is quite complex and only those involved would be interested and would understand

it.

It was considered positive that producers have a better understanding of their trading

counterparts, and a few suggested that producer’s results could also be published.

Additionally, some who supported these ideas would like to see it restricted only to the

relevant supply chain of each operator, rather than visible to all certified operators.

On the other hand those unsure or against the publications:

Were generally concerned about confidentiality of information and a possible risk to

Fairtrade’s public image by publishing bad results that would only confuse audiences.

The added value of the measure was also questioned by some, but with less frequency than

the other two arguments.

A particular argument of this group was that comparing different products with different standards and

realities may be misleading. Also, publishing results rather than promoting the best performers would

diminish the value of complying with core requirements, which may affect the smaller licensees with

less capacity to invest. It was also highlighted that the public scores would not be a complete picture

of a company’s ethical performance, as other activities (positive or negative) outside Fairtrade will not

24%

18%

30%

44%

33%

30%

19%

32%

27%

13%

18%

14%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Producer

Trader

Other

1.2

Yes, to the general public

Yes, but only to other certified organizations (producers and traders)

No, the results must not be made public

I don’t know


be covered by the score. The necessary operational changes to make publication of results possible,

such as modifying contracts with all operators, was also flagged as a potential problem.

The respondents presented a number of alternative ideas, such as:

delaying publication until the system is fully tested, making it first available only for Fairtrade

system staff and then making publication a choice of each operator;

calculating and publishing average scores so each operator can compare itself against the

average and the public can compare those who decide to publish their data against the

average;

or that only outstanding results are made public.

Conclusions:

In sum there was support to some form of publication in the interest of the objectives of the proposal

as explained in the consultation paper, however divided between the degree of disclosure preferred,

but also a relevant number of voices against it concerned mostly about confidentiality and a possible

risk to Fairtrade’s image.

Section 2. Labour requirements


The proposal is to include a number of labour requirements for processors, in order to be in line with

Fairtrade ambition to empower producers and workers, to respond to consumer expectation around

Fairtrade, and to put traders and producers on the same level in terms of compliance regarding

workers’ labour conditions.

1) Requirements covering the following issues:

a. No discrimination, abuse or sexual harassment

b. No forced labour

c. No child labour, and remediation and prevention where necessary.

d. Respect freedom of association and collective bargaining

e. Respect legal conditions of work

f. Provide healthy and safe working environments:

2) Applicable to certified operators that transform Fairtrade products only (i.e. all processors

and manufacturers).

3) All requirements are mandatory (core).

4) Application 2 years after the publication of the new standard to allow operators to invest

in compliance if necessary and allow Fairtrade to make the necessary changes for

implementation.

5) Audit frequency based on a risk assessment that takes into account the number of

workers, location, industry and specific type of operation, existence of other relevant

certifications and results from previous audits.


Feedback received

91% of the participants agreed or mostly agreed with the proposal to add labour requirements to the

Trade Standard. Amongst all stakeholder categories this percentage was highest among retailers

(100%) and lowest amongst processors/manufacturers in the South (86%).

It is important to note that the degree of appetence is equally high amongst producers and amongst

traders.

Rationale The majority of the respondents that provided comments highlighted that:

Guaranteeing compliance with international labour conventions was expected from Fairtrade

and that it was important to have the same rules applying to all operators in the certified

chain.

58%

34%

4%

2% 2%

Q2.1. Do you agree with including labour requirements in the Fairtrade Trade Standard as explained above?


Yes, I mostly agree




0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Producer

Trader

Other

2.1





Additionally, these were seen as basic requirements that many are already complying with

and that this addition will allow the protection and empowerment of workers.

It should be noted that the reference to the implementation period was addressed by only 4

respondents, 2 who mentioned that the 2 year period was excessive, one agreed and one suggested

that the auditor should have discretion to grant an additional time period. Two participants suggested

to include (even if not binding) a reference to living wages.

In spite of the very clear support to the inclusion of the labour requirements, several participants raised

their concerns about the increased costs for operators that these additional requirements would bring.

Some even highlighted that it may put that some producers at risk of finding processors who may

leave the system in view of the increased compliance and/or certification costs, particularly in the

sugar sector. These comments were echoed by the participants who responded negatively to these

requirements. Another argument opposed to the inclusion of labour requirements was the need for

Fairtrade to focus in origin countries, and existing legislation was seen as an alternative option for

addressing labour issues in processing and manufacturing activities. The assurance method of this

new section was also questioned, whether audits is the best way to prove this and how not to

duplicate existing social audits. In total 4% mostly or completely disagreed, the highest percentage of

disagreement (8%) was found amongst processors/manufacturers in the North.

It is worth to mention that members of the WRAC, the Workers Rights Advisory Committee to

Fairtrade, also supported the inclusion of labour requirements in the Standard and made several

comments about key topics that may be added in alignment with the recent Fairtrade Hired Labour

Strategy such as living wages and grievance procedure, and references that should be taken into

account for this section. The relevance to apply this section to the North was also questioned by some

of its members due to the fact that Fairtrade’s objective is to improve lives of producers and workers in

the South therefore applying and checking these requirements in the North would be a deviation of

resources from Fairtrade’s purpose. The timelines for implementation was also questioned by the

WRAC and a shorter one was suggested.

It is also worth mentioning the support to this proposal from the Producer Networks as well as the fact

that introducing labour requirements for non producer owned processor in the South has been

identified as a key aspect for fair competition by the working group that has been assigned that task.

Conclusions

There is overall strong support to go ahead with including labour requirements for processors although

there is a concern about the increased costs this would bring and the potential effect as an access

barrier to producers who depend on independent processors. It was suggested by some to only apply

it to the global South in order to: not deviate from Fairtrade’s objectives; focus on producers and

workers’ rights in the South; and in order to address unfair competition arising from compliance with

different requirements for producer-owned and non-producer owned processing facilities in the South.


Section 3 Environment


To introduce requirements related to the environment, as traders in the supply chain can have a

positive impact in the environment, and match the efforts that producers make in this area.

New Core requirements, with a transition time for implementation of two years:

Comply with local and national law regarding environment

New Aspirational (non-mandatory) requirements, that cover the following topics:

Assess environmental impacts of operations and minimize the negative impacts

Act to minimize environmental challenges in the supply chain

Use recyclable or biodegradable packaging

Use sea transport

Reduce carbon footprint

Feedback received

88% of the respondents completely or partly agreed with this proposal, while 6% disagreed with it

either fully or partly.

48%

40%

6% 4%

2%

Q.3.1. Do you agree with including environmental requirements in the Fairtrade Trade Standard as explained above?


Yes, I mostly agree





The rate of acceptance if very high in both producers and traders, although there are more

respondents that “completely agreed” amongst producers than amongst traders.

Rationale Amongst those who agreed, the arguments used were that the environment was everyone’s

responsibility and should therefore be shared; that it would be consistent with producer standards,

making the Trade standard more equitable and which is something expected from a sustainable

product.

There were two suggestions to add two additional requirements in line with producer standards:

banning the use of materials in Fairtrade Prohibited Materials List and banning the use of any GMO

ingredient.

Amongst those who disagreed mostly or entirely, and echoed also by those who otherwise agreed

with the addition, there were strong concerns about the costs that this would represent and added

complexity with no direct impact on producers and workers which should be Fairtrade focus, and the

addition would possibly impact smallest companies negatively. Duplication of efforts with other

environmental standards was also raised as a concern.

Regarding the proposed requirements the following specific concerns were expressed:

Comply with local and national law regarding environment: seen as too vague and would

require a specific audit in itself, with important costs.

Asses environmental impacts of operations and minimize the negative impacts: considered

to unclear what is actually expected to be consider compliant.

Act to minimize environmental challenges in the supply chain: also too unclear and virtually

impossible to comply for those organisations that buy several products and from different

organisations (particularly FTOs)

Use recyclable or biodegradable packaging: not possible when the company does not

choose the material

Use sea transport: non applicable to several products (flowers, blueberries, gold as an

example) and overlapping with the next point

Reduce carbon footprint: it was mentioned that there was an overlap with the previous

requirement as the use of sea transport would reduce carbon footprint.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Producer

Trader

Other

3.1





Conclusion Strong support to the proposal to include environmental requirements for traders but also important

concerns, especially about costs and deviation from Fairtrade’ priorities.

Section 4. Fairtrade payer and Fairtrade eligible


In order to clarify the role and responsibilities of exporters, we have made a proposal with 2

complementary sections:

Section A:

Not allow Fairtrade eligible as a general practice. The contract with producers always needs to

declare if the product is Fairtrade or not and pay the Fairtrade price and Premium.

The purchase contract must be signed between the producer and the Fairtrade payer, or between the

producer, a conveyer and the Fairtrade payer (in a tripartite contract).

The Fairtrade payer is the party responsible for paying the Fairtrade price and Premium. The

Fairtrade payer is the first company who buys from producers (an exporter or an importer),

regardless of where the price level is set, unless this first company is considered a conveyer. A

conveyer acts as intermediary in transactions with the real payers. If they want to act independently

then they would have to become a Fairtrade payer and declare the purchase as Fairtrade at the time

of purchasing from producers. In specific cases the party in charge of paying the Premium can be

different from the payer, as long as this is agreed in the contract.

Section B:

Allow the Fairtrade payer to buy Fairtrade in consignment only for a specific percentage (20%)

of each contract when they are not certain if they will be able to sell under Fairtrade terms. This

additional flexibility would not apply to bananas, cotton, tea, sugar or flowers as there are already

similar options in those current product standards.

Feedback received

Section A:

70% of the respondents were in agreement with the proposal for at least one of the products. The 12%

that are against the proposal were mainly traders.


Some respondents gave answers on several products. Therefore the overall results per product can

be higher than per stakeholder group, as shown below.

Section B:

46% of the respondents were in favor of the proposal and over 30% of the respondents are against

the proposal for at least one of the products. This counts as well for Traders as for Producers.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Producer

Trader

Other

4.1

Yes, I completely agree Yes, I mostly agree I don’t know

No, I mostly disagree No, I completely disagree

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Banana

Coffee

Cocoa

Sugar

Seed Cotton

Flowers and Plants

Tea

Other

4.1


I dont know, I don’t agree or disagre No, I mostly disagree




be higher than per stakeholder group.

Rationale

Section A:

The main arguments in favour were that:

This clarification enables a change in the power structure in favour of producers if the

conveyor by definition is accountable to the producer

It reduces loopholes where producers do not know what happens with their products

It brings producers and markets closer together and may lead to business opportunities for

producers

The transparency of the margin of the conveyor should increase

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Producer

Trader

Other

4.2



0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Banana

Coffee

Cocoa

Sugar

Seed Cotton

Flowers and Plants

Tea

Other

4.2





Risks mentioned:

Less flexibility leads to more risk and less motivation to buy/sell Fairtrade products for the

exporters/conveyors and mills and therefore to less market development (mentioned

several times)

Exporters that are developing small producer organizations won’t be able to do so except if

they become a conveyor and the contract happens between the producer and the importer.

However, for weak producer organisations, handling of international contracts might prove

very difficult.

For sugar there seems to be complications, because the milling ratio is influencing the price

of the cane sugar but not of the sugar cane. Furthermore the fact, that the importer buys

sugar and the cooperative sells sugar cane hinders them of having a direct contract with the

importer. Similar problems were mentioned for tea and rice.

Tea and sugar: clarification needed on how this concept works with responsibilities on retro-

certification (which is driven by traders in consuming countries)

Banana: might add complexity for supply chains with exporters as price and Premium payer,

due to shortfalls in sales clause and quality claim procedures.

Coffee: might change competitive situation significantly in the favour of multinationals, as

their FOB pricing would be in direct competition with importers buying directly from

producers, and there should be clear a rule that those exporters need to comply with FTMP

as well when selling at FOB (NB: this requirement is actually proposed in the Trading with

Integrity Section).

Section B:

The main arguments in favour are that:

Make it easier for new traders to enter the Fairtrade system

Allows a certain flexibility to reduce risk for the traders

Open market opportunities for producers

Would increase flexibility for flowers (NB: they were not included in the proposal)

Risks mentioned:

20% seems an arbitrary level that bears no specific relation to the market reality of the

different products and value chains

Many traders asking for more flexibility (80-100%)

Dangerous in the long term for the legitimacy and accountability of Fairtrade

Exporters in coffee already have to be transparent. Providing they are transparent on their

costing and that there is clear traceability when they sell coffee as Fairtrade certified then

there should be no need for the above.

Keeping track of the transactions and the traceability will become even more difficult and

fraud risk will be higher

In flowers (and other products labelled in the South) the risk of fraud would be even higher

as the label is already on the product when it leaves the producing country.

Further comments:

There was a comment suggestion to integrate all product categories in the 20% approach and lift all

the product specific rules such as retro-certification. There were other suggestions to include all rules

like this in the product standards, rather than the generic ones, and look for product specific solutions.


Conclusions There is overall agreement with the proposal and the majority of the stakeholders see the need for

clarification of the distribution of roles in the value chain.

Section A:

Although there is overall agreement with the proposal, many product specific risks have been

identified by different stakeholders.

Section B:

The over 30% disagreement with the proposal demonstrates the many concerns with it. The risks

mentioned are mainly regarding the integrity of Fairtrade and the percentage chosen.

Section 5.1. Core requirements on advanced payment


Clarified and modified core requirements:

1. Rename pre-finance as advanced payment of a contract (change)

2. Advanced payment requirements apply to the first buyer (clarification)

3. Shift the responsibility: buyers must offer advanced payment rather than producers request

it (change)

4. Advance payment does not need to be provided if producers decline the offer or it implies a high

risk (no change

5. Advanced payment can be provided directly or facilitated via a 3rd

party lender (no change)

6. Specifying what buyers need to do if they choose to facilitate advance payment via a 3rd

party lender: introduce them, confirm to the lender that the contract can be used as collateral

and paying through the lender if requested. (change)

7. The current amount of payment to advance and the time in which to do it remains the same (no

change)

Feedback received

A majority of the respondents (60%) agree with the proposal. Many respondents did not know how to

respond to the question (20%). 15% are against the proposal.




Rationale The main arguments in favour were that:

It will enable producer organisations to buy the product for their buyers on time from their

members

It will keep members of the producer organisations from selling to middlemen

Will reduce fees charged by lenders

Risks mentioned:

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Producer

Trader

Other

5.1



0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Banana

Coffee

Cocoa

Sugar

Seed Cotton

Flowers and Plants

Tea

Other

5.1


I dont know, I don’t agree or disagre No, I completely disagree



The fact that often the contract is being used as collateral for credit led to the conclusion that

the right timing of the contract is more important than the offer of pre-finance from the buyer.

For FTO’s that handle multiple supply chains this might become burdensome to manage

"High risk" is difficult to define

Advance payments reduce the pressure on the producer to supply on time and to the quality

agreed.

The relationship between the producers and the lenders are much more important than

between the buyers and the lenders. Not all buyers will be aware of the lenders.

Some lenders may already have reached their maximum number of clients/credit in the

respective country or product portfolios.

Producers may have poor accounts, in which case they won't receive finance from lenders.

Consequences when the producer organisation is a much bigger business than the trader.

The differentiation of excluding fresh fruits instead of year round crops was questioned

For wine it is complicated as the exporters buy the product and stock it for long time

For rice the risk of not getting the product seems to be high

In sugar the pressure will be on the mill that does not benefit from Fairtrade.

National law sometimes regulates payment intervals.

Conclusions

A majority of the respondents sees advance payment as an integral part of Fairtrade that should be

reinforced.

On the other hand, a large number of traders do not provide pre-finance, and argue they cannot do it.

The main argument being the risk involved, or that it is not the traders' role. In that sense, they

welcome the option of facilitating access to pre-finance via a 3rd party lender. However, there is still

the question what happens in case the 3rd party lender does not provide pre-finance, which may

happen if the producer does not have sufficient financial systems in place.

There are a lot of concerns regarding the lack of know-how on paying in advance.

Guidance of the right timing of contracts for efficient work with 3rd party lenders is important (country

and product specific).

The conditions for seasonal crops are not the same as for “all year” crops. Unfortunately the product

categories of the standards do not match this separation.

Section 5.2. Aspirational requirements on financial support


New aspirational requirement: Provide access, directly or through a 3

rd party, to credit for other

financial needs of the organization

Feedback received

A majority of the respondents (60%) agree with the proposal. Many respondents did not know how to

respond to the question or where neutral (24%). 14% are against the proposal, and many of those did

not understand that the criteria is aspirational.




Rationale The main argument in favour is that it could encourage traders to support producers.

Risks mentioned:

Aspirational may not be enough to encourage traders

Can lead to significant dependencies of producers on their buyer (in case credit is provided

by the buyer). Fairtrade as a system already provides support through the Fairtrade access

fund, which the respondent considers as the better way of supporting producer finance.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Producer

Trader

Other

5.2



0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Banana

Coffee

Cocoa

Sugar

Seed Cotton

Flowers and Plants

Tea

Other

5.2





Conclusions The survey concluded that as long as it stays aspirational, there is no important opposition. However,

it was also highlighted that it may not change much, and there was concern expressed about

generating dependencies.

Section 6.1. Sourcing plans


Clarified Core requirements

1. Sourcing plan (an estimation of future Fairtrade purchases) to producers has to be provided by

price payer only (clarification).

New Aspirational requirements

1. For traders working directly with producers: provide regular additional relevant market information

to the producer, as a minimum including the following: final destination market and product form,

customer feedback of the product and market trends regarding quality specifications, or other market

information as requested by the producer

2. For traders not working directly with producers: also provide a sourcing plan to immediate supplier.

3. For all: you sign long-term contracts with producers or you have a long term commitment with your

suppliers so they can in turn have a long-term contract with producers. Guidance: in this context long

term means 2 years or more.

Feedback received

A large majority of the respondents (76%) agree with the proposal. Only 9% are against the proposal.



0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Producer

Trader

Other

6.1




Rationale


Brings clarity to the producer to plan investments and plantation.

Risks mentioned:

The requirement will not change anything. If it is already in practise they will continue and if

not the actors will just create a paper document that has no meaning (increase bureaucracy)

Depends on the end-buyer (retailer/roaster)

There is confusion about the wording in the proposal as it mentions the word contracts. It is

therefore unclear whether it is about a contract or about a (non-binding) agreement.

In some markets 2 years is a very long time to plan ahead

Further comments:

Clarify the term “modality”

Inclusion of a penalty scheme for traders if they do not comply with a part of their “promised”

volumes

Producer Organizations should confirm the supply plan volumes

Change “honest estimation of purchases” into “realistic estimation of purchases” as honest

has a moral connotation

Conclusions There is overall agreement with the proposal as many of the actors already have long-term

relationships with their producers. Most Producers are generally very supportive as it is considered a

valuable tool. The critical comments, however, point out that several traders depend on receiving the

retailer/processor’s own forecast to be able to provide an adequate one, which even if encouraged by

the new aspirational requirement will not be guaranteed.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Banana

Coffee

Cocoa

Sugar

Seed Cotton

Flowers and Plants

Tea

Other

6.1

Yes, I completely agree Yes, I mostly agree I dont know



Section 7. Sharing risks:


New Aspirational requirements

1. Apply risk management tools to contracts with producers, on their behalf and with no costs

(when applicable)

2. Buyer checks quality before transport to reduce quality risks (if applicable)

3. Policy that explains that in the context of high price volatility with risk of losses for producers,

possible solutions are discussed with producers

4. Applicable jurisdiction for conflict resolution based in producing country

Feedback received

Overall, 71% of the respondents support the proposal on sharing risks (mostly or completely agree) for

one or more products, while 8% mostly or completely disagree with it. Producers are in vast majority

(90%) in favour. Among traders, opinions are more split, 57% mostly or completely agree, while 14%

disagree. A significant number (28%) do not know.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Producer

Trader

Other

7.1




Rationale

In general, those in favour (mainly producers) believe that sharing risks will create more transparency

and more trust between buyers and sellers, and that it will reduce risks for producers. Some point out

that it is important to share risks because producers are the most vulnerable part of the value chain,

and also face climatic risks.

Among traders, some agree with the proposed requirements as long as they remain aspirational.

Those against the proposed requirements argue that:

Fairtrade already regulates too much, and this makes things even worse. It becomes too

complicated.

There are already trade rules and practices defined in the conventional sector that regulate

the risk sharing between the various actors in the chain. No need for Fairtrade to intervene

or change that.

Any additional sharing of risks comes with additional costs.

One would need a very strong motivation to convince traders to comply with the

requirements.

There is a suggestion for clarity in contracts on risks of both parts and responsibilities.

In addition, some ask for more clarity on the requirements.

One respondent would prefer having clearly defined basic requirements, but no aspirational

requirements.

On the specific topics: As this section covers very different topics, the feedback differs much from one

requirement to the other, as follows:

Price risk management:

The specific comments given on this requirement are mainly negative:

First, respondents argue that any price risk management tool comes at a cost. Also, many point out

that this requirement is more relevant for coffee which is traded at open prices. Given that some

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Banana

Coffee

Cocoa

Sugar

Seed Cotton

Flowers and Plants

Tea

Other

7.1

Yes, I completely agree Yes, I mostly agree I dont know



requirements already exist for coffee, it is -according to them- now more a matter of closely auditing

the requirements, training producers and providing guidelines.

Quality:

Those in favour (mainly producers) argue that quality claims need to be regulated because there is

some abuse, and it leads to conflicts. A few traders mention that they already have quality control at

export level, but others argue that this would come at a cost. Some respondents point out that

checking quality before export in banana would not be feasible, because some quality problems

appear only once the fruit is ripened. Training and capacity building of producers is suggested as a

better way towards a more consistent and higher quality product. There are some requests for

increasing clarity of the requirements and one respondent suggests having more clarification on a

product basis.

Price volatility:

Very few commented specifically on this topic. Some agree with it as they recognize that otherwise

producers will run into problems in case of price volatility.

However, some traders complain about the imbalance in risk-sharing in favour of producers, especially

in coffee, some complain about “producers who sign contracts, but then do not deliver”.

One NFO gave very detailed feedback and made an alternative proposal for wording, namely a

compulsory requirement requiring a clause in the contract defining mechanisms for adjusting agreed

prices in case of high price volatility (upwards or downwards).

Country of jurisdiction:

Comments made specifically on this topic are mainly negative, because of the justice system in many

countries in the South is perceived as weak and other alternative mechanisms perceived as lacking

expertise. The costs involved are also an argument against. Suggestions are around either, using

existing contracts and authorities operating in the industry, helping producers be better represented

there or setting up alternative arbitration mechanism for Fairtrade. Providing guidance and detailed

information on this is also recommended.

Producers were particularly asked about additional risk-sharing mechanisms for them and the

following was mentioned:

Some risks mentioned by respondents are already covered by existing requirements (quality claims)

or by the proposal (price volatility, exchange rate fluctuation risk). Other risks were mentioned, but it is

difficult to define standard requirements to share such risks. These are: climatic risks and diseases

affecting the production, reduction in Fairtrade sales volumes or lack of sales after investment in

production, theft on farm or during transport.

Some banana producers suggest setting up an independent quality control mechanism at port of

destination. Another operator suggests an insurance cover.

Conclusions

In general, the section receives strong support, many express positive comments on the general idea

of risk-sharing. But, the comments made on the requirements themselves demonstrated some

concerns and criticisms.


Overall, there is support for improving rules around quality claims, but there are concerns about the

idea of quality control before export. Price risk management and price volatility are seen mainly as

coffee-specific issues while the topic of the country of jurisdiction is criticised as not being realistic.

Some agree with the proposed requirements as long as they remain aspirational.

On all topics, there is a recommendation to focus on capacity building through guidelines and training.

Section 8. Producer support:


New Aspirational requirements: to encourage supply chain operators to support producers in

building their operational capacities or advancing their social goals.

1. For all traders: supporting producers’ or workers’ Fairtrade development plan or Premium plan,

or provide other operational, production or social capacity-building support that producers or workers

choose. This can also be paying a higher Premium. But this cannot be paid out of the Fairtrade

Premium.

2. For all traders: Sourcing from producers with limited market access (Least Developed Countries

or land-locked countries, post-conflict areas, women or minorities-owned organizations, or that have

never sold to the export market before).

3. For all traders: Acting as market liaison: sponsor producer participation in trade fairs or put them

in contact with other buyers

Feedback received

The vast majority of respondents (74%) are in favour of this requirement, especially producers.

Approximately a third of the respondents did not respond or did not know. Only 7% mentioned they

mostly or completely disagree with the proposed requirements.

40%

35%

18%

5%

2%

Q8.1. Do you agree with the proposal for producer support?


Yes, I mostly agree

I dont know




Rationale


It will enable producers to build up their capacity, improve their production to get better

market access.

It will improve producers’ conditions of living

It will promote closer collaboration between producer and buyer.

Some appreciated that the requirement insists on “producers’ choice”, as it is important to ensure the

independence of the producer.

Also, many (mainly traders) support the requirement as long as it remains aspirational. They see it as

a “nice to have”.

Those against the proposal had the following main arguments:

This should not be in the Standard because:

o It is not needed. Those who do it, do it anyway, because of their motivation.

o The audits should focus on the Core.

It is not the role of the traders:

o There is a risk of bias if training is provided by the trader. Producers get confused

when they get support from many organisations.

o It should be Fairtrade International’s role to provide producer support and to invite to

trade fairs.

o Some traders do not have the capacity to provide producer support, especially if

they are not based in the country or if they have limited financial capacity and/or

tight margins.

It will not be possible to audit against these requirements if the support is not documented in

writing (one comment).

On the access to markets (2 respondents), it is difficult to comply if the quality provided by

producers does not match the customer’s expectations.

On the invitation to fairs, two said it is not possible to put producers in contact with other

buyers or with customers, because it would be direct competition.

69%

51%

76%

26%

36%

17%

4%

9%

3%

1%

3%

3%

1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Producer

Trader

Other

8.1





One participant noted that the capacity to comply with this requirement will depend on the

type of operator. According to this answer, multinationals have more capacity to provide

producer support, while FTOs are likely to comply since they already implement many of

these activities.

FTOs who participated in the survey completely agreed with the proposal.

The following suggestions/comments were made:

Add “workers” to the beneficiary group

Link to the “needs”, to be defined by producers

How are we going to define the list of “vulnerable producers”?

We should rephrase into “co-investment” from producer and trader, and possibly 3rd party

The trader should be allowed to monitor implementation to ensure his support has impact

The support to producers should be coordinated.

On the access to markets, we should add those who sell little volume under Fairtrade terms.

Conclusions

Overall, this requirement is strongly supported by stakeholders. Since it is “only” an aspirational

requirement, there is in any case limited risk for traders whom it would apply to.

Section 9. Trading with Integrity


New Core requirement for all traders, to avoid unsound trading practices:

You do not engage in unsound practices that clearly damage producers’ or other operators’ capacity

to compete and you must not impose trading conditions on your suppliers that will make it difficult for

them to comply with Fairtrade standards. Such as:

1. bonded contracts

2. exclusivity contracts

3. selling/buying below Fairtrade price

4. selling below costs (dumping)

5. poaching members from producer organisations or otherwise attempting to weaken existing

organisations

6. pushing prices down in such a way that the supplier cannot comply with the Fairtrade Minimum

Price, Premium and/or other Fairtrade requirements

7. other clearly unsound practices

Feedback received

This requirement is in overwhelming majority (90%) supported by stakeholders. Only 3% are against,

while 7% do not know.


The support is strongest among producers (96%), but traders are also strongly in favour (87%

completely or mostly agree).

Rationale Most stakeholders welcome the requirement in principle, because it will prevent unfair competition

and unsound practices, it is in line with what Fairtrade stands for and will maintain Fairtrade’s

credibility. It will provide greater transparency in commercial relations and more security to producers.

Some welcome that this is finally proposed, as they have noticed that such unsound practices do take

place at present and are very detrimental.

However, many note the challenge in the implementation: they are concerned about how these

requirements will be audited.

60%

30%

7%

2% 1%

Q9.1. Do you agree with the proposal for trading with integrity?


Yes, I mostly agree




69%

51%

76%

26%

36%

17%

4%

9%

3%

1%

3%

3%

1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Producer

Trader

Other

9.1





They suggest the following:

examples need to be defined carefully, more specific wording is required

the compliance criteria need to be measurable and auditable

preventive an corrective measures must be defined, the risks of non-compliance need to be

clear

Producers need also to be checked (by accepting such practices, they indirectly force others

to do the same).

Legal implications need to be looked at (especially because of the reference to pricing)

On the specific examples, the following is mentioned:

“other unsound practices” needs to be deleted because it is dangerously unclear

“Selling below costs” might be the only solution when market is falling; How to identify

whether prices have been pushed down in bad faith or because of market falling

“Poaching members” should be made more clear, is it poaching when weak co-ops lose

their members?

“Exclusivity contracts” can be beneficial to producers and should not be mentioned here.

One should rather promote long-term relationships

One respondent, considering that the real possibility to audit needs to improve because it is a Core

requirement, requires more explicit descriptions, and proposes the following for specific requirements:

1. Bonded contracts: suggested that in order to reduced the risk of bonded contracts Fairtrade

transactions are only allowed between trade partners who also trade at conventional terms,

when the value of their conventional trade is smaller than that the value of their Fairtrade

2. Selling below costs: submitting standardized costs sheets to the certifier that publishes

mean values of these cost sheets among all stakeholders, and audits major variations.

3. That for major products, contracts in any part of the value chain can only be cancelled with

written approval of certifier.

The respondents also mentioned other practices that they considered unfair and could be included in

the requirement, however most are covered by existing standards already therefore the importance of

continued strengthening of the standards assurance process is highlighted. Other practices referred to

producer organizations rather than to traders for Fairtrade’s consideration in next review of producer

standards.

Conclusions Overall, there is strong support for the proposed requirements, but some concerns about the

implementation and a request for clarification and more detail on the requirements. Because it is

presented as a Core requirement, operators are concerned about the risk of non-conformity, so they

want full clarity on what they are allowed and not allowed to do.

Section 10. Other comments

Out of the 323 complete responses received, 60 respondents provided additional comments. In

addition to expressing appreciation for the opportunity to participate and praising the proposal put

forward there was a wide array of comments on diverse issues. The most common were the need to


expand markets and find buyers for Fairtrade certified products and to access market data per country

as well as the need of closer surveillance to all actors in the supply chain and not only producers.

The following needs were also mentioned: to revise minimum prices and Premium ( mentioned

through individual responses and workshops), to strengthen the traceability requirements including a

platform that in real time that would give information about transactions, to train traders and producers

to facilitate the application of this Standard.

Additionally, in written feedback an NFO highlighted the dilemma the revision of the Trade Standard

faces as it aims to set rules to mainstream actors in the market at the same time as it aims to set rules

to “alternative supply chains”. In their opinion the mainstreaming of an alternative model is only

possible beyond a specific market segment through lowering the standards. According to the

respondent, two different models should be developed: one that focuses on payment of price and

Premium and another one that regulates the trading relations along the supply chain setting the bar

higher than what has been proposed during the consultation. A lack of strategic framework as a

necessary previous step before standard development was also raised by a member of the MEP team.

Finally, several stakeholders mentioned that it was unfortunate that the consultation period overlapped

with the summer break in Europe, as this reduced the opportunity to provide more and perhaps better

feedback to the questions raised.


ANNEX 1: Final Standard Committee decisions:

In view of cthe consultation feedback described in this document, the TS team revised the proposals and presented them to the Standards Committee, on September 16

th, 2014 to get their feedback, and

on November 26th, for approval of the final version.

The final decisions on the Trade Standard topics included in the 2nd

consultation round are as follows:

1a. Model with aspirational requirements: the SC approved the model consisting in Core mandatory (core) requirements and aspirational (voluntary) requirements, describing best practice. The aspirational requirements will be audited, but compliance will be voluntary, and will lead to a score. The term aspirational requirement was also changed to “voluntary best practice”.

1b. Publication of audit results: the consultation revealed some concerns about confidentiality. The final decision is to keep audit results internal to Fairtrade staff, and only publish average anonymous aggregated results, at least in the first 2 years, and then to reevaluate.

2. Labour section: the consultation results showed over 90% support to the idea of labour requirements. However, the issue of additional costs was raised. As a result, the team submitted a revised proposal, which the Standards Committee approved in its November session:

a) a core requirement that all operators are aware of the applicable labour laws in their country and of the fundamental ILO conventions and that there are no indications that they violate any of them. We will apply a reactive assurance approach (meaning: audits will be carried out on a reactive basis) based on allegations and on a risk assessment).

Guidance: ILO fundamental conventions cover freedom of association, forced labour, child labour and non-discrimination.

The SC agreed to have a transition period to prepare for the implementation of the labour

requirements. So they will only be applicable from 2017 on.

3. Environment section: the consultation feedback showed strong support to the proposal to include

environmental requirements for traders but also important concerns, especially about costs and

deviation from Fairtrade’ priorities. Therefore, the TS team revised the proposal, which the Standards

Committee approved.

a) Core requirement regarding compliance with regulations, with a reactive assurance approach,

focusing only on clear indication of non compliances such as allegation and on a demonstration

that the company is aware of laws, which in terms of auditing and certification will not be

intensive and will limit costs.

b) Core requirement forbidding the use of chemicals in the PML list on Fairtrade products. Despite

not being consulted upon, this was proposed by some respondents to the consultation, and it is

considered key for a consistent message, coherent with the consultation results and supportive

of fair competition between producers and traders.

c) Aspirational requirements regarding environmental impact evaluation, use of biodegradable

packing and efforts to reduce carbon footprint.

A more in-depth review of the PML list for traders will be done within the framework of the PML review

in 2015.

4. Fairtrade Payer and Fairtrade Eligible: the consultation feedback on this proposal showed a lack of stakeholder consensus, for opposite reasons, and also highlighted that trader roles and responsibilities vary a lot from one product sector to the other. Therefore the TS team presented a


revised proposal, aiming at regulating better the role of conceyors, to ensure greater benefits to producers, and greater transparency of Fairtrade transactions. Regarding Fairtrade eligible, the final decision is to adopt a product by product approach and to define for each product category who is payer and who is conveyor, and in which cases Fairtrade eligible sales may be allowed. This will be done progressively, within the framework of the product standard reviews. 5.1. Pre-finance / Advanced Payment: this topic is seen as a key component of Fairtrade, but there are challenges in the implementation. The SC approved the proposal, which requires the first buyer to facilitate access to prefinance. The TS team also pointed out that improving access to finance cannot only be enforced via a Standard, other measures beyond standards need to be taken. 5.2. Other forms of financial support: stakeholders were in favour of this aspirational requirement.

The SC approved it, with instructions to ensure that it is not imposed on producers, and fits their

financial needs.

6. Sourcing plans and market information: There is overall agreement on this topic. Most producers

are generally very supportive as it is considered a valuable tool. The critical comments, however, point

out that several traders depend on receiving the retailer/processor’s own forecast to be able to provide

an adequate one, which, even if encouraged by the new aspirational requirement, will not be

guaranteed. But this issue is beyond the scope of the Trade Standard Review. The SC approved the

proposed requirements.

7. Sharing risks: In general, the section received strong support, but the feedback differed from one

requirement to the other: Some agree with the proposed requirements as long as they remain

aspirational. In many instances, there was a recommendation to focus on capacity building through

guidelines and training. The SC therefore approved to maintain (and enforce) the existing requirement

related to documentation of quality claims.

8. Producer support: The consultation feedback on this section was in vast majority supportive of this

proposal, even if some did not see this as the role of the traders. The SC approved the section.

9. Trading with integrity: the consultation feedback showed there was very strong support (over 90%

of respondents) for the proposed requirements, but some concerns about the implementation and a

request for clarification and more detail on the requirements.

The team revised refined the definition of the requirement, taking into account the EC definition of

unfair trading practices, which the SC approved.

SC endorsed the team’s proposal that audits will focus on checking there are no clear indications of

breach of the requirement, such as allegations.

Documents

Consultation Results Synopsis · 30/09/2014 · Standards Consultation Results Synopsis Trade Standard 03.09.2014 Consultation Results Synopsis Information to Stakeholders on the