Fair play?

With big name companies like Starbucks and Cadbury now on board, the Fairtrade movement is gathering momentum. Huw Thomas asks if its commitment to social justice and sustainable development can withstand the pressures of big business.

“It can work for producers and it can work for consumers. Therefore it can also work for companies”
-Harriet Lamb, Executive Director, Fairtrade Foundation

We're all socially responsible these days. Issues that were once purely the preserve of activist groups are now creeping inexorably into the mainstream. The challenges of climate change, barely acknowledged a few decades ago, are now a key priority for political and business leaders alike. As consumers we have become considerably more concerned about the origins of the products we buy. We want to know where things come from, how they are produced and whether or not they are they sustainable. The Fairtrade movement has been at the forefront of this wave of ethical consumerism. Coalescing out of a collection of Non-Governmental Organisations (NGOs), it now encompasses 21 labelling initiatives across the world. These initiatives aim to provide shoppers with the reassurance that the money they spend on Fairtrade labelled products will actually be benefiting the people who produced them. The Fairtrade Foundation, the UK arm of Fairtrade Labelling Organisations International, describes its vision as: "To transform trading structures and practices in favour of the poor and disadvantaged. By facilitating trading partnerships based on equity and transparency, Fairtrade contributes to sustainable development for marginalised producers, workers and their communities. Through demonstration of alternatives to conventional trade and other forms of advocacy, the Fairtrade movement empowers citizens to campaign for an international trade system based on justice and fairness."

It's an ambitious sentiment. Even in an increasingly ethical world where every organisation has its own corporate social responsibility strategy, it is still the bottom line that generally has the last word. Supportive statements come cheap. Any changes that might directly affect profitability remain subject to the strictest scrutiny. But perhaps we are approaching a point where the ambitions of Fairtrade campaigners and the corporate imperatives of big food producers finally dovetail? The growing commercial value of the Fairtrade brand and genuine concerns over the continuing sustainability of food supplies suggest that this might be the case.

There is no denying that Fairtrade is on the rise. Cadbury's announcement that it is to use only Fairtrade cocoa and sugar in the manufacture of its Dairy Milk chocolate is a clear validation on the value now placed upon the Fairtrade brand. The new ethically labelled bars hit shop shelves in July, increasing the total UK market for Fairtrade by 25 percent at a stroke. There can be little doubt that the move was made chiefly for business reasons. "Fairtrade as a consumer mark has very high levels of consumer awareness," says Alex Cole, the chocolate maker's Global Corporate Affairs Director. "We would hope that through our involvement we will actually raise that awareness and we'll also raise the understanding for Fairtrade."

For Harriet Lamb, Executive Director of the Fairtrade Foundation, the Cadbury decision is just the latest affirmation of Fairtrade's commercial value. "I think it sends quite a powerful message that Fairtrade is clearly what the public are asking for," she says.  "A company like Cadbury would not be taking an interest in Fairtrade unless they were absolutely sure through extensive research, focus groups, and consumer testimony that was what the public wanted and indeed had been asking them to do for years now.  They tested the concept, tested it wide with a wide spectrum of the public. Clearly they're sure that it's going to work with the public, but it's also going to work with their brand values."

In addition to the goodwill generated by the Fairtrade label, Cadbury also has clear operational reasons for embracing the concept. "The original driver was around supply chain sustainability," Cole explains. "If we don't have the beans, we can't make the bars, and there really was for us a long-term view that we needed to invest more in our cocoa sustainability."

It's a view that Lamb supports and something that ties into the long-term value more ethical trading practices can bring for food producers. "What's interesting about the Cadbury move is that they've been very clear from the beginning that is also works for them from a supply chain point of view," she says. "I visited Ghana together with the Cadbury team including CEO Todd Stitzer. We met cocoa farmers and it was shocking to see how poor many of the farmers are whom whole supply chains depend on. They are worried that their sons don't want to grow cocoa, that they're leaving for the cities and drifting round unemployed because they see no future in it. Obviously Cadbury depends on cocoa farmers to grow the cocoa to make the chocolate. So they also saw it as a sensible investment to make in the future of the company."

Cadbury is not the only major food producer moving towards Fairtrade. Last year Starbucks announced that all espresso coffee in its UK and Ireland stores will soon come from Fairtrade sources. Furthermore, by the end of 2009 the aim is to source all Starbucks coffee either through Fairtrade or the company's own Shared Planet scheme. This forms part of a global plan that will see Starbucks become the biggest buyer of Fairtrade certified coffee in the world, purchasing 40 million pounds annually.

Compromising situations
On the face of things, more big corporations jumping into Fairtrade should be good news. Nonetheless, there are fears that the increasing involvement of big business might also have negative effects. Gavin Fridell, Politics Professor at Trent University, Ontario and author of Fair Trade Coffee: The Prospects and Pitfalls of Market-driven Social Justice, believes that the fundamental disconnect between the Fairtrade philosophy and the commercial ambitions of multinational enterprise could lead to big problems. "Fairtrade's origins are in the NGO sector and amongst development organisations, church groups, indigenous groups, peasant organisations and so on," he says. "It's not like a corporate top down initiative. But the bigger it's becoming, the more it's becoming kind of a victim of its own success. The more that these corporations get on board, the more challenges that is raising for Fairtrade because I think that these corporations have fundamentally different vision of what Fairtrade is. They have a fundamentally different objective of how they're going to use Fairtrade than the conventional or historical partners that we might think of."

Harriet Lamb dismisses such concerns by pointing to her organisation's stringent certification standards. "The reason the public can trust the Fairtrade mark is because we trust no one," she says. "We will check. We check the producers, the big companies and the small companies. You have to work quite hard to achieve the Fairtrade mark. The public can trust it because there are clearly defined standards."

Pretenders to the throne
However, it can be possible to obey the letter of the law without necessarily embracing the spirit. Fridell is concerned that business sees Fairtrade as little more than a branding exercise and that it neglects the educational message at the heart of the movement. The term 'ethical fig leaf' is one that crops up fairly often, acknowledging that certain companies' commitment to Fairtrade sourcing can seem a little lightweight once you start to peer behind the headlines. Nestlé, no stranger to criticism as a result of its sometimes controversial business practices, has its own brand of Fairtrade labelled coffee. While this could be seen as a step in the right direction, it is also possible to make the argument that the global giant is co-opting the goodwill engendered by Fairtrade to improve its image in a climate of growing socially conscious consumerism. This perception is only reinforced by the fact that the company actually sources less than one percent of its coffee from Fairtrade approved suppliers. Fairtrade's standards are undoubtedly solid and can make a huge difference to the lives of producers, but questions remain over who gets the most out of the relationship when global corporations with shaky ethical records are able to associate themselves with the brand, despite such fractional involvement.

In fact the combination of Fairtrade's marketing success and its rigorous certification process might even account for a rash of imitators that have sprung up in its wake. Labelling initiatives like the Rainforest Alliance and numerous corporate buying programmes such as Starbucks' Coffee and Farmer Equity Practices (CAFE) guidelines seek to tap into the growing ethical consumer market, but under their own terms. While Fairtrade's principles grew from its focus on individuals and communities, these later programmes approach the issue from a very different direction. "The Rainforest Alliance has some interesting environmental standards," says Gavin Fridell. "I don't think these things just need to be trashed, but at the same time, their labour standards and their social standards are very vague and unclear." Rainforest Alliance certified coffee was developed in conjunction with Conservation International, a corporate driven NGO that counts companies like Exxon, BP, Coca Cola and Rio Tinto among its backers. In place of the grassroots relationships with independent producers that Fairtrade cultivates, the Rainforest Alliance does much more business with plantation owners and industrial-scale farmers.

Self-certification schemes such as Starbucks' also pose problems. In 2006 the coffee giant self-certified 53 percent of its beans through its own CAFE programme. It's a headline-grabbing figure. In the eyes of casual observer it could appear that Starbucks' system was a direct equivalent of the Fairtrade programme. However, closer examination reveals some major differences."Fairtrade standards are minimums," Fridell explains. "Everybody who is Fairtrade certified needs to meet all the basic criteria. With the Starbucks criteria you get an overall score which means you don't have to meet all the standards. The higher your score is, the closer you are to being a preferred supplier." A more detailed look at the figures shows up some interesting facts. Of the 53 percent of farmers certified by CAFE only 19 percent were considered 'strategic suppliers', meaning that they scored 80 percent or higher. Twelve percent were 'preferred suppliers with scores between 60 and 79 percent. The remaining 69 percent were designated 'verified suppliers'. "All that we know about verified suppliers is that they scored less than 60 percent, but they have to obtain a 10 percent improvement next year," Fridell continues. "At university, less than 60 percent is less than a C." Because of the way the  Starbucks' scoring system is structured it is possible for suppliers to become verified while almost completely ignoring certain key social indicators, such as freedom of association and collective bargaining, access to education, access to medical care and worker safety and training.

While it wouldn't be fair to say that these more corporate responses to Fairtrade have no positive impacts for the producers involved in them, there is the risk that so many competing ethical marketing initiatives could create confusion in the minds of consumers to the detriment of true Fairtrade principles. Once again, Harriet Lamb expresses her confidence that the Fairtrade brand is strong enough to withstand these challenges. "If you compare the level of knowledge and recognition, the Fairtrade mark is head and shoulders above any other ethical label," she explains. "I think what's unique about Fairtrade, there's not only a level of consumer recognition but it's the fact that it's a people's movement. It's people up and down the country who are ready to knock on the door of their supermarket and ask them to start fair trade who talk about it in the local school or at their work place or in the town hall."

Real results
Amid the to and fro on the finer details of Fairtrade, it is possible to lose sight of the concrete benefits it can bring when properly applied. Unlike its larger peer Cadbury, Divine Chocolate is 100 percent Fairtrade certified. In addition, the company is co-owned by Kuapa Kokoo, the Ghanaian cocoa growers' collective that produces every bean used in its products. The nature of this relationship has led to significant advantages for both sides. "Being 100 percent Fairtrade is mainly a business advantage," says Divine's Head of Communications Charlotte Borger. "It emphasises the integrity of our business at a time when the companies behind brands are under more scrutiny than before. The fact that Divine is 45 percent owned by our Fairtrade cocoa suppliers is what truly sets us apart in our market. Consumers understand that there are much greater benefits to be had through company ownership, than purely from receiving the Fairtrade deal. They like the idea of farmers being able to share in the wealth they've helped create."

The rewards for the 45000 cocoa farmers who make up the Kuapa Kokoo are impressive. They receive a minimum of €1134 per tonne of cocoa, supplemented with the Fairtrade premium of €106 per tonne which they can invest in their own community projects. In addition, two percent of Divine's turnover goes to Producer Support and Development (PS&D) to help with training, maintaining the cooperative's principles and democratic processes. Finally, they get a distributable profit share for their 45 percent stake in the company. It all adds up. For 2007/2008 the premium totalled €179,779, PS&D came to €287,050 and profit share was €38,967.

But it isn't all about money. "Kuapa Kokoo has a very progressive programme of women's empowerment," says Borger. "This has led to women taking leading roles in their communities and being voted onto the National Executive, which is now comprised of more women than men for the first time. Company ownership has meant that farmers have learned much more about the industry they are part of.  Many have been to visit the UK and US and have seen firsthand how popular their chocolate is. This news has been fed back to the entire organisation, giving them a real pride in their cocoa and their own company."

It is results like this that are at the heart of the Fairtrade philosophy. The image of people empowered with a real stake in their own business and their own future is one that really resonates. Perhaps it is the strength of emotion engendered by these successes that makes the issue of increasing commercial involvement so contentious. As Fairtrade seeks ever larger trading partners to help spread its message, is that message going to be drowned out by the noise of conventional capitalist imperatives? "We're not just consumers," says Gavin Fridell. "One of the major goals of Fairtrade was not just to get people to buy the coffee but to actually say to them, look how unjust the coffee industry is. The new corporate partners don't have that educational mission.  In fact, I would argue they have the exact opposite mission, that they bring in often a token amount of Fairtrade, depending on the company we're talking about, and use that as a marketing tool."

For Harriet Lamb though, any such concerns are outweighed by the positive impacts association with big corporations can bring. "We've shown that it can work," she says. "It can work for producers and it can work for consumers. Therefore it can also work for companies. We now have to take it to volume if we're going to really make a difference.  The farmers are queuing up.  I hope that companies across Europe will look at the successful start taken by both 100 percent Fairtrade companies like Divine and also organisations like Cadbury and Starbucks that have really put their weight behind fair trade. I hope that that sends a very powerful message that it's possible to do the right thing but actually to do it in a way that works for their company too. We absolutely need to have more companies on board in order to meet the needs of the farmers overseas."

Trading up

Despite the global economic downturn 2008 was an extremely good year for Fairtrade

• Global sales increase by 22 percent overall
• Sales of Fairtrade tea grew by 112 percent, coffee by 14 percent and bananas by 28 percent
• Fairtrade coffee sales increased to 66,000 metric tons
• Consumers spent roughly €2.9 billion on Faitrade products worldwide
• Sales grew by at least 50 percent in seven countries including Finland (57 percent), Germany (50 percent), Norway (73 percent) and Sweden (75 percent)

 

Going bananas

Bananas have traditionally been a big Fairtrade product. Nonetheless, the decision by UK supermarket Sainsbury's to use only Fairtrade sources for its supply was a bold one. It certainly seems to have paid off for the retailer. Following the change, Sainsbury's banana sales have risen by 10 percent. "That strikes me as that's a pretty strong commercial message that Fairtrade could work as much for the farmers, but it could also work for the companies," says Harriet Lamb. "That's because the public do embrace it and actually are ready in some cases to pay more, obviously for a more premium product. But in other cases, companies are seeing how they can actually make it completely mainstream and not pass the price increase onto the customer but take that hit themselves." However others argue that the mutual benefits aren't as clear cut as they can at first appear. "A lot of the burden on fair trade is really dumped on the poor farmer," says Gavin Fridell. What's happening is that for a few extra cents, farmers have to jump through more and more and more hoops to for certification bodies for really a relatively modest increase to their income. Now it might be a necessary increase in the sense that maybe otherwise they'd go bankrupt. But it's not an increase that has given them a healthy, thriving life." Fridell goes on to say that some Caribbean farmers he spoke to were actually getting paid less under Fairtrade than they were previously. He also shares a particularly worrying statistic about the current health of the industry. "In St. Vincent in the Grenadines, 90 percent of the farmers there are certified fair trade," he says. "But that's only after 85 percent of them have gone bankrupt and left the industry. They've gone down from 7855 farmers to 1151 banana farmers, a decline of 85 percent since the early 1990s."

 

Fairtrade: key principles

Minimum price
This is the minimum price that a buyer must pay to a Producer Organisation for their product. It is not fixed, but should be seen as the lowest possible starting point for price negotiations between producer and purchaser. It is set at a level which ensures that Producer Organisations receive a price which covers the cost of sustainable production for their product. It also acts as a safety net for farmers at times when world markets fall below a sustainable level. However, when the market price is higher than the Fairtrade minimum, the buyer must pay the market price.

Premium
The Fairtrade premium is a sum of money paid on top of the agreed Fairtrade price for investment in social, environmental or economic development projects, decided upon democratically by producers within the farmers' organisation or by workers on a plantation. The premium fund is typically invested in education and healthcare, farm improvements to increase yield and quality, or processing facilities to increase income.

Standards
To qualify for the Fairtrade mark producers must satisfy a number of criteria. These include social, economic and environmental development benchmarks designed to protect farmers and the land they work on.