Fairtrade: how it works

and how you can get involved Kindly provided for adaptation by

Faaiza Bashir – The Fairtrade Foundation

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The FAIRTRADE Mark is the only independent consumer guarantee of a better deal for producers in the developing world.

Our vision: A world in which every person, through their work, can sustain their families and communities with dignity

The FAIRTRADEMarkThe FAIRTRADE Mark

FLO EV

FLO - Cert

20 National Labelling Initiatives

UK: Fairtrade Foundation

France, Switzerland, Netherlands, Norway, Belgium, Denmark:Max Havelaar

USA, Canada, Germany, Luxembourg, Italy: Transfair

Develop standardsFormulate Price + Premium levelsProducer Business Unit (PBU)– provides in country support

Separate legal entity Certifies Producer groups Registered supply chainsAnnual auditing

Ireland:Fairtrade Mark

StructureFairtrade Labelling Organisation

FLO

Australia & NZ:Fairtrade Labelling

Japan:Fairtrade Label

Mexico:Comercio Justo

Sweden:Rattvisemarkt

Austria:Fairtrade

Economic Standards

The Fairtrade System sets a minimum price …

The Arabica Coffee Market 1989 – 2008:Comparison of Fairtrade and New York Prices

…and a social premiumThese projects are for everyone in the community, not just farmers

Community bore hole in Ghana (cocoa farming community)

School in Mali (cotton co-op)

Cable TV in India on a tea estateSports centre in the Windward Islands

(banana co-op)

©Simon Rawles

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Creche in South

Africa (orange and lemon farm)

©Naomi Kranhold

©Simon Rawles

Social Standards• Democratic structure

• Transparent business structure

• All members to benefit

• Business planning

• No child labour

• No forced labour

• Non-discriminatory employment and business practices

• Freedom of association

• Health and safety standards

Environmental standards• Dirty dozen’ pesticides banned

• Protective clothing

• Health screening for sprayers

• Water conservation measures

• Where appropriate, working towards organic status

• No GM

‘With Fairtrade income we were able to implement a fermentation program to improve the quality of our cocoa and to convert our production to certified organic.’      

Isidoro de la Rosa, Executive Director, CONACADO 

Global view

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...however the share of product sold as Fairtrade remains low

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Source: Management Data, OC&C analysis

Fairtrade Sales as Proportion of Producer Capacity, 2009 Producer Audit% total production (MT) sold as Fairtrade

Honey

Herbs and Spices

Coffee

Nuts and Oilseeds

Seed Cotton

Banana

Cocoa

Tea

Wine Grapes

Low proportion of product sold into Fairtrade usage due to the fact that

– Crop is not all of export quality

– Product may not have the right taste profile (particularly tea)

– Low demand

– High level of local demand eg Honey

Significant recent sales growth in specific categories will also have resulted in much higher proportions being sold into Fairtrade, in particular

– Sugar: Expansion of Tate and Llye sales

– Cocoa: Cadbury and Nestle account growth

Overview

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Building the Fairtrade movement

• 500 Fairtrade Towns in the UK

• Over 4,000 schools registered and 460 achieved status

• Over 6,000 Fairtrade places of worship

• 130 Fairtrade Universities & colleges

Fairtrade and faith

Fairtrade unites all faiths which stand for fairness, justice and honesty

• The fields of the poor may produce abundant food b but injustice sweeps it away. Bible, Proverbs 13.23

Give full measure and full weight in justice, and wrong not people in respect of their

goods Quran 11:85

If you sell anything to your neighbour or

buy anything from your neighbour, you shall

not wrong one another Torah, Leviticus 25:14

Climate Change

There is no doubt that climate change demands urgent action at every level. An effective, meaningful, international response will not ruin poor people’s prospects for development by taking away their right to trade on fair terms.

Fairtrade products cannot be grown in a UK climate, therefore these products are imported regardless of whether they carry the FAIRTRADE Mark.

Fairtrade represents millions of producers who are already experiencing the devastating consequences of more frequent and severe climatic events. They have contributed the least to carbon emissions yet face a future of increased drought, flooding, disease and famine. Fairtrade enables communities to prepare for a changing future and respond to natural disasters. Long term relationships and established co-operative structures give producers the confidence and supportthey need.

Fairtrade also enables farmers to develop sustainable farming practices and programmes to protect their own environment. For example Fairtrade producers are preserving rainforests through the sustainable harvesting of nuts or coffee.

Local farmers?

The Fairtrade Foundation recognises that many farmers in the UK face similar issues to farmers elsewhere, but its specific role is to support farmers in the developing world.

Fairtrade is not in competition with UK farmers and the purchase of locally produced and Fairtrade products are not necessarily mutually exclusive. Fairtrade focuses mainly on tropical agricultural products such as coffee and bananas that cannot be grown in temperate climates.

For some items such as honey and flowers, local supply is not able to meet the total demand. It has been estimated that both UK flowers and honey account for less than one third of the UK market, so imports are necessary to keep up with consumers’ shopping preferences.

Often the choice facing shoppers is not necessarily between local honey and Fairtrade certified honey but between Fairtrade honey and conventional honey imported from the US or China for example. What is important is that we all try to make informed choices wherever possible.

False Economies?

Fairtrade is a voluntary model of trade that brings consumers and companies together to offer organisations that represent small farmers and hired labour a price for their produce that covers the cost of sustainable production and provides a sustainable livelihood.

Fairtrade is a market response model of trade: the farmers receive a Fairtrade minimum price and premium only if they have a buyer willing to pay them. Nearly all producer groups also sell to the conventional market.

Producers tend to use their additional income from Fairtrade to improve their homes, send their children to school and improve the quality of their existing crop, rather than to increase production. In time, this may also provide sufficient funds for producer groups to diversify into other products or income generating schemes in order to reduce dependence on a single crop.

Thank you. Any questions?