Brussels Rural Development Briefings A series of meetings on ACP-EU development issues

Does Fair Trade contribute to sustainable development?

This Reader was prepared by Lebo Mofolo, Research Assistant at the CTA Brussels Office Isolina Boto, Head of the CTA Brussels Office Does Fair Trade contribute to sustainable development?

This Reader was prepared by Lebo Briefing n. 5 Mofolo, Research Assistant at the CTA Brussels Office

With the assistance of Isolina Boto, Does Fair Trade Head of the CTA Brussels Office contribute to Parts of this document were compiled as background reading sustainable material for the 5th Brussels development? Development Briefing on Fairtrade and its contribution to sustainable development on 16 April 2008. Brussels, November 2014 The Reader and most of the resources are available at http://brusselsbriefings.net

2 Does Fair Trade contribute to sustainable development?

TABLE OF CONTENTS

1. Introduction

2. What is Fair Trade: concepts and key players

2.1. Definition and definitional issues

2.2. Key players in Fair Trade

2.3. Other Fair Trade certification schemes

2.4. The routes of commercialisation of Fair Trade products

2.5. The role of retailers

2.6. The role of the Consumer

2.7. What is Equitable Trade and how does it relate to Fair Trade

2.8. Voluntary vs. Mandatory Approaches

3. Fair Trade Standards and standards setting

3.1. International Standards for Fairtrade labelled products

3.2. International Standards for Fair Trade Organizations

4. Fairtrade in the Global Marketplace: Issues and Implications for the ACP

4.1. Issues with Fair Trade in the Global Marketplace

4.2. Normative Issues with Fairtrade

4.3. Substantive Issues with Fairtrade

5. Fair Trade in ACP-EU Trade context: scale, opportunities, successes and Case Studies

5.1. Fair Trade in the EU

5.2. Fair Trade in the ACP

5.3. ACP Opportunities for Fair Trade

5.4. Case Studies: Fair Trade in the ACP and EU context

Annex

Glossary

Acronyms

Resources

Websites

3 Does Fair Trade contribute to sustainable development?

1. Introduction

Rationale In addition to the question of in developing and developed Fair Trade, this Reader will also countries were often not considered The term “Fair Trade” (FT) has explore the additional dimension of jointly – as Fairtrade represents various meanings. In this Reader, it “Equitable Trade (ET)/ Equitable private standards which are often is used to indicate the “Fair Trade Sourcing (ES)”, and non-trade not the purview of government movement”, represented in particular concerns in international trade. The regulation or intervention, and by Fairtrade Labelling Organisations range and functions of standards equitable trading often also concerns International (FLO) and its associate and certification methods have public policy on trade covering organisations (and hence the use changed, to cover new areas of issues such as public or international of “Fair Trade” in this note is with commerce beyond those traditionally standards as well as trade rules. In capital letters). These groups aim concerned with FT, for example this sense, FT was promoted as a to provide an alternative business public procurement or services. means to fill the gap in the public which attempts to redistribute This necessitates a broader analysis rules on trade that were silent on returns to factors of production of the trading regime between issues such as the health, education, in a manner that is “fairer” for developing and developed countries labour rules and other social issues developing-country producers. In further to the activities of the FLO relevant to producers from trading this sense, conventional trading and its associate organisations. partners, or else only the minimum relations involving developing In this regard, equitable trade rules were stipulated. This has country producers are deemed is not in and of itself a specific changed, and there is a growing “unfair” insofar as the returns to standard framework, but rather recognition and validation in the EU those producers are abnormally low encompasses all the principles of a at least, that considerations that are in an economic, environmental and/ more balanced, fairer and sustainable not purely about trade can be taken or social sense. Hence, Fair Trade trade commercial relationship into account in commercial activities, seeks to secure higher earnings for between producers and consumers, regulation and partnerships4 developing country small-producers the former largely constituting that will allow them to cover farmers or other service providers production costs, earn higher returns from developing countries. More Historical background and address potential market failures importantly, trade rules at the such as environmental degradation national, regional and international The fair trade concept has been and/or low labour standards1. levels, many of which are covered developing in western nations Fair Trade, therefore, seeks to in instruments such as Free Trade throughout the past 40 years or so, connect low-income producers and Agreements (FTAs) or are agreed in response to a growing recognition consumers in large markets in more in fora such as the World Trade that benefits accruing from trading equitable and sustainable ways. Organization, are also considered and trade growth are not necessarily It originates in a growing interest to fall within the ambit of ET. This shared by all countries and all among consumers in large markets is evidenced in the emphasis which layers of the population within each in the development of socially many stakeholders and international country in a comparable manner. responsible traders, that would institutions within and outside of allow for a “social value added” in the FT system placed on ET in the Fair or equitable trading has its roots their commercial transactions. This context of WTO negotiations during in the Italian and British cooperative value added is generated when the Doha Development Round and movement of the 19th Century, which the purchase of a product, besides the Bali Round3 was then followed by religious and its intrinsic value, gives the final political movements in the 1950s and consumer the benefit of knowing Recognition of the interrelatedness 60s in Britain and the US, seeking that it contributes to improve the between FT and ET is increasingly alternative trade models. Religious quality of life of a group of low- gaining tract. Traditionally, these organisations and development income producers2. two dimensions in the relationship agencies were also involved between producers and consumers in actively working to support

4 Does Fair Trade contribute to sustainable development?

producers in the Global South to and respect. The goal was greater FT organisation, Max Havelaar in reduce inequality and poverty in equity in international trade. 1988, whose first FT labelled product their livelihoods.5 was coffee. Parallel to this citizens’ movement, The commercialisation of fair trade the developing countries were started in the United States, where addressing international political Fair Trade in the ACP- Ten Thousand Villages (formerly fora such as the second UNCTAD EU context Self Help Crafts) began buying conference (United Nations needlework from Puerto Rico in 1946, Conference on Trade and Fair Trade has repeatedly been and SERRV began to trade with poor Development) in Delhi in 1968, to recognized by the European communities in the South in the late communicate the message “Trade not Commission and EU member 1940s. The first formal “Fair Trade” Aid”. This approach put the emphasis governments for its contribution to shop which sold these and other on the establishment of equitable poverty reduction and sustainable items opened in 1958 in the USA. trade relations with the South, instead development. In 1998, the European of seeing the North appropriate all Parliament adopted the “Resolution The retail development of Fair Trade the benefits and only returning a on Fair Trade”7, which was followed in Europe date from the late 1950s small part of these benefits in the in 1999 by the “Communication from when Oxfam UK started to sell form of development aid. the Commission to the Council on crafts made by Chinese refugees “Fair Trade”8. In 2000, the ACP- in Oxfam shops. In 1964 it created The growth of Fair Trade (or EU Cotonou Agreement made the first Fair Trade Organization. alternative trade as it was called in specific reference to the promotion Parallel initiatives were taking place the early days) from the late 60s of Fair Trade9. In 2001 and 2002, in the Netherlands and in 1967 the onwards grew as a response to several other EU documents importing organization, Fair Trade poverty and sometimes disaster in the explicitly mentioned Fair Trade, Original, was established. At the South and focused on the marketing most notably the 2001 Green Paper same time, Dutch third world groups of craft products. Its founders were on Corporate Social Responsibility began to sell cane sugar with the often NGOs, working with their and the 2002 Communication message “by buying cane sugar counterparts in countries in the South, on Trade and Development. you give people in poor countries a assisting them to establish Southern In 2004, the EU adopted the place in the sun of prosperity”. These Fair Trade Organizations that “Agricultural Commodity Chains, groups went on to sell handicrafts organize producers and production, Dependence and Poverty – A from the South, and in 1969 the first provide social services to producers, proposal for an EU Action Plan”, “Third World Shop” opened. World and export to the North. Alongside with a specific reference to the Shops, or Fair Trade shops as they the development trade there was Fair Trade movement which has are called in other parts in the world, also a branch of solidarity trade. “been setting the trend for a more have played (and still play) a crucial Organizations were set up to import socio-economically responsible role in the Fair Trade movement. goods from progressive countries in trade.”10 In 2005, in the EC They constitute not only points the South that were both politically communication “Policy Coherence of sales but are also very active in and economically marginalised6. for Development – Accelerating campaigning and awareness-raising. progress towards attaining the As its name indicates, Fair Trade Millennium Development Goals”11, During the 1960s and 1970s, NGOs has always been closely linked to Fair Trade is mentioned as “a tool for and socially motivated individuals in developments in international trade, poverty reduction and sustainable many countries in Asia, Africa and and the need to respond to changing development”. Finally, in 2006, the Latin America perceived the need for global commodity prices and trade European Parliament unanimously fair marketing organizations which regimes. In this regard, severe price adopted a resolution on Fair Trade, would provide advice, assistance and volatility and instability in coffee recognizing the benefits achieved by support to disadvantaged producers. trade which led to the dismantling of the Fair Trade movement, suggesting Many such Southern Fair Trade the International Coffee Agreement the development of an EU-wide Organizations were established, 1989, necessitated a rethink in coffee policy on Fair Trade12. and links were made with the marketing and retail. In this context, new organizations in the North. Solidaridad, the Dutch development Two very notable developments These relationships were based on agency, spearheaded the foundation in the ACP-EU trade relations took partnership, dialogue, transparency of the first ever Fair Trade label and place between 2010 and 2014. Firstly,

5 Does Fair Trade contribute to sustainable development?

the second revision of the Cotonou associated with fair or equitable especially those exporting produce Agreement, which was concluded trade, such as labour, health, that is already subject to a in 2010, saw significant revisions environment, education and so on. substantial amount of FT certification and new provisions being made As FT and ET are inherently and such as banana or sugar. Whereas for economic and trade provision essentially concerned with exports, there is considerable recognition between the ACP and the EU (title and therefore also secure access to in the revised Cotonou Agreement II Cotonou Agreement, 2010), export markets (in this case, the EU of the risks of preference erosion, which amongst other things now market for ACP goods) it is arguable and furthermore, obligations are in recognises the dependence of ACP that the EPAs present an attractive place for it to be addressed in the countries on “commodities and a proposition for ACP producers context of ACP-EU cooperation, it few key products, including value- insofar as they ensure as stable and is still a topic which creates a high added agro-industry products”. long-term market access regime. degree of uncertainty, notably in Furthermore, agriculture has for the the agricultural sector, as it can first time been inserted as a target Furthermore, 2010 also saw changes undermine one of the key tenets policy area for EU support under to the EUs trade and development of FT certification, namely the the economic sector development legal regime through the Lisbon guaranteed price which producers article.13 Lastly, Policy Coherence Treaty, which for example granted get based on FT premium. for Development (PDC) was also the EU exclusive competency with made a legal obligation for ACP-EU regards foreign direct investment The positive trajectory of FT and cooperation under Article 12, which and for the first time made an its recognition in the EU context also states that “the [European] explicit link between trade and suffered a blow as a result of the Union acknowledges that Union development in EU external action. 2008 financial crisis, the subsequent policies, other than development A key provision is Article 3(1) which global economic recession and the policy, can support the development states that in its relations with the resulting euro-crisis.15 The general priorities of ACP States in line with wider world, the EU shall contribute drop in consumer demand and the objectives of this Agreement”. to sustainable development, free shift in policy perspective, made The Economic Partnership and fair trade and the eradication of it imperative for the Fairtrade Agreements which the EU has poverty. In this sense, the EU and its institutions and commercial regime concluded with the Caribbean Member States are therefore obliged to re-state their value-added for Region (EU-CARIFORUM EPA) to contribute to greater fairness consumers as well as producers and more recently, with a number in EU-ACP trade. In this case, it is in a context where generally EU of African regions (EU-Central arguable that fairness can be taken institutions, Member States and Africa, EU-Eastern and Southern to signify both trade that is fairer for governments were arguing for a Africa, EU-ECOWAS, EU-SADC, EU partners, including developing decrease in support to developing EU-EAC EPAs) seek to liberalise countries and their producers, as well countries. Strong responses from trade between ACP countries and as trade that is fairer in the sense FT stakeholders in some Members the EU, and were mandated under that it reduces trade distortion and States, notably the Netherlands, the Cotonou Agreement. In the measurers which promote unfair Belgium and the UK meant that texts of the agreements which trading practices. According to some not only did sales in FT certified have been published (CARIFORUM, analysis, “[a] careful reading of these products recover since the crisis, but Central Africa and EAC), no explicit provisions indicates that the general with certain products the growth reference is made to fair or equitable trade objectives are not only limited in sales is higher than at pre-crisis trade, and the extent to which the to trade liberalization, which is the levels. Furthermore, certain Member EPAs are bound by the reference only objective provided in Article States, such as Belgium, maintain in the Cotonou Agreement to fair 206 TFEU [Treaty on the Functioning a strong engagement within their trade is arguable. A key area of of the EU] but include other trade- development cooperation portfolio to concern in this context has been related objectives.”14 support FT, for example the Trade for the policy space which ACP and Development Centre, which is part EU Member States will have to Notwithstanding these of the Belgian Development Agency exercise if they wish to legislate developments, preference erosion (BTC) programme, and promotes fair to promote or secure provisions continues to be a longstanding trade, sustainable trade and organic which concern certain policy issues area of concern for ACP producers, farming in partner countries.

6 Does Fair Trade contribute to sustainable development?

2. What is Fair Trade?

2.1 Definition and of FT to other alternative trade of different parts of the alternative definitional issues approaches. trade movement. In particular, FT labelling criteria relating to agricultural Fair Trade is a particular type Fair Trade may be viewed as one commodities produced on plantations of relationship between ‘ethical part along a continuum of related (particularly tea) include stipulations consumers’ and low-income non-governmental activities, which regarding labour standards. About producer households through aim at promoting “sustainable two-thirds of FT product lines are international trade. The accepted trade” and “ethical trade”17. also certified as organic20. definition of FT makes it clear: What distinguishes Fair Trade is that this movement focuses on “Fair Trade is a trading producer groups and involves 2.2 Key players in Fair partnership based on dialogue, paying participating producers Trade transparency and respect, a pre-determined price for their which seeks greater equity labelled products. “Ethical trade” The Fair Trade scheme involves the in international trade. It focuses on production methods and following three categories of actors: contributes to sustainable results, and has a corporate focus development by offering in that it attempts to ensure that -- Fair Trade producers usually better trading conditions to, labour, environmental, and human represent co-operatives or and securing the rights of, rights standards are upheld within associations in developing marginalised producers and a corporation’s supply chain. In countries. To participate in the Fair workers – especially in the particular, ethical trade promotes Trade scheme, they have to join South. Fair Trade organisations adherence to core labour standards their regional Fair Trade network. (backed by consumers) are for employees and currently has no The three producer networks are: engaged actively in supporting specific concern with the terms of Fairtrade Africa, Coordinator of producers, awareness raising trade or seeking to overcome the Fairtrade Latin America and the and in campaigning for marginalisation of producers18. As Caribbean (CLAC) and Network changes in the rules and noted by the European Commission19, of Asia and Pacific Producers practice of conventional the FT concept could be taken as (NAPP). These producer networks international trade.”16 applying to trading situations and generally constitute the first point commodities where social and of contact between smallholder Equity lies at the core of what environmental standards are not, farmers and producers, and the FT seeks to achieve, and which or cannot be (because of the way FT system. Producer networks are responds directly to the fact that in which production is organised), in turn part of the international notwithstanding the contribution enshrined in law. Environmentally- Fairtrade system, e.g. their made by producers in developing driven trade is concerned with producers are certified by the countries to global trade in goods, ensuring that traded products are Fairtrade Labelling Organisation and particularly smallholder farmers produced using environmentally (FLO/FLOCERT), and are also in regards to agricultural produce, sustainable techniques. part of the Fair Trade Federation the benefits they derive from this (FTF) and the World Fair volume of trade in pecuniary and There is a considerable overlap Trade Organization (WFTO). developmental terms has historically of issues and attitudes between Participation commits producers always been marginal in both different types of alternative trade. to abide by Fair Trade standards, absolute and relative terms. On the demand side, individuals pay annual fees and supply and organisations sensitive to products at pre-determined prices. FT, Ethical trade and environmental issues are also likely to environmentally-driven trade be concerned about social justice. On -- Traders are importers, exporters the supply side, there is a significant or processors who deal in Fair It is important to relate definitions level of overlap between the standards Trade products, replacing so

7 Does Fair Trade contribute to sustainable development?

called middlemen. They are brings producers and Alternative Fairtrade certification bodies associated with Fair Trade Trade Organizations (ATOs) were created. To coordinate the membership organisations together in a single organization. monitoring and standards of these and subject to the standards, The WFTO has three goals: market National labelling Initiatives (NIs), predetermined prices and development, advocacy and building a common approach to monitoring monitoring requirements of trust. WFTO aims to improve the producers was agreed. Each agency the organisations which they livelihood of disadvantaged people would monitor a list of producers join. Prime traders include in developing countries by linking and share that information across Solidar’Monde (France), Oxfam and strengthening organizations Europe. In 1997 this cooperation was (UK), Oxfam Wereldwinkels that offer “just” alternatives to unfair formalized through the creation of (Belgium) and Claro trade structures and practices. It is a FLO. There are now 20 NIs that use (Switzerland), to mention a few. federation to promote Fair Trade and the shared monitoring and standard a forum for exchanging information setting service that FLO offers. -- Retailers interface with the to help members increase benefit The NI then licence a local FLO end consumers of Fair Trade to producers. From the mid-1970s endorsed mark to businesses in their products. World Shops represent onwards, a group of 30 ATOs met geographic area22. the most common outlets for regularly to support each other Fair Trade products. Recently, and share ideas. A meeting of that Currently, FLO takes a very rigorous however, Fair Trade products group in 1989 decided to formalize product-by-product approach to have begun to make their way the grouping and create an inclusive register development. The criteria into general retailers, such as global network. It is the largest are complex to develop for each supermarket chains21. International Fair Trade Association sub-sector and the registers for fair trade organizations with expensive to maintain—worth Presently, (2014), the international over 300 members. Southern noting that Fairtrade labelling is the Fairtrade system includes three organisations began joining after only labelling scheme in the world producer networks, 25 Fairtrade the 1991 biennial IFAT conference, where the consumer pays for the organizations, Fairtrade International, and now represent more 60 per cent monitoring of the producers. and FLOCERT, the independent of the membership of the WFTO. It certification body of the global allows accredited members to use From May 25th 2007, the Producer Fairtrade system. its FTO Mark—which it emphasises is Networks CLAC (Coordinadora distinct from the FLO product label. Latinoamericana y del Caribe de Moreover, there are five key The WFTO Fair Trade Organization Comercio Justo), AFN (African networking or membership Mark was launched in January Fairtrade Network) and NAP organizations that seek to bring Fair 2004. The Mark is available to (Network of Asian Producers) Trade organizations together. Each member organizations that meet officially became full members of services a different group of Fair the requirements of the WFTO FLO too23. Trade organizations and therefore monitoring system and identifies takes a different perspective on the them as registered Fair Trade NEWS—The Network of World Shops nature of Fair Trade. Organizations. WFTO is working with FLO on a Quality Management NEWS coordinates the cooperation WFTO—World Fair Trade System for Fair Trade. between World Shops all over Organisation (formerly IFAT Western Europe. The network – International Federation for FLO/FLO-Cert—The Fairtrade consists of 15 national World Shops Alternative Trade then International Labelling Organisation associations in 13 different countries Fair Trade Association) and in total represents 2,500 World Following on from the successful Shops.30 NEWS was established WFTO is the only worldwide Fair launch of Max Havelaar coffees in 1994 and much of its focus is Trade networking organization that in 1988, a number of independent around maximizing the campaigning

8 Does Fair Trade contribute to sustainable development?

voice of the shops and their FINE owns concerns Fairness, Solidarity, customers. The European World Responsibility (Equitable, Solidaire, Shops day is held in May every In an effort to unite standards and Responsable in French). This is the year and focuses on shop-based approaches the four key Fair Trade standard against which operators are activities ranging from product- networking organizations began to certified. It applies its certification tasting to campaigns. meet together in an effort to unite services broadly, covering foodstuffs the movement around the things as well as cosmetics and detergents EFTA—The European Fair Trade that could be readily agreed on. and home perfumes. EcoCert does Association The FINE—FLO, IFAT, NEWS and not work exclusively on Fair Trade, EFTA—group was established to but is also provides other certification EFTA was set up in 1990 as a trade build relationships and common services based on sustainable association to enable cooperation approaches. The key success so far is agriculture and production, between the European ATOs to be the FINE definition of Fair Trade that including organic certification. coordinated and effective. EFTA has was agreed by all of the participants 13 members who pay a significant in 1999. This definition has been Fair for Life membership fee (around $10,000) revised further and is to be agreed to resource a small secretariat among all the members during 2001. The Fair for Life Social & Fair Trade headquartered in Maastricht Although short on radical action, Certification Programme is engaged (Netherlands) with other staff based FINE has created an environment of with producers in developing elsewhere in Europe. There are trust and cooperation. As common countries to provide a range of three key ways that the cooperation approaches are coordinated among certification services under three has developed. First, EFTA acting the members, some bilateral broad themes: For Life - Social as trade association represents the arrangements will help to pull the Responsibility Certification, Fair for European ATOs in various fora and Fair Trade players more closely Life - Social & Fair Trade Certification seeks to agree a common line on together. For example, the WFTO and Individual Performance Rating. issues external to the movement. has a self-monitoring scheme The Social & Fair Trade Certification, Through a small advocacy office to prove you are a Fair Trade which is supported by a Fair Trade in Brussels, EFTA has raised the organization. The next step would Development Fund, is concerned profile significantly of Fair Trade be introduce external monitoring—a with the typical Fair Trade values, with the European Parliament and role that FLO could play. Although such as fair trade relationships, Commission. Second, through by no means certain that these steps fair prices and direct support of creating an environment for will be taken, if they are then FINE marginalised groups and also audits working together, particularly in the may need to become more according to Social Responsibility food sectors, the EFTA members of institution to support this standards like fair working conditions, share manufacturing and importing increased cooperation24. environmental performance and of key commodities. For example, community relations. the Swiss Fair Trade organization, Claro, coordinates the production 2.3 Other fair trade UTZ of chocolate for all of the EFTA certification members. The economies of scale schemes Founded in 2002, UTZ Certified is a derived from this make the product multistakeholder initiative operating reasonably successful in all of the in the food and agriculture sector European markets. Finally, because With the increase in popularity of the across 33 countries. Originally FLO only monitors against the fair trade approach, there has been a an idea of a Guatemalan coffee seven agricultural commodities replication of the approach operated grower and a Dutch coffee roaster, that it has registers for, EFTA has by non-FLO organisations. UTZ Certified has grown into an developed a system called Fair Data independent, nongovernmental, not- that shares monitoring information EcoCert Fair Trade for-profit organization dedicated to among all of the participants. creating a world where sustainable This covers hundreds of non-FLO The most well-known are EcoCert farming is the norm. Farmers who producers enabling the cost of Fair Trade, which provides work with UTZ Certified in the global monitoring Fair Trade suppliers to certification through auditing and marketplace receive a premium for be shared. vouching for fair trade operators. The their crop and they don’t have to pay ESR standard which it enforces and for taking part in the program.

9 Does Fair Trade contribute to sustainable development?

2.4 The routes of organisations are members of the accrediting a single organization to commercialisation World Fair Trade Organization certify FT practices in each country of Fair Trade (WFTO, formerly IFAT). The use and coordinating work among of a Fair Trade Organisation (FTO) its members. products Mark is granted to a Fair Trade Organisation which has successfully Under the FLO system, producers do Fair Trade products are met the requirements of the WFTO not pay for their certification. Distinct commercialised under two different Standards and Monitoring system25. from other schemes, the consumer routes. The traditional or integrated pays for the Fair Trade system. route is the route where products The Fair Trade labelling route Traders pass on to consumers the (mainly crafts) are produced, higher FT price and premium that imported and/or distributed by a Under this route, national labelling they pay producers. The financial Fair Trade Organisation. Another initiatives monitor the compliance resources flow all the way back from marketing route is through Fair with Fair Trade standards by the consumer who buys the product, Trade labelling initiatives and producers or traders against a set of to the producer. The national entity certification. In this case, goods are internationally harmonized standards. in each country charges the Licensee labelled by specialised Fair Trade a fee for using the Fair Trade label. certification agencies to testify that The objective here is to follow This pays for all of FLO’s certification their production chains respect Fair normal distribution patterns in order and monitoring costs and for the Trade standards. The importers and to facilitate greater access to fair National Initiatives marketing traders can be traditional commercial trade products. There is therefore, expenses. So the cost of the system companies, and the distribution no longer the confidence of the is included in the retail price, making channels can be regular retail outlets. close link between producer and Fair Trade labelling sustainable27. outlet as with the traditional fair These organisations are all members The integrated route trade movement. Here, the importers of FLO (Fairtrade Labelling and traders are normal commercial Organisations International), the Fair Trade products are made companies, and the goods are sold Fair Trade standard-setting and available to consumers through through normal retail outlets, but certification organisation. The Fair Trade Organisations which a fair trade label, awarded by a fair International Fairtrade Standards are identify and source products directly trade certification agency, signifies developed and regularly reviewed from small producers and co- to the consumer that the goods and and monitored independently28. operatives, and import and market the marketing chain respect fair them in specialised outlets such as trade principles. The four fair trade Worldshops. labels used within the EU are “Max 2.5 The role of Havelaar”, “Transfair”, the “Fairtrade retailers All aspects of their commercial Mark” and “Rättvisemärkt”. operations are based on a Fair Retailers will point to a commitment Trade ethos, and as much of the A fair trade symbol is displayed on to FAIRTRADE labelled (FT) goods final price as possible is passed back the packaging, certifying that the that are certified against Fairtrade to the producers. In many cases production and marketing processes standards as a sign of commitment profits generated are devoted to respect fair trade criteria. The label to fairness and justice in their trading development causes. The majority is additional to other labelling relationships. of products marketed through information requirements, such as Worldshops are not labelled as quality classification and origin, ‘Getting’ Fairtrade has been part of such; the purchase is done on the which are governed by the normal a trend since the mid-1990s in which basis of confidence. The “brand statutory rules26. supermarkets and food companies names” or Fair Trade Mark of these have sought to de-commodify their organisations are in themselves In 1997, the various national FT mainstream lines, with organic, a signal to consumers that the labelling initiatives formed an Fairtrade and ‘local’ branding products and business practices umbrella organization called Fairtrade offering both reputational and profit are in accordance with Fair Trade Labelling Organizations International benefits. Major supermarket chains principles. Most of the Fair Trade (FLO). FLO is responsible for not only stock Fairtrade products Organisations and producer certifying and monitoring producers, but have introduced Fairtrade

10 Does Fair Trade contribute to sustainable development?

lines amongst their own brands in conventional companies on the one part of a wider product range. products such as coffee, tea and hand, and the impact of the new An independently verified label chocolate, contributing to both ethical approaches on the profile offers smaller manufacturers a the growth in sales and increased of Fair Trade itself. It is frequently relatively easy way of demonstrating public awareness of the concept argued that a major contribution of responsible practice which may be of Fairtrade. Similarly, some major Fair Trade has been to influence the less attractive to a larger company branded food companies, both behaviour of mainstream companies that has invested more in its own processors and food service, offer (e.g. Ethical Trading Initiative, brand profile and consumer message. the consumer a fair trade choice. adoption of “responsible business” practices and codes of conduct). Some argue that competition In northern Europe the range of fair Whilst the more empowering between an increasing number of trade products available continues elements of the Fair Trade approach Fair Trade brands and the adoption to expand and more conventional are not always taken on board, the of more ethical practices on the part companies offer a product with a fair different needs of smallholders in of conventional companies can only trade label29. terms of meeting ethical standards is be a good thing. The competitive increasingly being considered. process may encourage more firms Fair Trade and the mainstream to adopt ethical practices, or even market However, the increasing trend Fair Trade practices. However, as we for conventional companies to noted above, the complex decision- Fair Trade is engaged in the espouse ethical principles --from making processes that lead to ethical mainstream market both in terms of ethical sourcing of supermarkets to consumption and the influence that actively marketing products through cause-related marketing whereby this has on the sourcing strategies mainstream outlets and encouraging companies2.2. NORTHERN donate COa percentageuNTRIES of companies is as yet incompletely conventional companies to use of the consumer price to a charity understood. Moreover, it is not clear the Fair Trade label and thereby or environmentalFigure 2.3: percentages group of the trends -- has and developmentsalso in ifthe there Northern is countries in practice a competitive adopt Fair Trade practices. Whilst createdFigure 2.3 increased percentages of competition the trends and developments for inprocess the Northern between countries ethical and this is becoming an increasingly Fair Trade products. 3%The increasing conventional lines, which would Awareness in society important strategy for Fair Trade number of ethical claims in the drive non-Fair Trade companies 21% 31% Macro-economic variables in some markets, it should be market place may cloud the Fair to consider ethical approaches. Internal issues recognised that not all Fair Trade Trade message12% to consumers. Supermarkets tend not to stock products are appropriate for the moreLabeling than one or two ‘ethical lines’ 12% 21% mainstream market. To date, Fair At the same time, many mainstream so that the whole range of Fair Trade External relations / value chain Trade products in the mainstream brands have been reluctant (and brands are not necessarily on offer

inOther particular chains or localities. have largely been commodity- even hostile) to support Fair Trade based food products such as tea values and activities – it is invariably This can make it less easy for the and coffee. This is largely because smaller scale companies that have consumer to consistently choose a of the supermarket demand for a Fair2.3. Trade IN PRE labelledvIOuS productYEARS as Fair Trade product30. large volumes and guarantee year- Figure 2.4: Total Fair Trade retail value* (in euro’s) by individual EFTA member Figure Figure 1: 2.4: Total Total Fair Trade Trade retail value* retail (in euros)value* by individual (in Euros) EFTA member by individual EFTA member round availability, which can only be accommodated by sourcing from a € 90.000.000 relatively large number of producers EFTA member € 80.000.000 that are well organised. Crafts have Gepa faced many difficulties in accessing € 70.000.000 CTM Altromercato the mainstream home-ware and € 60.000.000 Oxfam Fairtrade interiors market, partly because of € 50.000.000 Traidcraft the short life-span of products (due Fair Trade Original € 40.000.000 to changing fashions) and the high EZA € 30.000.000 up-front costs of professional design. Claro Many products are likely to remain in € 20.000.000 Solidar Monde a Fair Trade niche. € 10.000.000 Intermón Oxfam Magasins du Monde Oxfam There is a complex inter-relationship € 0 IDEAS between the positive influence 2001 2002 2003 2004 2005 2006 2007 2008 2009 of Fair Trade on the behaviour of Data source: EFTA Statistics 2003, 2004, 2007, 2008 and 2009 Data source: EFTA Statistics 2003, 2004, 2007, 2008 and 2009

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Does Fair Trade contribute to sustainable development?

Figure 2: Total Fair Trade retail value* (in euro’s) of all goods sold by EFTA in some FT bananas being sold in conventional markets and without FigureFigure 2.5: 2. 5Total: Total Fair Fair Trade Trade retail retail value* value* (in (ineuros) euro by’s)o all of EFTA all goods members sold jointly by EFTA members the FT benefits to the producers.

€ 300.000.000 Special pricing of Fairtrade bananas

€ 250.000.000 The minimum guaranteed price for

FT banana differs from other FT

€ 200.000.000 products in that it is not constant across regions. The added premium € 150.000.000 of $1 USD per 18.14 kilo-box is constant for all producers, but the € 100.000.000 minimum guaranteed price for

€ 50.000.000 bananas varies by region and is “based on the cost of sustainable € 0 production” (Fairtrade International). 2001 2002 2003 2004 2005 2006 2007 2008 2009 The price variation can result in supermarkets sourcing their bananas from the cheapest place and Data source: EFTA Statistics 2003, 2004, 2007 and 2008 The Case of Fairtrade Bananas in the a better bargaining position relative to leaving out those producers whose * Retail value of a product is the price paid by the final consumer less the Value Added Tax, excluding sales to other EFTA members. UK (Alvarez, A (2014) The inclusion the suppliers, and makes the suppliers production costs are higher, causing of market-driven supermarkets in dependent on them for sales since a race to the bottom (Smith 2010). Fairtrade:FigureFigure 22.6:.6: TotalTotalconcerns value retail retail and sales sales implications by by FLO FLO members members aroundthere around the worldare the veryworld(in euros) few(in euro’s) places to sell their For example, bananas produced in for farmers)31 products other than supermarkets. the Windward Islands, the Dominican € 4.000.000.000 According to Smith (2010), suppliers Republic and Costa Rica have a A person in the UK on average are forced to accept terms of supply minimum price for every box of € 3.500.000.000 consumes about 100 bananas a year that include last minute changes to 18.14kg set at $9.65 USD, $9.60 and and€ the3.000.000.000 market for bananas in the orders, giving retrospective rebates, $9.25 respectively, while Ghana and UK €is2.500.000.000 about £700 million (Fairtrade and paying for in-store promotions, Cameroon’s minimum price is $8.30 Foundation 2014), and the UK is as well as sudden change sin and $8.50 respectively (Fairtrade the€ second2.000.000.000 largest market for FT payment terms. International 2013). bananas€ 1.500.000.000 after Switzerland (Raynolds 2007). Fairtrade bananas make one- Supermarkets pass the Furthermore, the four super markets € 1.000.000.000 third of all bananas consumed in the responsibilities of production to engaged in a ‘banana price wars,’ UK (Fairtrade€ 500.000.000 Foundation 2014). category managers (a small number with ASDA lowering their price € 0 of first tier suppliers), which are of bananas in 2002 and the other Highly concentrated2004 food retailing2005 2006responsible2007 of ensuring2008 that2009 FT three responded by lowering their industry standards are met as well as any prices as well, and then sending the

Data source: Annual Report FLO 2003 – 2009 other demands of the supermarkets costs down the production chain to Data source: Annual Report FLO 2003 – 2009 The point of sale of food in the UK (Barrientos and Smith 2007). At the the producers (Robinson 2009). In is highly concentrated in a handful same time supermarkets add their 2002 a kilo of conventional bananas of supermarkets. Four supermarkets store brand to the bananas, and cost £1.08, but today a kilo of dominate the banana chain: Tesco, therefore keep all the reputational both conventional and FT bananas Asda, Sainsbury’s, and Morrison, benefits (ibid). Supermarkets do costs a mere 68p in Tesco, Asda which combined account for 76% of not give FT banana producers and Sainsbury’s (Blythman 2014). the UK grocery retail market (Kantar long-term contracts or any other Suppliers still get a guaranteed Web 2014). This puts supermarkets in sort of guarantee which can result minimum price and supermarkets

50 12

7

Does Fair Trade contribute to sustainable development?

paid the difference, but the problem An internal market in retail in campaigning activities for more is the extent of supermarkets willing services which is more efficient global justice. to continue to absorb this loss before and fairer for future generations demanding a lower minimum price, must also fully account for its The first European World Shops as well as consumers perceiving that environmental impacts. It must conference took place in 1984. that 68p/kg is the actual “fair” price be a gateway to the offer of a This conference set the beginning of bananas (Balch 2013). wide range of more environmentally- of close cooperation between friendly and/or fair trade products, volunteers working in World Shops A different approach to Fairtrade allowing “fair” firms, including those from all over Europe. The Network bananas based in non-EU countries, to gain of European World Shops (NEWS!) access to the internal market. It was formally established in 1994 But not all supermarkets approaches must also be based on lower energy and now represents approximately to FT are bleak. Sainsbury’s, consumption and on efficient 3.000 World Shops in close to 20 Waitrose and the Co-Op are good logistics and waste collection and European countries. example of supermarkets taking FT recycling systems. Competition ideals more seriously. Sainsbury’s within the sector must not only The first World Fair Trade Day, which and Waitrose became the first be gauged on economic factors involves the worldwide Fair Trade supermarkets in the UK to replace but also on social, ethical and movement, was celebrated on May all their bananas with FT bananas environmental ones.32 4, 2002. Now World Fair Trade Day in 2007 (Sainsbury’s). Furthermore takes place every year on the second in 2007, Sainsbury’s established The Commission Staff Working Saturday of May. a £1 million Development Fund Document (SWD) accompanying managed by the Comic Relief the Communication also recognises Another tool was the establishment charity, with the aim of helping the diversity and asymmetry at the of the FINE Advocacy Office in marginalized producers enter the retail end of Fair Trade in the EU, Brussels, which focuses on influencing FT system (ibid). The Co-Op was whereby the Northern and Western the (European) policy-makers. It is the first supermarket to sell FT European retailers are more strongly supported, managed and funded by bananas in 2000 and since 2012 integrated into the value chain for the whole movement, represented in all of their bananas are 100% FT, Fair Trade and ethically sourced FLO, IFAT (now WFTO), NEWS and and it also offer support to co- produce than those in other parts EFTA – hence its acronym FINE. operatives in Panama and Dominican of Europe.33 In addition to variations Republic (The Co-Operative). These in consumer expectations, the SWD A TNS Omnimas survey done in supermarkets investment in selling notes that civil society and NGOs 2007 35 showed 57% of adults can only FT bananas means that they have also played a strong role in identify the independent Fairtrade will promote and create awareness pressuring supermarkets and large consumer label, up five points in just of FT ideals in order to ensure that retailers to address their ethical one year, and 53% of respondents the bananas sells and it also makes it or environmental records when it correctly associated the symbol with harder for them to go back to selling comes to sourcing.34 a better deal for producers in the conventional bananas (Smith 2010). developing world.36 The 2009/2010 These supermarkets’ commitment to annual review revealed that the FT bananas, symbolizes the potential 2.6. The role of the FAIRTRADE Mark is now recognized of FT to transform the trading Consumer by almost three in four British adults.37 system in a way that is fair to the A 2011 international consumer survey poor and marginalized workers in From the beginning, the Fair Trade from GlobeScan found that Fairtrade the South. movement aimed to raise awareness is the most widely recognized ethical among consumers of the problems label in the world with almost 6 out The European Commission has caused by conventional trade, and of every 10 (57%) people seeing recognised the specific role played to introduce changes to its rules. the Fairtrade certification mark. For by retailers in the Fair Trade system, The sale of products always goes those stating they recognized the in the Communication Retail market alongside with information on the mark, 9 in 10 found it trustworthy monitoring report “Towards more production, producers and their (Fairtrade International, 2011).38 efficient and fairer retail services in conditions of living. It has become the internal market for 2020”: the role of World / Fair Trade Shops Emerging economy consumers are to mobilize consumers to participate increasing featuring in the picture

13 Does Fair Trade contribute to sustainable development?

of consumer awareness about Figure 3: How much influence does the ‘Fairtrade’ (or ‘Fair Trade’) claim Fair Trade. An investigation by have when making food and beverage choices? Datamonitor into consumer attitudes toward both Fair Trade and Fairtrade Very Very Country High Medium Low and found that its influence has High Low expanded beyond the traditional Brazil 21% 26% 35% 10% 7% European and North American bases and is now more pronounced in U.S. 10% 15% 31% 21% 22% emerging markets like Brazil, Russia, Canada 11% 20% 35% 20% 14% India, and China, as well as Saudi Arabia and the United Arab Emirates Australia 11% 21% 37% 18% 12% (U.A.E.). Datamonitor has also China 21% 40% 32% 5% 2% tracked consumer interest in paying more for Fair Trade and Fairtrade India 31% 36% 25% 6% 2% and has generally found that in the Japan 4% 12% 42% 31% 11% last two years there has been a trend toward more agreement on Korea 14% 28% 37% 16% 5% this question in all countries, even in Singapore 13% 30% 41% 11% 5% emerging markets.39 South Africa 12% 22% 37% 18% 11% 2.7 Equitable Trade Saudi Arabia 29% 25% 31% 7% 8% and its relationship U.A.E. 25% 31% 31% 6% 7% to Fair Trade France 10% 20% 38% 18% 14% Germany 10% 21% 37% 18% 14% The concept of equitable trade (ET), Italy 16% 33% 35% 9% 7% which concerns the development and achievement of greater “equity” Russia 22% 31% 28% 11% 8% between trade partners and in Sweden 11% 17% 32% 25% 15% trading relationships, is a broader and more dynamic issue than that U.K. 11% 20% 38% 17% 14% of FT, which specifically concerns TOTAL 15% 24% 35% 15% 10 standards and premium prices that ensure producers get a guaranteed Source: Datamonitor Consumer Research, May-June 2011. premium on produce/productions that meets certain criteria. In this reformed or reviewed in order to economic growth, opportunity and sense, FT is one of means by which promote equity in trade, namely development) which global trade is ET can be achieved, and as a matter that trade should be inclusive supposed to achieve. of fact, FT organisations are often at (non-discriminatory), based on the frontline of the promotion and transparent rules, and all involved Whereas FT is based on private rules advocacy in favour of ET. should be treated on the basis of or standards, ET targets global and equality40. This equity should apply public rules and standards, including Equitable trade calls for the rules across the entire spectrum of the those set at local, national, regional which apply to global trade – trade relationship, and concerns as and international levels. For example, such as tariffs, market access and much the inputs (rules, regulations, at the regional level, the European liberalisation rules, services and standards, negotiations etc) as Union has been strongly appealed by investment rules and soon – to be the outputs (benefits such as stakeholders such as its developing

14 Does Fair Trade contribute to sustainable development?

Figure 4: To what extent do you agree or disagree with the following statement? “Fair trade or fair trade food and beverages are worth paying a little extra for.”

Strongly Tend to Neither agree nor Tend to Strongly Disagree Country agree agree Disagree Disagree 2009 2011 2009 2011 2009 2011 2009 2011 2009 2011 Brazil 9% 13% 28% 29% 43% 45% 11% 8% 9% 4% U.S. 4% 8% 13% 26% 41% 38% 21% 19% 22% 10% Canada - 8% - 19% - 46% - 18% - 10% Australia 5% 7% 17% 24% 43% 46% 22% 17% 14% 6% China 6% 13% 28% 38% 49% 42% 14% 6% 3% 1% India 9% 20% 33% 40% 43% 31% 12% 6% 3% 2% Japan 1% 3% 22% 16% 55% 67% 16% 11% 7% 3% Korea 4% 6% 30% 24% 48% 48% 14% 17% 3% 5% Singapore - 6% - 28% - 52% - 11% - 2% South Africa - 7% - 23% - 50% - 14% - 6% Saudi Arabia 10% 23% 26% 29% 28% 32% 22% 9% 14% 6% U.A.E. 9% 20% 24% 33% 42% 37% 15% 6% 10% 5% France 5% 9% 28% 31% 36% 35% 18% 16% 13% 9% Germany 8% 10% 28% 29% 38% 42% 14% 11% 13% 8% Italy 5% 10% 25% 37% 41% 37% 19% 11% 11% 5% Russia 3% 12% 19% 34% 45% 37% 20% 11% 13% 6% Sweden 10% 11% 25% 26% 32% 37% 16% 17% 17% 9% U.K. 5% 8% 24% 29% 36% 39% 22% 15% 13% 9% OVERALL 6% 10% 24% 28% 40% 43% 18% 13% 12% 6%

Source: Datamonitor consumer research 2009 and 2011. country partners as well as NGOs Perhaps the most convincing the question arises as to what criteria and other institutions, to seek rationale for linking ET and FT, is that can apply to public procurement greater trade equity in the review of the latter depends on the former – tenders, especially criteria relating its trade rules under the Common without transparent, inclusive and to FT such as sustainability or Commercial Policy. This was a key equitable trade rules, FT (and other social standards; secondly, with issue of concern during the revision private sustainable trade standards) regards non-trade objectives in of the EU Generalised System of cannot operate effectively. This trade rules, the concern that rules Preferences, which defines the tariffs dynamic can be illustrated in two which seek to liberalise trade and applied to development country distinct scenarios, both of which eliminate non-tariff barriers in order exports to the EU.41 Similarly, at the put FT against trade rules that to promote trade in goods and WTO various initiatives have been prohibit rules or conduct which could services and investment, would development in order to achieve be considered discriminatory or be undermined by an increase in greater equity in global trade rules42 protectionist:44 firstly, with regards public rules and regulations that and various NGOs and other global public procurement where FT is promote labour, sustainability, institutions have emphasised the key upscaled from producer-private environmental or other social issues. role played by the WTO in promoting consumer relationship to producer- In order for the stakeholders that equitable trade around the world43. public consumer relationship, and FT supports, namely smallholder

15 Does Fair Trade contribute to sustainable development?

farmers, craftsmen and women, and developing countries will face (such as local governments or public producers in developing countries, to punitive measures which developed institutions such as hospitals or be fully integrated into global trading countries don’t in the event that schools) to become stakeholders systems, ET has to unequivocally these standards are breached etc. in the FT system as consumers, protect social and environmental The response from the private sector and for their engagement in FT standards. is seldom enthusiastic, as again the to be protected within the trade issue of costs and regulation to rules that apply to their country enforce mandatory standards are of establishment. This is especially 2.8 Voluntary vs. often decried as burdening business relevant because the public sector Mandatory and especially small and medium is a significant economic player Approaches sized enterprises. Lastly, even in in many countries and the rules the event that a country is willing that apply to it are, especially to implement such mandatory in the case of the EU and other One key tenet or principle which standards, there is a real risk that its developed countries, part of the should be recognised as critical trading partners could interpret them multilateral trade framework through to the ongoing success of FT, and as protectionist measures which seek the Government Procurement which is sometimes at odds with to create non-tariff barriers to trade.45 Agreement47. Another possible ET is the notion that standards are response is for developing country voluntary, namely they are often For the FT system, a key issue is governments to support FT as a not already part of the farmer or whether the development and means of achieving greater ET. In producers or buyer or consumer’s enforcement of public standards recognition of the particular desire of obligations under national or which match or even supersede the developing countries to achieve ET, international law. private standards currently used by as well as the difficulties of agreeing FTO and others, would result in a on and enforcing mandatory The voluntary aspect of FT marginalisation of the FT operators standards, and their commitment recognises the fact that the and eventually make the entire FT to supporting key economic implementation and enforcement of system as a standard setting and sectors such as agriculture, and mandatory social or environmental enforcement tool, redundant. This empowering smallholder farmers, standards and rules at national and has become the case with other producers, craftsmen etc, who are in international levels is essentially private standards setting schemes, and of themselves part of the SME an impossible feat. On the one particularly in the organic sector sector, then developing country hand, many developing countries, which went from largely being a governments can leverage the and some developed countries privately operated economy to voluntary private standards such have shown reluctance or outright one which is now almost entirely as FT to directly promote ET. This opposition to the development of regulated from the public domain.46 can be done, for example, through mandatory social or environmental Free Trade Agreement/ Economic rules on various grounds: that With so many challenges to the Partnership Agreement negotiations, they will discriminate between development of mandatory rules, seeking to get greater tariff developing and developed countries the question then becomes how reductions or have no tariffs at all (as the rules are often formulated to integrate the many voluntary applied to developing country goods by developed countries), that they standards-setting and enforcement that have FT or like certification. An will be impossible to enforce in any approaches (including FT as well as approach such as this one could also case, and the burden for paying for environmental standards) into the be further applied as a response to the enforcement will often fall on global trade and ET domain without the challenge of preference erosion developed countries, that they will making it more challenging for for key commodities which are jeopardise the competitiveness of farmers and producers in developing often the same commodities that developing country economies by countries to export. One possible are targeted for FT certification creating more costs and expenses response to this dilemma has been in developing countries (bananas, for businesses to comply, that for public sector bodies and entities sugar etc).

16 Does Fair Trade contribute to sustainable development?

3. Standards and standards setting

Compliance with standards is the which standards face include lack of Committee which is composed of primary means by which the Fair transparency (in the development FLO’s labelling initiatives, producer Trade certification is gained, and and application of standards), organizations, traders and external the standards themselves are set unfairness or discrimination (where experts. by the certifying body. As the standards apply to one group of certifying bodies or organisations economic entities but not another), Producers and traders need to are private, their standards are also legal uncertainty (in some cases, comply with the applicable considered private and are not where a voluntary standard overlaps Generic Trade standards and publicly enforceable. Nevertheless, with a legal obligation, and parties Producer Standards as well as there is a strong public aspect may not be sure where a law ends Product Standards. All standards to these standards as often they and a standard begins), acting as a are divided into core and concern compliance with some barrier to trade (where standards development standards. existing domestic legal obligations put additional burdens beyond legal (on child labour and other illegal obligations, for economic entities to 3.1.a. Generic standards for Trade labour practices). trade in goods or services). and Production

A standard can be generally defined The two aforementioned routes FLO stipulates three categories of as “a document that provides to market Fair Trade products generic producer standards, one requirements, specifications, (traditional or integrated route and for small farmers51, one for hired guidelines or characteristics that the Fair Trade labelling route) are labour,52 and another for contract can be used consistently to ensure reflected in two sets of Fair Trade production.53 that materials, products, processes Standards: international Fair Trade and services are fit for their standards for labelled products have The first set applies to smallholders purpose.”48 The WTO Agreement been developed by FLO (Fairtrade organised in cooperatives or other on Technical Barriers to Trade goes Labelling Organizations International organisations with a democratic, further still and defines standards as or Fairtrade International) and participative structure. The second document approved by a recognised international standards for Fair Trade set applies to organisations that body, that provides, for common Organizations have been developed employ hired labour to supply and repeated use, rules, guidelines by WFTO (World Fair Trade particular Fairtrade products. Part or characteristics for products or Organization, formerly IFAT). of the standard also applies to the related processes and production companies that trade with them. methods, with which compliance is Both systems are based on the joint The final set applies to small- not mandatory.49 Therefore, unlike Fair Trade definition and principles. scale producers who are not yet rules or regulations, standards are not democratically organised. As a mandatory and as such, are a suitable temporary measure, they can join instrument for private certification. 3.1 International Fairtrade if they have a partnership Standards for with an organisation (such as an However, standards, whether Fairtrade labelled exporter or NGO) who will assist private or public, are not without them to form an independent their critics and are an issue that products organisation. often raises contention between countries, both developed and FLO is the leading Fairtrade standard In addition to these three producer developing alike. The most frequent setting body for labelled products. standards, FLO also stipulates generic contexts in which standards are Its affiliated company FLO-Cert trade standards (GTS), which apply questioned are at the WTO and regularly inspects and certifies over to those operators in the supply chain other trade-related fora, and then 500 producer organizations in more who ‘trade (buy, sell or process) also in the context of consumer than 50 countries in Africa, Asia and Fairtrade certified products, up to affairs, including consumer rights and Latin America.50 Fairtrade Standards the point where the product is in its protection. Some of the criticisms are developed by the FLO Standards final packaging’ as well as Fairtrade

17 Does Fair Trade contribute to sustainable development?

payers (being responsible for paying These standards, which have been and under the responsibility of the the Fairtrade Price and Fairtrade in application since 1 February 2014, promoting body. It is structured into Premium) and conveyors (receiving cover the following issues (number the following sections (number of or handling the Fairtrade price and of obligations in parentheses): obligations in parentheses): Fairtrade Premium). Operators who are part of the processing of FT -- General Requirements, Part A: goods and products are certified which defines what Fairtrade against the GTS and their purpose understands by small producers -- General Requirements, which is to strengthen the relationship and their organisations (4). defines Fairtrade small producers between producers and traders of and lays out the prerequisites for FT products in the context of the FT -- Trade , which defines what promoting bodies (11). principles and especially to ‘provide producers can do to build fair greater transparency of the flow of trading practices. It covers -- Trade , which defines what Fairtrade Premium and prices’.54 traceability (8), sourcing (1), promoting bodies can do to build contracts (4), and use of the FT fair trading practices. It covers As Fairtrade is also about Trademark (2). traceability (7), sourcing (1), development, the generic standards contracts (10), and use of the FT distinguish between core standards, -- Production , which defines what Trademark (2). which are minimum requirements producers can do via production that producers must meet to be methods to better secure -- Production , which defines what certified Fairtrade, anddevelopment sustainable livelihoods. It covers producers can do via production standards which constitute management of production methods to better secure requirements for progress that practices (5), environmental sustainable livelihoods. There are encourage producer organisations development (28), and labour provisions on monitoring systems continuously to improve working conditions (36). (1), environmental development conditions and product quality, (26), and labour conditions (3). to increase the environmental -- Business and Development, which sustainability of their activities defines the unique Fairtrade -- Business and Development, which and to invest in the development approach to development. It defines the unique Fairtrade of the organisations and their explains how through social approach to development. It producers/workers55. organisation producers can explains how, through social build a basis for empowerment organisation, producers can Standards for Small Farmer’s and sustainable livelihoods. build a basis for empowerment Organisations Three issues are covered, non- and sustainable livelihoods. This discrimination (4), democracy, covers development potential Two principles are outlined by FLO participation and transparency (7), democracy, participation with regards this standard: (13) and development potential and transparency (7), non- (11). discrimination (2), Fairtrade Price -- Members must be small-scale (2) and Fairtrade Premium (8). producers. The majority of the Standards for Contract Production56 members of the organisation Part B: must be smallholders who don’t The latest standards for contract depend on hired workers all the production, in application since 1 -- General Requirements, which time, but run their farm mainly by March 2014, cover two subjects of defines Fairtrade small producers using their own and their family’s the Fairtrade contract production and lays out the prerequisites for labour. approach – promoting bodies57 and promoting bodies (1). producer organisations58. Part A -- Democracy: Profits should contains the requirements that the -- Trade , (there are no trade be equally distributed among promoting body must comply with. obligations). the producers. All members Part B contains the requirements have a voice and vote in the that the registered producers -- Production , which defines what decision-making process of and producer organisation must producers can do via production the organisation. comply with, with support from methods to better secure

18 Does Fair Trade contribute to sustainable development?

sustainable livelihoods. There -- General Requirements set the Generic Trade Standards are provisions on environmental requirements related to the development (15), and labour certification process and to the FLO defines a number of principles conditions (12). scope of the standard (7). which underlie this standard, and meaning that traders must: -- Business and Development, which -- Social Development consists of defines the unique Fairtrade requirements that are unique to -- Pay a price to producers that approach to development. It Fairtrade and is intended to lay aims to cover the costs of explains how, through social the foundations for empowerment sustainable production: the organisation, producers can and development to take Fairtrade Minimum Price. build a basis for empowerment place. The provisions relate to and sustainable livelihoods. management of FT Premium (20), -- Pay an additional sum that This covers development and capacity building (9) producers can invest in potential (8), democracy, development: the Fairtrade participation and transparency -- Labour Conditions requirements Premium. (5), non-discrimination (2), and are intended to ensure decent Fairtrade Premium (2). working conditions. They are -- Partially pay in advance, when based on the 1998 ILO Declaration producers ask for it. Standards for Hired Labour on Fundamental Principles and Rights at Work, as well as all -- Sign contracts that allow for Organisations which use hired labour other applicable ILO Conventions long-term planning and are informed, in the application as references for decent working sustainable production practices. of this standard, by the following conditions. There are provisions principles elaborated by FLO: on freedom from discrimination The latest version of these (9), freedom of labour (2), child standards was amended in July -- Management of the Fairtrade labour and child protection 2014, and covers the following Premium: The Joint Body, (5), freedom of association issues (number of obligations in which includes workers and and collective bargaining (12), parentheses): management, is responsible for conditions of employment (28), the management of the Fairtrade and occupational health and -- General Requirements, which Premium in accordance with safety (31). define requirements related to Fairtrade standards. certification, and to the labelling -- Environmental Development and packaging of finished and -- Freedom of association & requirements intend to make unfinished products (8). collective bargaining: Workers certain that agricultural and have the right to join an environmental practices -- Trade , which define requirements independent union to collectively contribute to a more sustainable related to trading practices. negotiate their working conditions. production system. It covers It concerns traceability (14), environmental management product composition (5), and -- Working conditions: Working (2), pest management (15), contracts (7). conditions are equitable for all soil and water (13), waste (3), workers. Salaries must be equal or genetically modified organisms (1) -- Production , which may only apply higher than the regional average biodiversity (6), and energy and to product specific requirements. or than the minimum wage in greenhouse gas emissions (2) There are no generic production effect. Health and safety measures requirements. must be established in order to -- Trade requirements define what avoid work-related injuries. must be done when you produce -- Business and Development, which Fairtrade products and then sell defines requirements that make The standards for hired labour, them. Provisions are outlined the unique Fairtrade approach to which came into force on 1 February on traceability (6), sourcing development more visible. They 2014, and are structured as follows (1), contracts (3), and use of concern sustainable trade (3), (number of obligations Fairtrade trademarks (2). pre-finance (7), and pricing (7). in parentheses):

19 Does Fair Trade contribute to sustainable development?

3.1.b Product standards This initiative to develop fairly WFTO has developed 10 traded precious metals had also international standards for Fair Trade Product standards have so far sought broad based partnerships Organizations (FTOs), namely: been developed for 17 classes food to support the development of and non-food products, ranging artisanal and small-scale miners 1. Creating Opportunities for from coffee, tea, sugar, cocoa, rice, through trade. Along with the Economically and fruit to flowers, cotton and FLO, there are numerous regional, sportballs.59 The product standards international and multilateral Disadvantaged Producers specify the minimum price and institutions, as well as NGOs, premium as well as other product- and the private sector involved in 2. Transparency and Accountability specific requirements. Certification engaging with stakeholders and of compliance with these standards to providing technical and non- 3. Fair trading practices is done by the independent technical inputs, including organization FLO-Cert GmbH 60. Fairtrade Africa, Environmental 4. Payment of a Fair Price Women in Action for Development The setting of standards or criteria, (EWAD) Uganda, Solidaridad 5. Ensuring no Child Labour and certification that those standards East Africa, MTL Consulting, Forced Labour have been met, and labelling to Estelle Levin Ltd and the indicate that the producer has been Artisanal Gold Council.65 6. Commitment to Non certified are critical elements for the Discrimination, Gender operation of Fair Trade schemes. Equity, Women’s Economic Fair Trade membership organisations 3.2. International Empowerment and Freedom of certify and monitor producers, Standards for Association traders and retailers based on these Fair Trade standards and authorise them to use 7. Ensuring good Working Conditions their labels or logos61. Organizations: what does Fair 8. Providing Capacity Building Finally, there are a few product- specific Fairtrade standards for Trade mean 9. Promoting Fair Trade each product that determine such for producers’ things as minimum quality, price, and organizations? 10. Respect for the Environment processing requirements that have to be complied with62. Each standard is accompanied by The World Fair Trade Organization a set of measurable indicators and The most notable development (WFTO) is the global network of compliance criteria which differ in relation to Product standards Fair Trade Organizations, with between “entry” and “progress” was the introduction of gold and around 386 members in 71 countries.66 level. FTOs in compliance with associated precious metals, including The membership is very diverse, these standards can acquire the silver and platinum as a Fairtrade ranging from small producer right to use the FTO Mark for their product in 2013.63 This is the first organizations to large cooperatives organisation67. time that mineral products can and from one person importers to receive Fairtrade labelling, and retailers with turnover of several 3.2.a. Fair Price the standard will be valid from million Euros. Two thirds of WFTO November 2014. According to the members are located in developing The defining characteristic of Fair FLO, the aim is for ‘Fairtrade to countries. WFTO standards are Trade in comparison to other private offer a small, but scalable solution developed in the Standards and and voluntary standards is that it to companies looking to source gold Monitoring subcommittee with input provides producers with a price from artisanal and small-scale miners from various stakeholders including guarantee for their goods, by virtue that can demonstrate conformance producers, southern exporters, of the Fairtrade price premium.68 with the OECD Due Diligence importers, retailers and Fair Price premiums are a price which the Guidance for Responsible Supply Trade support organizations, producer of a FT good or product Chains of Minerals from Conflict- and approved by the Annual received in addition to the price Affected and High-Risk Area’.64 General Meeting. for the product or good itself. The premium is ultimately paid by the

20 Does Fair Trade contribute to sustainable development?

consumer, on the price of the final price that may be paid by buyers goods at the disposal of the buyer consumer good into which the FT to producers for a product to at the premises of the seller. produce goes. become certified against the Fairtrade standards. -- Market price means the price Definitions and Procedures calculated under normal/ -- Fairtrade payer means the ordinary conditions (including FLO has established a specific table buyer responsible for paying the any differentials due to quality, for the calculation of the Fairtrade Fairtrade Minimum Price and variety or other factors), with Premium which takes into account the Fairtrade Premium Buyers no reference to any additional the product and its Fairtrade must check their potential status Fairtrade Premium. Minimum Price (where applicable), its as Fairtrade payer with the Commercial or market price, which certification body. Additional considerations are also is the price is a negotiated price stipulated by FLO for the calculation between the seller and the buyer. -- Fairtrade Premium is an amount of the Fairtrade price which may go Most of the products are assigned paid to producers in addition to to the producer, and the costs which a specific Fairtrade Minimum Price the payment for their products. may be involved, in addition to the (for some, this is the Commercial The Fairtrade Premium is products specific premium price. Price) and Fairtrade Premium which intended for investment in These include transport, specific is calculated as either a share of the the producers’ business and packing or processing, for which the Minimum or Commercial Price (10% community (for a small farmers’ parties to the contract (producer to 15% on average), or it is calculated organization or contract and buyer in most instances), must as ‘Currency / Quantity x Unit´ (for production set-up) or for the stipulate who is responsible for such example, x US dollars or Euros per socio-economic development of costs in the contract.70 metric tonne or kilos).69 the workers and their community (for a hired labour situation). The rules are also clear as to how According to the FLO “For Fairtrade the Fairtrade premium must be products, a Fairtrade Minimum Price -- Fairtrade price means the total calculated for transformed or (where it exists) and a Fairtrade price paid to producers and blended products, which, such as a Premium have to be paid. Wherever includes the Fairtrade Minimum chocolate bar, may contain Fairtrade the market price or negotiated price Price (or relevant market price produce (cocoa, sugar) and non- is higher than the Fairtrade Minimum where applicable) and the FT produce (milk, stabiliser). Only Price, the relevant market price Fairtrade Premium. the raw FT ingredient serves as applies. In any case, the Fairtrade the basis of the calculation of the Premium has to be paid on top of -- Farm Gate price as used by FLO price and Fairtrade Premium.71 the price.” refers to the gate of the certified The Explanatory document for producer entity (e.g., the Small the Fairtrade Trade Standard Below are some of the definitions Producers’ Organization), and provides an illustrated guide as to provided by the FLO in relation to not the gate of the individual how the Fairtrade premium must the Fairtrade price: producer’s farm. Farm Gate be transferred down various value therefore means that the seller chains and finally to the producer: -- Fairtrade Minimum Price (where (the certified producer entity) it exists) is the lowest possible delivers when they place the

21 Does Fair Trade contribute to sustainable development?

Box 1: Illustrating Fairtrade Premium transfer in the Product Value Chain (source: FLO)

Fairtrade Payer and Conveyor

Fairtrade payers are responsible for paying to producers the Fairtrade Minimum Price or the relevant market or negotiated price whichever is higher. Which operator acts as the Fairtrade payer depends on the supply chain and may be different in each case. It is usually the trader who buys from the producer organization.

It is the exporter if the producers do not export directly and prices are set at ex works/ farmgate level.

When producers export directly, the importer is the Fairtrade payer.

When producers sell to the processor and prices are set at ex works/ farm-gate level, it is the processor.

In contrast to the Fairtrade payer, the Fairtrade conveyor only receives the Fairtrade Premium money from the Fairtrade payer and passes it on to the certified producers. This can happen for example where the applicable price is at FOB level but producers do not export themselves. In this case, there is a processor or exporter between the producers and the importer. The operator in-between just passes the Fairtrade Minimum Price and Fairtrade Premium from the Fairtrade payer to producers.

22 Does Fair Trade contribute to sustainable development?

4. Fairtrade standards in the Global Marketplace: Issues and Implications for the ACP

4.1 Issues with Fair Figure 5 : Growth of standard-compliant production (2008–2012, hectares Trade in the Global compliant). Marketplace

There is a considerable volume of literature about Fairtrade in the context of analyses and critiques of private or voluntary standards and their effects on local, global and regional markets. The study of standards has also become an increasingly urgent issue in the food and agriculture sector, as growth of standard-compliant production across key commodities for smallholders has increased much more rapidly than for conventional commodity markets (2012: 41% increased growth for standard compliant productions vs. 2% growth for conventional commodity markets), across all commodity groups (sugar: 79%, cocoa: 69%, cotton 55% growth). As it stands, standard compliant products have also seen a strong growth in their market share72, and constitute an ever increasing production system.73

From the consumer perspective, it is estimated that there are more than 400 consumer facing eco- labels operating globally74, and the European Commission’s Directorate for Agriculture estimated that in 2010, there were also over 400 private certification schemes in the EU. 75

23 THE INTERPLAY OF PUBLIC AND PRIVATE STANDARDS

and the global selection/adaptation process (market-based or nonmarket-based). These distinctions result in four types of standards (see figure 2):

 Public nonmarket-based standards collaboration of intergovernmental organizations or cooperation Does among Fair domestic Trade regulators contribute to sustainablePublic market-based development? standards result from market-like competition between public regulatory agencies of individual states or regional and multilateral standard setting bodies.  Nonmarket-based private regulation by private bodies dominating one or several sectors.  Market based private regulation by firms or any other body, such as NGOs, research institutes, multi-stakeholder coalitions/roundtables and industry associations. Figure 6: Typology of Standards Fair Trade as a private standard Figure 2. Typology of standards have considered issues such as its legitimacy as a private standards (and the legitimacy of private standards in general), its level of Non-market transparency, inclusiveness, rationale, Non-market private standard public standards setting (e.g. the extent to which it conflicts or International overlaps with public standards, its (e.g. ILO core Organization for relevance to smallholder farmers labour standrds) Standardization, ISO) and their needs, its relevance or Global appropriateness as a market or trade selection/ instrument and so on. adaptation process I. Legitimacy Market-based The issue of the legitimacy of Fair public standard Market-based setting private standard Trade as a private standard is a (e.g. Codex setting (e.g. complex one, and also largely Alimentarius Fairtrade, FSC) subjective as there are no hard and Commission) fast rules as to what constitutes a legitimate standard. The International Trade Centre explores

this issue substantially in a technical Institutional setting of standard setting paper on The Interplay of Public and Private Standards78. Source:Source: Büthe & Mattli& Mattli 2011. 2011. With a myriad of standards in use, all kinds of production, processing and transporting activitiesIn this regard,are subject several of the WFTO Figureto at least7: Elements one, often of Legitimacyseveral standards. These vary in scopes, requirements, and implementationprinciples correspond and strongly with verification policies. It should also be noted that the distinction between these four types respondingof standards tois not legitimacy, such as always straightforward and there are cases where a clear distinction is difficult. Two examples illustrate Transparency and Accountability. this: The issues of inclusiveness or The ISO is a private organization that aims to facilitate trade and technology transferaccountability in developing of the Fair Trade international standards serving as standards for standards. It creates international ‘private’organisations standards thatand the WFTO have are not market based. The WTO recognizes the important role the ISO plays towardsbeen the subjectinternational to criticism and praise. harmonization of standards. In fact, ISO is an interesting example of the difficulty in clearlyFor example,differentiating in a comparison private and private standards. The ISO is a network of national standards institutes of 162 countries between15 Fairtrade and the fifteen of recognized as the body being ‘most representative of standardization in its country’. Member bodies participate and exercise voting rights on any technical committee and policy committeethe most. They important form global standards committees and working groups developing the standards. While the majority of ISO memberinitiatives bodies currently are covering the agriculture, forestry and biofuels sectors, Fairtrade was only one of two which only had civil society as 15 Please see: http://www.iso.org/iso/about/iso_members/member_bodies.htm accessed on 21 November 2011. stakeholders in their founding. Source: Authors. Furthermore, in terms of the board Within16 the broader scheme 4.2. Normative Issues with representationMAR-11-215.E by supply chain, of private standards, Fairtrade Fair Trade Fairtrade was found to have a can be categorised as a positively even distribution between ‘market-based private standard’ A norm is colloquially a standard, producers, industry/private sector, (International Trade Centre (2011); pattern or model which is regarded NGOs and civil society, and other Hiscox, M.J. 2007) as typical76. As the popularity and groups. application of Fair Trade continues This analysis of Fair Trade and to increase, according to several Lastly, looking at board other private standards has tended criteria77, it becomes increasingly representation by geographical to centre around two issues, the subject to normative evaluation. location (developing/developed normative and the substantive. Generally, normative review of countries), the same study also

24 The Green Economy

Box 2.1 deFining The green economy: The growing role oF The privaTe secTor

As a general rule, most voluntary systems today seek to involve through industry-led dialogue and cooperation.19 More recently, a broad range of stakeholders somewhere in the standard- however, a trend has appeared, loosely following the FSC model, setting process. Notwithstanding this, different initiatives tend toward use of clearly designated multistakeholder governance as to be launched with different underlying philosophies, which the a foundation for launching new standards initiatives (RSPO, RTRS founders of the initiative typically define prior to the standard- and Bonsucro). setting process itself. Regardless of their origins, all of the initiatives in this

The past decade has seen the rise of greater involvement report currently operate as non-profit organizations, with most Standards Context and leadership from the private sector in the development and including some degree of multistakeholder representation in implementation of voluntary sustainability standards. The oldest their implementation process. initiatives covered in this report (IFOAM, Rainforest Alliance and Fairtrade) were established principally as civil society movements seeking to exert influence on private sector activity. 19 Note the 4C Association was launched through a public-private Does Over time, Fair companies Trade have contribute become increasingly integrated partnership between the German Coffee Association and GIZ. A multistakeholder steering committee guided the 4C Association’s tointo sustainable the standard-setting development? and implementation processes. initial standard-development process. UTZ Certified was initially 3.4.1 Several ofExecutive the standards Decision covered Making in this report (UTZ Certified, Boardlaunched representation in 1997 as a coffee provides standard an emanating indication from of a coffee potential The4C Association, internal management GLOBALG.A.P. structure and ETP) of a sustainabilitywere originally standardinitiated ownership,project run buy-in by Ahold and in participation Guatemala under of the stakeholder name UTZ Kapeh, groups or in the

plays a role similar to the executive powers in public government. day-to-day“Good Coffee.” management The organization of an organization. became an independent In the contextnon-profit of a Criteria Development in 2002. The day-to-day implementation of the sustainability initiative global economy, where consumer and private sector demand in FigureTastemsBle 8:2.1 from Founding Founding executive sTstakeholdersakeholders, decision B ybymaking ini TinitiativeiaT ive. and includes matters of the developed world often drive supply chain decision making, general management, market development, training, transaction one of the key challenges for participatory governance has been processing, and monitoring and enforcement of compliance. The to find mechanisms for empowering stakeholders upstream in highest management authority in most member-based organizationsStakeholder global groups supply that chains established to participate the initiative in downstream supply chain typicallyInitiative rests with the general assembly, but for practical matters, management decisions. (from date of establishment) Civil society Producers Private sector Public sector the board of directors is usually the highest level of executive With this in mind, Figure 3.3 shows the current distribution of managementIFOAM for “hands-on” decision making. A board of directors stakeholder roles in the supply chain across the initiatives reviewed orSA similarN/RA entity24 governs all 16 of the initiatives covered in this in this report. The categories of “producer,” “industry/private report.FSC However, governance structures do indeed vary among the sector,” “NGOs and civil society,” “workers’ associations and unions,” ETP different voluntary sustainability initiatives.25 and “other” have been used to provide a general picture of the Fairtrade GLOBALG.A.P. distribution of stakeholders on an initiative’s board. It is important Markets PEFC to note that the categories are not entirely exclusive of each other, UTZ Certified with many variations among them. Producer representatives may 24RSPO Paralleling the operations of the board of directors is the council of the also have interests in industry or NGOs, for example.26 BCI4C Association and the executive team for UTZ Certified. Note that in CmiAthe case of PEFC, the General Assembly functions as a board typically 4C Associatiodoes in othern organizations. 25RTRS For example, UTZ’s supervisory board holds the highest management RSBauthority, similar to a General Assembly. PEFC is different in that its 26 An organization’s structure can further complicate these categories. For BonsucroGeneral Assembly makes almost all decisions, and therefore holds face- example, “foundations” differ from “associations” in that in foundations, ProTerrato-face general assemblies on a yearly basis, as well as multiple general individual board members can represent different organizations, which assembly postal ballots annually (as noted in SSI correspondence with themselves can include multistakeholder constituencies. ProTerra PEFC). exemplifies this distinction. source: SSI 2014 Conclusions

27 FigurefIgure 9: Board3.3 board representation represenTaTIon byby s TstakeholderaKeholder role role In suppl in Supplyy chaIn. Chain

100

80

60

40 References BY PERCENTAGE BY

20

BREAKDOWN OF BOARD REPRESEN TA TION 4C Association BCI Bonsucro CmiA ETP Fairtrade* FSC IFOAM PEFC ProTerra** RSB RSPO RTRS SAN UTZ

SSI Review 2014 | 33 Producer Industry/private sector NGOs/civil society Workers’ associations/unions

Other *36 per cent of Fairtrade’s board is made up of market-facing organizations that can include private sector groups or NGOs working to build Fairtrade markets. For the purpose of this graph this category was split between industry/private sector and NGOs/civil society. **ProTerra’s breakdown is the average of the total of ABRANGE, ARGE Gentechnik Frei, and VLOG member associations’ stakeholder representation. source:27 No SSI data 2014 available for GLOBALG.A.P.

60 | SSI Review 2014 25 3.4.2 Legislative Decision Making Opening the rule-making process to all stakeholders that may be of sustainable development, and these variables distinguish held accountable to such rules presents sustainability initiatives stakeholders and their associated level of decision-making authority. with the potential to mirror democratic institutions. However, at Therefore, while sustainable development is a concept that must both a practical and political level, initiatives face several challenges speak at some level to the needs of all stakeholders, individual Does in opening Fair their rule-makingTrade contribute processes to stakeholders at the initiatives are often designed with the needs of specific stakeholders international level. in mind. toOn sustainable a practical level, cost increasesdevelopment? exponentially with the number While it is not possible, based on available data, to determine of stakeholders included. Moreover, heavily multistakeholder the precise makeup of stakeholder participation in the legislative decision-making procedures could lead to reduced efficiencies in an process of each initiative, the SSI measures the degree to which a initiative’s ability to adjust to market conditions quickly—one of the given standard includes external (i.e., non-member) stakeholders in attractive features associated with private initiatives. their rule-making processes. Table 3.5 illustrates that the majority found Fairtrade to have an inclusiveness, transparency and livelihoods and communities through At the political level, it is unclear whether equal voice for all of the initiatives reviewed (12 out of 16) engage stakeholders approximate balance of 50/50 accountability found as follows: Fair Trade.79 31 fromstakeholders each region. in the legislative process is appropriate, particularly significantly in the standard-setting process. when rules apply only to a specific segmentII. Relevanceof the supply of Fairtrade chain. to To put the market in which FT ThePerhaps other moreevaluations importantly, comparing however, each initiativeProducers has a distinct operates into context, it is necessary 31 ProTerra has a stakeholder council and opens its standard up for public

mission or markets that they target within the broader pursuit The Green Economy Fairtrade to other global The stated aim of the WTFOconsultation is to on a yearlyto basis have (ProTerra, a cursory 2012). view at some sustainability initiatives on enable producers to improve their figures on agricultural trade 3.4.3 Judicial Decision Making FigureTable 10: 3.5 External exTernal participation parTIcIpaTIon In inrule rule-making-maKIng processes processes for volun forT aryvoluntary sTandards. standards.32 Adjudication is intended to deal with disputes between stakeholders While most standards provide publicly available policies during the standard implementation process. Since systems are on dispute settlement processes, only 31 per cent provide an presumably designed to minimize such disputes in the first place, independent dispute settlement body. Ten of the 16 initiatives the development and management of adjudication processes may permit both local and informal complaints, indicating a specific

be regarded as a sort of secondary activity for standard-setting effort toward making dispute resolution accessible to marginalized†99 bodies more focused on monitoring and enforcement processes. groups across the standards reviewed.33 Given the costs associated 4C Association BCI Bonsucro CmiA ETP Fairtrade FSC GLOBALG.A.P. IFOAM PEFC PROTERRA RSB RSPO RTRS SAN/RA UTZ Nevertheless, a sound dispute resolution process is key to ensuring with formally independent bodies, there may be particular hope for

that due process supports decision making, and it therefore more creative dispute settlement bodies and processes, such as the Standards Context provides an important pillar in ensuring the credibility and strength RSPO dispute settlement facility (see Box 3.7). of the overall conformity assessment and governance process of any initiative. As noted in Table 3.6, most of the initiatives reviewed have publicly available policies and procedures on dispute settlement.

Only† Participation a small minority of stakeholders: (25 per The cent)Standards report Committee having independentand Product disputeAdvisory settlementCommittees providebodies, thesignalling fora for stakeholdersan ongoing alongrisk forthe perceivedvalue 33 At the time of this report, Fairtrade was in the process of implementing conflictchain, from of producers interest to buyersin dispute to be involved processes and influence throughout the the industry procedures for workers to launch complaints through informal means. operations of UTZ Certified (UTZ, 2013). more generally. source: SSI 2014 Criteria Development Figure32 Some 11: Disputeinformation settlement extracted from index ITC Standards for voluntary Map (ITC, 2013b) sustainabilit and also providedy standards directly from reviewed standards inbodies. the SSI Report. Table 3.6 dIspuTe seTTlemenT Index for volunTary susTaInabIlITy sTandards revIewed In ThIs reporT.34 4C Association BCI Bonsucro CmiA ETP Fairtrade FSC IFOAM PEFC ProTerra RSB RSPO RTRS SAN/RA UTZ

§ 102 Markets

ǂ Rainforest Alliance, 2013a. § It is perhaps worth noting here that there are various levels of disputes concerning different issues such as certification decisions and standard setting. These complaints occur at both the national and international level. At PEFC, for example, the availability of different languages with respect to 62 | SSI Review 2014 disputes is distinguished between international activities (English), endorsement decisions (English), PEFC members (local languages as well as

English for international) and certification decisions (local language). Conclusions GLOBALG.A.P.: Information unavailable. source: SSI 2014 34 Some information extracted from ITC Standards Map (ITC, 2013b) and also provided directly from the standards bodies.

26 References

SSI Review 2014 | 63 The Green Economy

3.4.4 Public Disclosure In order to play an effective role in the governance of sustainability decision and management processes, it is nevertheless notable initiatives, stakeholders must have sufficient information about the that only half of the standards reviewed provided online access characteristics, processes and impacts of those initiatives. Public to independently audited financial statements. This is a rather disclosure of systems and financial data therefore represents an surprising result given the stated public objectives maintained important tool for enabling effective participatory governance. by virtually all of the initiatives reviewed and the corresponding At the same time, the geographic, cultural and linguistic diversity importance of revenue streams in determining overall capacity and of the stakeholder base can make effective communication with activities along the supply chain.

stakeholders extremely time and resource intensive for international Public disclosure is a value closely aligned with standard-setting Standards Context organizations. processes, as is exemplified by the high degree of documentation The SSI’s Public Disclosure Index is based on seven parameters made available to the public online by the standards reviewed (see and provides a high-level measure of the degree to which key Table 3.7). Meeting minutes and records as well as audited financial Doesinformation Fair is available Trade online forcontribute different initiatives. Although 50 statements are the notable exceptions, and therefore represent perto cent sustainable of the initiatives revieweddevelopment? provide online access to 75 per important opportunities for improving public engagement in the cent or more of the information included in the SSI Public Disclosure development and implementation of standard-setting processes. Index, pointing to a general effort toward ensuring easy access to

35 FigureTable 12: 3.7 Availability avaIlabIlITy of of documen documentsTs and anddecIs Idecisionsons onlIne. online. Criteria Development 4C Association BCI Bonsucro CmiA ETP Fairtrade FSC GLOBALG.A.P. IFOAM PEFC ProTerra RSB RSPO RTRS SAN/RA UTZ Markets

35 Some information extracted from ITC Standards Map (ITC, 2013b) and some provided directly from the standards bodies.

ǂ SSI data: Rainforest Alliance, 2011 (independently audited full financial FSC: All ca. 1300 FM/CoC certification decisions are publicly online (including statements); Rainforest Alliance, 2012 (financial summary in annual CARs/follow-up) (SSI direct communication with FSC). Conclusions report, policies and procedures for complaints). RSB: RSB (2011a). 4C: The list of committee members is in reference to technical committee RTRS: RTRS “committee members” refers to the Task Force Brazil and the members and Mediation Board members (4C Association, 2013c; Pesticides’ Use Working Group (SSI correspondence with RTRS). 2013e). See 4C Association (2013a) for list of compliant enterprises. SAN/RA: The list of the International Standards Committee is available online BCI: Although BCI makes complaints and dispute resolutions available (A. de Freitas, SAN/RA, personal communication, December 2013). online, the initiative has not received any official complaints since its UTZ: UTZ makes lists of some committee members available online, but not inauguration (SSI correspondence with BCI). members of all committees. UTZ will begin publishing independently Fairtrade: Fairtrade’s website provides an annual statistical report with audited full financial statements online in 2014 (SSI correspondence aggregated figures for complaints, appeals and allegations, as well as for with UTZ Certified). certification decisions. source: SSI 2014 References between developing and developed UNCTAD has found that they make developing countries to agriculture countries. According to UNCTAD, up 98% of the world’s 1.3 billion and the global food value between 2007 and 2012, the share agricultural workers, and in Africa, chain, they nevertheless remain of agricultural goods in global trade this equates to over 60 per cent of marginalised and impoverished remained stable, growing marginally the workforce. Furthermore, poverty even though the global food from 8.3 to 9.2 per cent. Furthermore, is highly concentrated within workers and agriculture sector continues the top ten South-North agricultural in rural areas, particularly in Sub- to grow in value. InSSI light Review of 2014this | 65 exports included cash crop products Saharan Africa. picture, the question then becomes such as coffee and bananas, which whether Fairtrade is relevant to have shown little change since 2007. The agricultural sector in developing addressing the needs of farmers in In 2012, the value of exports in South- countries also has the highest developing countries. North agricultural trade was US$296 incidence in child labour, with over billion and making up 33.6 percent of 60 per cent of all child labourers One of the criticisms often levied global agricultural trade flows80. working in agriculture.81 against Fairtrade is whether its standards are suitable or even With regards to agricultural It is evident that notwithstanding relevant for the situation of producers in developing countries, the contribution of farmers in smallholders and producers in

27 TD/B/61/2 Does Fair Trade contribute followedto sustainable by those in South Asia, development? at 51 per cent. Altogether, sub-Saharan Africa and South Asia represent half a billion workers employed and/or engaged in the sector.9 23. Closely linked to the high ratio of poverty in the agricultural sector in developing countries, a concentration of socially and economically vulnerable groups is also seen in this sector, as shown in table 6. Figure 13: Poverty incidence and depth in low-income and lower middle-income countries Table 6 Poverty incidence(Percentage) and depth (UNCTAD, in low-inco 2014)me and lower middle-income countries (Percentage) As private sector participation in Poverty headcount ratio Poverty gap Fairtrade grows, especially large Low-income countries Rural 53 20 multinational food and agro-industry Urban 29 10 operators, including in the areas of Total 46 17 retail and food services, criticism Lower middle-income countries has arisen as to the degree to Rural 48 15 which these operators implement Urban 27 8 Total 40 12 the Fairtrade values, particularly Sub-Saharan Africa in light of numerous studies which Rural 57 22 argue that the largest share of the Urban 29 11 gains from the Fairtrade Price are Total 47 20 South Asia largely captures by the downstream Rural 27 6 operators such as retail sector, and Urban 15 3 the Fairtrade Premium which the Total 25 5 producer gets is actually minimal Note: Country averages are based on the latest available data for 2008–2012. The poverty by comparison.85 headcount ratio corresponds to the percentage of the population (total, rural or urban) living on less than $1.25 a day at 2005 international prices. The poverty gap is the mean shortfall from the poverty line (counting the non-poor as having zero shortfalls), expressed as a percentage of the poverty line. From the political perspective, Source: World Bank World Development Indicators database, available at some critics argue that Fairtrade, http://data.worldbank.org/data-catalog/world-development-indicators. and private standards in general, 24. Figure 5(a) and figure 5(b) present the sectoral composition of employment by are of a disservice to farmers and developinggender in sub-Saharan countries. Africa For example, and South Asia,seeing respectively. the benefits In both regions,of increased agriculture all other constituents in developing someremains standards the largest such sector as of theemployment, absolute compared consumption to the services of Fairtradesector and the products industrial countries overall because it shifts prohibitionsector. In sub-Saharan of child labourAfrica, theor agriculturalthe use sectorwhere absorbed large aboutprivate 62 persector cent ofoperators men and regulatory responsibility from the ofwomen GMOs workershave been in 2012. argued, In South from Asia,the whilehave the co-opted overall sharethe Fairtradeof workers brand in the state to consumers86. perspectiveagricultural sector of orthodox is around 50economics, per cent, there isto a considerableaccess a niche difference market, between but men have and towomen; be potentially women’s employmentinconsistent in withthe agricultural not sector implemented represents aroundthe corresponding 70 per cent of In response to these criticisms of the total, compared to 15 per cent in both the services and industrial sectors. In addition, the the immediate economic needs rules and obligations on how the Fairtrade, a number of studies have agricultural sector has the highest incidences of early entry into the workforce, at ages as of farming families in developing label should be used and for which argued that from the conceptual or early as five and seven years. Around 60 per cent of all child labourers – about 129 million 82 countries.girls and boys – work in agriculture.10 specific goods: theoretical perspective, the Fairtrade approach can respond to the needs Another criticism of Fairtrade, The greatest concern of smallholders in various ways. elaborated by Jaffee, D. (2012), expressed by fair trade However, lack of timely and explicit is the increased risk of co-option, movement groups and data concerning smallholder farmers whereby the private sector, and many 100 percent fair trade and developing countries in general, corporate institutions in particular, companies is that without also raises limitations with regards 9have International undermined Labour Office the socialKey Indicators and of the Labourbinding Market database, commitments eighth edition, to available at to the accuracy of any model which economichttp://www.ilo.org/empelm/what/WCMS_114240/lang--en/index.htm imperatives of Fairtrade volume growth, (accessed large 1 July firms 2014). can evaluates the relevance of Fairtrade. 10 by Food developing and Agriculture their Organization own like of and the United Nationsutilize (FAO), the 2013, fair FAO trade Statistical seal Yearbook 2013: World Food and Agriculture (Rome, United Nations publication). sometimes misleading private to burnish their corporate With regards the issue of whether standards. In fact, the issue images and mislead consumers standards should be applied, and of overlapping standards and about their overall business if so, whether the standards being 14 certification initiatives and their practices, without meaningfully chosen are the most relevant or potential cost to smallholder farmers altering those practices. The appropriate ones, this question can be is one that is often raised by both potential of the fair trade looked at from the counterfactual – proponents and detractors of label to serve as a vehicle for namely, what the scenario would Fairtrade and private certification “fair-washing” (Renard 2005) be in the absence of any initiative and standards in general.83 The in the fast-growing arena of which seeks to encourage and problem that is outlined in the co- corporate social responsibility certify the compliance of producers option scenario, is that producers claims is acknowledged by the in developing countries with global in developing countries are not licensing bodies.84 standards. Although Fairtrade

28 Does Fair Trade contribute to sustainable development?

standards and certification are the lead from private standards producers benefit from having voluntary, some of the provisions initiatives to create national to comply with standards that which are included in these standards standards that are harmonized are developed for their specific concern obligations by developing with international standards.”88 circumstances, rather than the countries under international law, broader, less clear and sometimes for example with regards labour There is also some scepticism as more onerous rules or regulations provisions and some environmental to whether governments are, in that the public bodies may initiate.90 provisions. As noted in Hiscox (2007), the first place, the best or most developing countries may not have suited institutions to exclusively Lastly, public regulation in the means, capacity or political will respond to the rapidly evolving food agriculture and agri-food works to enforce these global standards in and agricultural sector, especially through negative enforcement, the face of other competing demands taking into account consumer namely penalties or other costs to or as a result of corruption. However, demands. At the international level, producers or other operatorsWeak who Coffee 105 failure to comply with obligations on adoptinggenerating whatdecisions David Dorwardon items (1974) such terms as a “workingbreach misunderstanding, the rules. Fairtrade” in which works the parties child labour or rights of workers can agriculturalsimultaneously trade, operate social under issues distinct, evensuch incompatible through“conceptual positive models enforcement, which had proven i.e. have a very negative effect on exports asmeaningful labour standards under quite different and so circumstances on, takes ” (p.rewarding 477). This misunderstanding, producers and as I describeother later, from developing countries, especially aextends long time to the and semantic often conflation is fraught of fair with trade ceroperatorstification and who licensing complybodies with with the social movement from which they emerged. in the agricultural trade context. Entry contention and lack of consensus. It rules, thereby acting as an incentive into developed country markets has is arguable that private institutions, for certified operators to maintain been listed by some producers as and notablyFair Trade Fairtrade, Coffee: Transnationalcan play a role Firms and and sometimes Intra-Movement build on Dynamics their a motivation for gaining Fairtrade in the event of paralysis at the state commitments under the Fairtrade certification,87 over and beyond and internationalFair trade was founded level. duringFurthermore, an era of regulated scheme. coffee trade, under the International Coffee the gains made from the Fairtrade suchAgreement a private quota institution system that had is functionedable to as a price and supply stabilizer since the early 1960s. However, it soon came to represent an alternative to the harmful effects of a liberalized coffee Premium, as certification can act as an focusmarket, its which resources sowed the more seeds efficiently of its eventual focus4.3. on corporate Substantive firms. When Issues in 1989with the Fairtrade Agree- assurance to buyers, traders, retailers toment address collapsed, a specific due in part tochallenge, U.S. commercial and foreign policy interests, the market was glutted and consumers that, notwithstanding suchand worldas guaranteeing coffee prices crashed, a fairer jeopardizing price the livelihoodsAt the substantive of 20 to 25 million level, farmer the families, the national situation, a producer or forwreaking agricultural social and producers, environmental which damage, andevaluation dramatically of reducing Fairtrade producing looks countries ’ share of the coffee dollar (Oxfam America 2002; Talbot 2004). Figure 2 portrays the movement group of producers at least comply governments may not be able at the measurable effects that of both conventional and fair trade coffee prices since 1988. Economic power in the coffee indus- with what are regarded minimum totry do is highlywithout concentrated, falling foul with of the their“Big Five” transnationalsFairtrade— hasNestlé, on Kraft, various Procter groups, & Gamble, international norms. internationalSara Lee, and Tchibotrade— obligations.controlling 6989 percent of globalnotably roasted smallholder and ground farmers coffee sales and (Ponte Therefore,2002). These through traders reaped Fairtrade billions in additional profitscooperatives, during the 1989 but– 1994also period,looking and at again In response to the political criticism, during the more recent and severe price crash, which lasted from 1999 to 2005 (Charveriat 2001; Oxfam International 2004). During these twin crises, as Figure 2 indicates, fair trade’s minimum that instead of the governments Figureor base 14: prices Conventional paid to producer and organizations Fair Trade for green Minimum (unroasted) Arabica coffee— Coffee$1.26 per Prices pound, and in developing countries drafting, $1.41 for certified(Nominal), organic coffee1988–2010—were well above the world price, as much as three times higher. implementing and enforcing regulations, it is now private entities 300 and organisations that are taking on this responsibility, the proponents 250 of Fairtrade argue that it acts as an incentivising mechanism for all 200 stakeholders, public and private, to improve domestic standards. If 150 governments in developing countries can see that the private sector in developed countries respond 100 positively to the establishment pound per Cents (U.S.) of a framework for the respect of 50 international rules on social issues, then it is possible that the standards 0 that Fairtrade expects of its 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 producers could be normalised. As the FAO notes, “some Conventional “C” price Fair trade price Organic fair trade price governments and national level – producers’ associations have taken Sources:Figure 2 • FLOConventional 2010; andICE Fair Futures Trade Minimum 2010, ArabicaJaffee, Coffee D. (2012) Prices (Nominal), 1988 2010 Sources: FLO 2010; ICE Futures 2010

29 Does Fair Trade contribute to sustainable development?

TD/B/61/2 other agents in the value and supply Figure 15: Specialized services associated with agricultural production in chains for food and agricultural different stages of the value chain Box 2. Specialized services associated with agricultural production in different stages produce. This includes consumers, of the value chain supermarkets, buyers and other Inputs Production or Transport and Client or customer agents, as well as other private processing distribution services sector and public sector bodies. • Research and • Research and • Packaging • Marketing There are various disciplines development development • Marketing • Research and • Marketing and • Extension • Warehousing development concerned with the substantive market research services • Logistics • After-sale effects of Fairtrade, notably • Equipment and • Equipment and • Transport services social sciences such as economics, machinery rental machinery • Research and agriculture and sociology, as • Extension rental development • well as trade, agriculture and services Certification and testing development in the context of • Labelling public sector cooperation. Source: Economic Commission for Latin America and the Caribbean, 2014, I. Fairtrade effect on Prices studiesSource: presented Economic Commission at the Third for Latin Conference America and of the the Caribbean, Latin 2014,American studies presentedNetwork at for the Third Conference of the Latin American Network for Research on Services – Innovation and As the Fairtrade price is the Researchinternationalization on Services in services: – Innovation New sources andof economic internationalization development in Latin in America, services: Mexico New hallmark of the Fairtrade system, sourcesCity, 13 andof economic14 March, and development N Oddone and RP in Pérez, Latin 2014, America, El mejoramiento Mexico de lasCity, cadenas 13 and de valor 14 a and also one of the easier outcomes March,través deand servicios N Oddone profesionales and y RPde soporte, Pérez, International 2014, El Centremejoramiento for Trade and de Sustainable las cadenas to measure across different deDevelopment, valor através 6 May, de available servicios at http://www.ictsd.org/bridges-news/puentes/news/el-mejoramiento- profesionales y de soporte, International Centre commodities and countries, it forde-las-cadenas-de-valor-a-trav%C3%A9s-de-servicios Trade and Sustainable Development, 6 (accessed May, available 1 July 2014). at http://www.ictsd. has been subject to the broadest org/bridges-news/puentes/news/el-mejoramientode-las-cadenas-de-valor-a-26. The unavailability of agriculture-related services may inhibit overcoming the trade range of analysis as a means of trav%C3%A9s-de-serviciosbarrier effects of technical barriers (accessed to trade and1 July sanitary 2014). and phytosanitary measures. For quantitatively demonstrating the UNCTAD.example, the2014 Government of Jamaica acknowledged in its most recent WTO trade policy substantive outcomes of Fairtrade. review that the limited ability to meet international quality standards was a significant challenge for exports, in particular in the agro-processing subsector, in spite of various Undoubtedly, the Fairtrade Premium consumer choice is influenced by the increased incomes for hired workers. initiatives undertaken by the Government to improve the association of quality assurance means that a farmer will receive representationframeworks with made agricultural through production the and agro-processingJaffee’s (2009) industries. study11 of 51 coffee a higher price for a Fairtrade Fairtrade label that the producer or farmers from Oaxaca, Mexico also product than for a non-Fairtrade farmer27. is Additional making servicesa fairer thator healthier are cross-cutting finds to the that value few chain of theinclude benefits training of and education, financial, legal, telecommunications, security, accounting, quality control, product.91 Furthermore, because profit for their product.94 Other forms Fair Trade are passed on to messaging, real estate, energy and mechanical maintenance. Findings of the Economic of the price floors for Fairtrade ofCommission certification, for Latin such America as organic, and the whichCaribbean workers. research Althoughreferred to in he box finds 2 suggest that that products (Fairtrade Minimum Price), dospecialized not make or such professional a representation, services can contri buteFair to Tradetechnological certified upgrading farmers at each get stage producers are also less vulnerable haveof the often value been chain. found to actually 130% higher prices, the wage paid to extreme market price fluctuations result in a higher profit margin for to hired workers is only 7% higher 28. Figure 6 plots the share of agricultural employment in total employment against the which can be devastating for producersshare of agricultural than Fairtrade trade certificationin total trade. The(47 two vs. ratios 44 pesosreveal peran inverted-U-shaped day). In 95 smallholders as they often are less forrelationship, the same goods.i.e. the share of agricultural exportsaddition, rises labour as the costsshare asof aagricultural percent resilient than other agricultural employment increases only up to a certain oflevel, coffee around sales 20 wasper cent.actually The lowershare of operators in the value chain. 92 Anotheragricultural issue trade raised tends toin bethe low literature in countrie s whereamong agriculture the Fair absorbs Trade over certified 50 per cent farms of reviewtotal employment. of Fairtrade These is that,are largely in the a group of low-incomerelative to countries the conventional that may be facing,farms in The case for the Fairtrade price contextaddition of to certifiedlow agricultural producers productivity, difficulties(57.2% in versus physically 68.3%).” reaching96 international is not so clear cut, however. A whomarkets. use hiredThe gaplabour, between the thegains hypothetical linear relationship representation and the observed one may be seen as the trade gap, to be filled through appropriate policies, substantial body of literature also of the Premium may be eroded II. Fairtrade effects on Access to assuming that farmers may gain from increasing the share of traded production. demonstrates that, compared once you factor in distributional Credit and other Services to the costs of certification, and considerations. Subsequently, One of the greatest barriers to other expenses that are not “although the records of Fair Trade growth and development for factored into the Fairtrade Price, farmers indicated that they received producers of agricultural products the premium that farmers gain higher prices for their coffee, their in developing countries is the lack 11 from Fairtrade certification may qualitative UNCTAD, 2013, research Trade Policy indicated Framework: no Jamaica of(New access York and to Geneva, agriculture-related United Nations not actually result in markedly evidencepublication). that workers received services, which also play a key role increased profit margins.93 This higher wages or benefited in any for producers and other operators issue is particularly contentious with way from certification... while Fair in developing country supply chains Fairtrade certification, compared16 Trade certification is associated to overcome technical barriers to to other forms of private standards with significantly greater incomes trade and comply with sanitary and and labels, because arguably the for farmers, it is not associated with phytosanitary measures.97

30 Figure 2.3 shows the activities undertaken by each of the depth of the conformity assessment process associated with the initiatives reviewed. All develop standards and all manage conformity standard system itself. In order to capture “system variances” that assessment using either certificationDoes or Fair verification. Trade Some of existcontribute beyond the individual standard-setting bodies, we use lighter the organizations reviewed also apply an accreditation model. shading to underscore “affiliated activities”22 that are associated Since both verification and accreditationto sustainable can be combined development? with with the standard system. certification (potentially carried out by third parties), the adoption of one or another of these conformity assessment processes by 22 These “affiliated activities” are not included in the calculation that the standard-setting body does not on its own determine the determines the overall percentage of types of main activities performed by the initiatives.

Figure 16: Main activities of voluntary sustainability initiatives. farmers has also been outlined Figure 2.3 main acTiviTies oF volunTary susTainaBiliTy iniTiaTives.23 as one of the future priorities of Fairtrade International in its 2013- 100% 2014 Annual Report.99

69% All of the FLO standard areas, covering Producers and

31% 31% 31% Trade, include Development Requirements (in addition to Core requirements), which are the continuous improvements Develop Marketing Certification Verification Accreditation that certified organizations must Standards & labelling make on average against a scoring system (also defining the minimum 4C Association average thresholds) defined by the BCI certification body.100 Furthermore,

Bonsucro under the Fairtrade Standard for Small Producer Organizations, there CmiA is a specific chapter on Business

ETP and Development, which obliges certified producers to build a basis Fairtrade for empowerment and sustainable

FSC livelihoods. This chapter also introduces rules and guidelines GLOBALG.A.P. on the application and use of the 101 IFOAM Fairtrade Premium , namely that the producer organisation must PEFC ensure that the premium is only ProTerra used in accordance with the rules established under its Fairtrade RSB Development Plan. According to RSPO Fairtrade International, this strategy saw 86% of the Fairtrade Premium RTRS invested in services to farmers or SAN/RA strengthening cooperatives between 2013 and 2014.102 UTZ Certified

Access to finance and levels of 23 FSC, IFOAM, PEFC and ProTerra manage or oversee certification schemes but do not act as certification bodies. savings have been shown to improve Accreditation Services International (ASI) provides accreditation for FSC, RSPO, and RSB certification bodies. IFOAM Global Organic System Accreditation accredits IFOAM-compliant certification bodies, which must then with Fairtrade certification, use standards or regulations recognized by the IFOAM Family of Standards. IFOAM also approves Participatory Guarantee Systems, which do their own form of verification. PEFC is considered a certification system, while also [I]n a study by Mendez et al. underscoring the certification process as a distinct activity in order to maintain impartiality. RSB also manages a certification system that is conducted and verified by a third party. (2010) of 469 coffee producers in Central America and Mexico, source: SSI 2014 Fair Trade farmers had higher 36 | SSI Review 2014 reported access to credit In addition to the Fairtrade certification, Fairtrade also provides (42%) than conventional coffee Premium, Fairtrade organisations marketing and labelling services farmers (34%). This could be provide a range of services for for its producers and producer related to the fact that the certified producers, which result in groups, and through its standards, Fair Trade social premium ancillary benefits to smallholders, it also promotes the development finances “credit funds” that cooperatives and even non-certified or application of services for are run by cooperatives to local producers.98 Therefore, in its certified producers. Further, make credit available to addition to developing standards and developing services for Fairtrade producers (Ronchi 2002;

31 Does Fair Trade contribute to sustainable development?

62 MONITORING THE SCOPE AND BENEFITS OF FAIRTRADE FIFTH EDITION 2013

Figure 17: FIGURE 6.7 Fairtrade Premium expenditure by category: Small Producer Organizations and Contract Production 2011–12 (€)

Other 2% Other services to members 3% Facilities and Healthcare for farmer infrastructure 21% Investing in producer members and their families 1% organizations 44% Education for farmer Services for communities 11% members and their families 1%

Services for farmers 42%

Other 2%

Payments to members 20% Human resources and administration 23%

Training and capacity building of producer Credit and fi nance services 3% organization staff and representatives 1%

Community infrastructure 2% Provision of agricultural tools and inputs 10% Education 2% Implementation of on-farm good practices 3% Environmental services 1% Farmer training in agricultural or business practices 2% Other services to communities 0% Healthcare 2%

Social and economic services for communities 4%

Source: Monitoring the Scope and Benefits of Fairtrade - fifth edition - 2013 On plantations, in comparison, community investments remained high, accounting for around 25 percent of Fairtrade Premium expenditure. Direct support for workers Ruben et al 2009). These and a significantly higher expands, the greater the increase fundsand their are families particularly constituted useful the largest spendingpercentage category, ofaccounting Fair Trade for 54 percent in the value of the non-price goals insofarof all Fairtrade as banks Premium often failuse. to Of this, 16 percentfarmers was usedreported to support an increase education for of Fairtrade which encourage the provideworkers creditand their to children—forsmall-scale example throughin their providing savings. bursaries, Jaffee’s books, and creation of better conditions for producersuniforms. Eleven (Utting-Chamorro percent was used to make improvementsstudy of 51 coffee in workers’ producers housing. Ten hired workers, more democratic and 2005),percent despite was used the for needloans andfor credit. Finally, in14 Oaxaca,percent was Mexico, used for revealed ‘other’ services transparent cooperatives, encourage accessfor workers, to working comprising capital a wide range of purposesthat such only as 30.8% transport, of Fairsubsidized Trade shops, environmentally sustainable for financing investments members were indebted, production, improved access to and crèche facilities. In general, the Fairtrade Premium for many workers has become a (Farnworth et al 2006; Nelson compared to 41% of credit, and establishment of stable resource to help them meet their daily needs as living costs in many countries continue and Pound 2009)…There is conventional producers.103 long-term buyer-seller relationships. alsoto increase, suggestive and also evidence to overcome on the costs of life’s exceptional challenges—such as “To the extent that these are the savingsa sudden and illness assets. or the Geiger- cost of a funeral—withoutTherefore, falling it into is widelydebt. acknowledged goals of Fair Trade, greater entry [of OnetoThe and new ArnouldFairtrade Premium(2011) categories enablethat usthe to non-price understand benefits better how Fairtradeof newly certified producers] is a good foundmoney that, is being among used to1,269 support coffee workers’ organizationsFairtrade andalso training. play a Aroundstrong 14 role percent in thing. Even if higher-than-normal producersof the Fairtrade in Guatemala,Premium is being used to meetattracting the running producerscosts of workers’ to become organizations economic rents do become fully Nicaragua,including the and Fairtrade Peru, morePremium Committeecertified and other or workers’remain certified.committees. In This dissipated, the free entry that fact, some of the non-monetary causes this is also causing the Fairorganizational Trade coffee strengthening producers combined with the four percent of Fairtrade Premium opened savings accounts over benefits to Fairtrade also support spread of these important outcomes dedicated to training workers and their representatives is a support to worker a three-year period than their the robustness of the system, as within the farming community, etc. empowerment and is vital to ensure the good management of the Fairtrade Premium. conventional counterparts, the more Fairtrade certification Therefore, even if the monetary

32 Does Fair Trade contribute The Green Economy

tofour sustainablecommodities had surpassed development? the 10 per cent mark, with coffee opportunities for the demand of standard-compliant products (see and cocoa leading the way with 40 and 22 per cent of global supply Figure 4.3). reported compliant with one or another voluntary sustainability There are several possible explanations for this trend. The first, standard, respectively. and certainly the most important, relates to logistics. Typically, any The trend toward mainstream adoption is, in turn, giving rise to given unit of production will supply multiple markets. Faced with benefit of Fair Trade is an elusive systems and soil and water guarantee to the producer that just shrinkingunprecedented carrot marketthat draws shares farmers for standard-compliant conservation production. practices an explicit were demand for because standard-compliant the product production has been from grown only intoAs certification, noted in Figure it4.2, serves the palm an oil, cocoa and coffeeinstalled. markets On stand average, one sixof thosedays buyers, a andproducer certified may decide as Fairtrade, to convert that its entire the importantout with and15, 22 beneficial and 40 per purpose.”cent of global104 productionmore of as technical standard assistance,production to be in compliancebuyer willwith purchasea given sustainability it as such standard. and

compliant in 2012, respectively. The averageeasier market access share to pre-harvest for In such cases, the supplypay of standard-compliant the minimum Fairtrade product will price. clearly107 Standards Context Anotherstandard-compliant non-price benefitproduction which across the nine reportingcredit and commodity better contactoutpace tothe demand. Similarly,Therefore, many whenof the sustainability the downward standards hassectors also been was an demonstrated unprecedented 12in per cent in 2012.development Based on these programs and affiliated of non- supportingprice institutions pressure of often oversupply face a hurdle and in moving Fairtradestatistics certified alone, one cooperatives could easily conclude thatgovernmental compliance with organizations an to mainstream markets thewhereby rise provenin commodity supply is a prices prerequisite are to andinternationally farm families recognized concerns socialsustainability standard(NGOs), is includingincreasingly scholarships,the generation of demand.combined, With this “the in mind,price most difference initiatives [is] will benefits,becoming such the “priceas education, of entry” oncapacity international education, markets. While coffee this qualityengage in building the supplyreduced base assignificantly, a strategy for enablingwith the further result development etc.: training, and micro credit that the Fairtrade social premium may largely be true, a definite lag between supply and demand market growth. programs were reported.105 is sometimes the only remaining exists across all of the sectors reviewed. Typically, only a portion of With these explanations in mind, the relatively persistent Bacon (2005) investigates difference. Unlike the Fairtrade overall standard-compliant product is actually “sold as” standard condition of oversupply can be regarded as an artefact of specific a sample of 228 small-scale III. Fairtrade vs. market dynamics – price, the Fairtrade social premium coffeecompliant—with producers the in remaindernorthern instead enteringthe problem the market with as oversupplycharacteristics of commodityis not normallymarkets undergoing paid to afarmers transformation but Criteria Development Nicaraguaconventional in aproduction. livelihood In fact, on average,A wekey found concern that the for two Fairtradetoward compliance withis used voluntary collectively sustainability by the farmer standards. vulnerabilitymost important framework. sectors in terms of standard-compliantproducers production has been theMoreover, fact that the current cooperative. state of supply The suggests, impact at of a minimum,the social Participationmarket share (coffee in alternative and cocoa) had only 35 perFairtrade cent and production33 per cent that has the grown voluntary at sustainabilitypremium standard may therefore sector is well be positioned more coffeeof total trade production networks actually (FT, sold as compliant,a pacerespectively. that outstripped Across for continuedthe growth rapid importantgrowth into if it mainstream is used well markets by the for the organic,all commodities direct to anroaster) average 44 per centin demand of standard-compliant and sales foreseeableof Fairtrade future. farmer organization.”108 isproduction able to reduce was sold exposure as standard compliant on producethe market. (market Moreover, growth), Nevertheless, a trend persistent oversupply can have pernicious effects andin addition vulnerability to representing to low a recurrent themewhich across is commodities,reflected inas standard well. Indeed, oversupplySpecifically on conventional in the marketscontext has ofbeen one coffeeoversupply prices, also evenappears if manyto be a consistent conditioncompliant in sustainable produce moreof the generally. most persistent andoversupply challenging for“sustainability” the Fairtrade issues market, facing FT certified cooperatives The resulting oversupply has Nindl outlines two sources of macro- markets over time, with similar data being reported over the last commodity markets more generally over the past century, giving rise sell up to 70 percent of the had two consequences: (a) an economic disequilibrium in the decade.6 to a host of international commodity agreements and corresponding harvest to conventional increase in the share of standard Fairtrade system, all of which directly Although standard-compliant production represents a significant supply management schemes. Mismatches between supply and markets. In a follow-up study, complaint produce that is sold in the relate to the inefficient balance Baconportion et of al. global (2008) production, find that sales representconventional a considerably marketplacesmaller demand and are (b)largely associatedbetween with supply boom andand demandbust price forcycles

inportion households of the selling global to FT market, pointinga towarddownward significant pressure growth that, on particularlythe price in the Fairtradecontext of ruralgoods: producers living in poverty, Markets markets, children show higher of standard compliantcan produce. have significant impacts on livelihoods and efforts to promote primary6 Where school initiatives attendance have existed for a decade orAccording more, they haveto someshown studies,poverty only reduction. WithinFirstly, the asking context for ofan above-standard-compliant ratesa andgenerally women consistent work trend more toward oversupply.between Fairtrade coffee, one thirdas one andmarkets, one-half a general of lack ofmarket systematic price data without on standard-compliantdelivering example, has typically sold between 25 and 35 per cent of compliant days on coffee farms. Also, total compliant production is actually extra (physical) product production as Fairtrade (see Potts et al., 2010). pricing, combined with the still minority share of standard-compliant more water purification sold as compliant106, and there is no quality will cause oversupply

FigureFigure 18: 4.3Sustainable sustainable markets: markets: s Standard-complianttandard-compliant production production versus v standard-compliantersus standard-compliant sales For 2012. sales for 2012. Conclusions Commodity Production Sales

Coffee 40% 12% Cocoa 22% 7% Palm Oil ProductionProduction 2012 Sales 2012 15% 8% Tea 12% 4% Cotton 3% 2% Bananas 3% 3% Sugar 3% <1%

Soybeans 2% 1% References

source: SSI 2014

SSI Review 2014 | 91 33 Does Fair Trade contribute to sustainable development?

and a welfare loss. The price says that only 10 percent sell the majority of their crops on floor enables inefficient of the higher price paid Fairtrade terms.110 The report on producers to stay in the by consumers reaches the Monitoring the Scope and Benefits market even if marginal costs producers. Besides causing of Fairtrade paints the picture exceed marginal revenue at price distortions, consumers more clearly: world market prices (Mann, not only pay a higher price, 2008). The FLO responds but also carry the costs The data indicate that a significant to the problem of potential from a suboptimal level of number of certified organizations oversupply by demand aggregate production, were not yet able to find market induced producer registration, caused by oversupply of opportunities for their certified such that the finalization FT commodities (Yanchus products in 2011–12. At current of certification depends on and de Vanssay, 2003; The market levels there is significant demand of importers (Booth Economist, 2007; Sidwell, oversupply of certifiable product and Whetstone, 2007). 2008; Lindsey, 2004).109 for almost all products, although the degree of oversupply depends Secondly, a transfer in the In acknowledgement and response on the product in question, and is form of a price floor and a to the issue of oversupply of FT complicated by the diversity of sub- price premium is inefficient produce, Fairtrade International has products and qualities within any relative to a direct transfer. made it a key priority to improve given product category.111 Anecdotal evidence for coffee market access so more farmers can 46 MONITORING THE SCOPE AND BENEFITS OF FAIRTRADE FIFTH EDITION 2013

Figure 19:

FIGURE 5.3 Fairtrade sales volumes as a proportion of total production volumes 2011–12

Percentage of all producer organizations 35% Small Producer Organizations /Contract Production

Hired Labour Organizations 30% All

25%

20%

15%

10%

5%

This fi gure is based on data from 908 Fairtrade certi- fi ed producer organizations. It excludes organizations that gained their Fairtrade certifi cation during 2012 and had not held Fairtrade certifi cation during the 0% 0 >0 & ≤10 >10 & ≤25 >25 & ≤50 >50 & ≤75 >75 & ≤90 >90 sales period under review. It also excludes any certi- fi ed organizations that did not report their sales data Fairtrade sales volumes as a percentage of total production volumes for the period under review.

Source: FIGURE Monitoring5.4 the Scope and Benefits of Fairtrade - fifth edition - 2013 Fairtrade sales volumes as a percentage of total production volumes, for major products 2011–12

Fairtrade sales volumes as a percentage of total production 34 volumes in Small Producer Organizations/Contract Production 100% Banana 61%

Cane Sugar 46% 90% Cocoa 46% 80% Coffee 35%

Seed Cotton 13% 70% Tea 9% b 60% bb Fairtrade sales volumes bb as a percentage of total 50% production volumes in bb Hired Labour Organizations bb s x Banana 65% 40% bb s x Flowers and Plants 21% bb s x v 30% bb s x v Tea 6% bb s x v 20% bb s x v f bb s x v f c 10% bb s x v f c t This fi gure excludes newly certifi ed bb s x v f c tt organizations which gained their Fairtrade certifi cation during 2012 and which had not 0 held Fairtrade certifi cation during the sales Cane Flowers Seed period under review. Banana SugarCocoa Coffee & Plants Cotton Tea Does Fair Trade contribute to sustainable development?

5. Fair Trade in ACP-EU Trade context: scale, opportunities, successes and Case Studies

Fairtrade plays a strong role in the EU trade in the ACP, has the result of in 2013, European countries made up and the ACP under different contexts. opening new avenues for Fair Trade 85% of this value. The EU has the biggest global retail products to be exported within and consumption rate of FT products, the region or to other developing United Kingdom (U.K.) (International and the Fairtrade Mark is one of the countries (South-South trade) to Markets Bureau (2012)” Socially most widely used and recognised satisfy the demand of this expanding Conscious Consumer Trends Fair private standards. In African, demographic. Secondly, the EU Trade”; Fairtrade Foundation) Caribbean and Pacific countries, public sector has increasingly Fair Trade is also well integrated as become involved in Fairtrade, as a The U.K. was one of the first a voluntary productions approach, consumer but also as a stakeholder, regions of the world to embrace particularly in key commodities such whereas historically Fair Trade has the Fair Trade movement and as cocoa, bananas, sugar, tea, coffee, always been in the domain of the Fairtrade certified products and with further potential expansion for private consumer and NGOs. Lastly, it has remained a stronghold for non-food commodities and products. notwithstanding the Euro-crisis the market niche. The Fairtrade For the majority of ACP Fair Trade and the global economic downturn Foundation reported that there producers, the biggest export market since 2008, consumers in the newer are 9.3 million cups of Fairtrade is the EU. EU Member States from the Baltic, tea, 6.4 million cups of Fairtrade Central and Eastern Europe (EU coffee, 2.3 million Fairtrade The scope and potential for 25 to EU 28 group) have also led chocolate bars, 530,000 cups Fairtrade commerce in the to a strong increase in the demand of Fairtrade drinking chocolate context of ACP-EU trade has for Fairtrade and other sustainably and 3.1 million Fairtrade generally been understated, as labelled products. bananas consumed each dialogue between the two groups day in the U.K. (Fairtrade on the trade front has more Foundation, 2011). often than not centred around 5.1 Fair Trade in the reduction of tariffs (market the EU According to the GlobeScan liberalisation), the elimination of survey, U.K. consumer trust in non-tariff barriers, compliance with I. Data Fairtrade is the highest it has ever mandatory standards and other According to the latest figures been at 90% and the same survey forms of trade regulation (sanitary from Fairtrade International112, also found that word of mouth and phytosanitary measures between 2012 and 2013, Fairtrade is a key way of finding out about in particular), and addressing sales saw a steady growth within the Fairtrade. In addition, 77% of those preference erosion as the EU adopts EU, with the UK market breaking the familiar with the Fairtrade mark changes to its generalised system €2 billion mark. strongly associated it with helping of preferences and phases out farmers and workers in poor preferential market access for the The total value of estimated countries tackle poverty (Fairtrade ACP Group. Fairtrade retail sales in twenty EU Foundation 2011).113 countries in 2013 amounted to Other dynamics are also leading to €4,682,221,317. Two EU countries Source: Fairtrade Foundation, 2011. change for the Fair Trade system posted phenomenal growth rates: in the context of the ACP-EU the Czech Republic saw a 142% -- In the UK, sales of Fairtrade relationship. First, the changes growth in estimated retail sales products in 2012 reached £1.5 in demographics in developing between 2012 and 2013, and Estonia billion – an 18 per cent increase on countries, particularly in Africa, the figure was 65%. the previous year which is leading to a growing middle class, combined with the increase Of the total global estimated retail -- 78 per cent of consumers and ongoing push towards regional sales which stood at €5,500,317,789 recognise the FAIRTRADE Mark

35 Does Fair Trade contribute to sustainable development?

Figure 20: Estimated Fairtrade retail sales by country 2013 (source: Fairtrade International Annual Report 2012-2013)

Country 2012 (in Euros) 2013 (in Euros) Growth rate Austria 107,000,000 130,000,000 21% Belgium 85,837,221 93,209,845 9% Czech Republic 2,744,524 6,439,976 142%* Denmark 71,836,714 81,080,778 13% Estonia 1,061,938 1,756,251 65% Finland 152,263,629 156,785,309 3% France 345,829,378 354,845,458 3% Germany 533,062,796 653,956,927 23% Ireland 174,954,927 197,296,405 13% Italy 65,435,059 76,355,675 17% Latvia 938,975 975,010 4% Lithuania 846,027 842,258 0% Luxembourg 8,319,391 9,628,859 16% Netherlands 186,100,623 197,142,624 6% Norway 65,450,834 68,441,095 9%* Spain/Portugal 22,274,635 23,663,783 6% Sweden 178,951,375 231,668,646 29% Switzerland 311,590,237 353,206,210 13% UK 1,904,891,092 2,044,926,208 12%* Total 4,219,389,375 4,682,221,317 11%

* Growth rate is based on the percentage increase reported in the local currency, not the value converted into Euros. Source: Monitoring the Scope and Benefits of Fairtrade - fifth edition - 2013

-- One in every three bananas sold -- The FAIRTRADE Mark is the most producer market access, and these in the UK is Fairtrade widely-recognised ethical label increased by 14%. This means that globally the UK market generated £26m of -- 44 per cent of bagged sugar sold premium to producers for investment in the UK is Fairtrade certified Fairtrade sales continued to in their own business and community perform strongly in the UK despite development priorities, an increase of -- 25 per cent of all roast and a continually challenging economic £2.7m over 2012. ground retail coffee in the UK is climate. Sales of Fairtrade products Fairtrade certified in 2013 exceeded an estimated Coffee is a well established Fairtrade retail value of £1.7bn, a 12% increase category, and sales grew slightly -- Fairtrade products are now sold in on 2012. However, it is volumes of during 2013, showing a 4% increase more than 125 countries sales rather than retail value that over 2012 despite a challenging climate provide a more useful indicator of with relentless price promotions.

36 Does Fair Trade contribute to sustainable development?

Figure 21: Estimated UK Retail Sales for Fairtrade

Estimated UK retail sales by value 2002-2012 (£ million)

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Coffee 23.1 34.3 49.3 65.8 93 117 137.3 160 179.8 193* 192.4 Tea 7.2 9.5 12.9 16.6 25.1 30 64.8 70.3 82.6 87.1* 79.7 Cocoa products** 3.9* 7.3* 9.6* 13.2* 16.4* 25.6* 25.6* 44.5* 162 212.8* 320.9 Sugar products** 5.7 8.7 14.3 19.5 23.7 50.6 107.7 164.6 384 441.7* 549.1 Honey products** 4.9 6.1 3.4 3.5 3.4 2.7 5.2 3.6 6.8 3.8* 3.6 Bananas 17.3 24.3 30.6 47.7 65.6 150 184.6 215.5 206.6 210.9* 242.5 Flowers n/a n/a 4.3 5.7 14 24 33.4 30 27.6 26.4* 23.7* Wine n/a n/a 1.5 3.3 5.3 8.2 10 18.1 18.5 21.8* 23.9 Cotton n/a n/a n/a 0.2 4.5 34.8 77.9 73.2 51.7 41 39.6 Fresh Fruit 0.1 1 5.9 8.5 17.6 28 32.2 24.3 15.5 12.5* 12.3 Fruit Juices 0.8 1.1 2.3 4.6 7.7 13.8 21.1 13.1 15.2 16.1* 14.5 Other*** n/a n/a 6.7 6.4 10.1 8.3 21.8 26.2 23.5 27* 28 TOTAL 63 92.3 140.8 195 286.3 493 712.6 843.4* 1173.8 1294.1 1530.2 Year-on-Year 25% 47% 53% 38% 47% 72% 45% 18% 39% 10% 18% Growth Chocolate 6.2 9.2 13.7 18.4 23.2 35.8 38.3 88.6 346 413.1 542.4 * Along with the 2012 sales analysis, these 2011 figures have been reviewed and updated

* *After review, the 2009 and historical cocoa figures have been reviewed and the sales values updated.The figures against these products represent the cocoa part of all products containing cocoa, the honey part of all products containing sugar.

***These figures cover all Fairtrade commodities not covered by other catgeories. These include gold, vegetables, dried fruit, pulses, rice, quinoa, sesame seeds, nuts and oils, sportsballs and spices.

Chocolate includes figures listed elsewhere in this table (e.g. sugar and cocoa) so are not included in the totals.

Source: Fairtrade Foundation

Tea also remains a challenging Fairtrade tea brands such as growth led by Fairtrade certification market for producers, with many Cafedirect and Clipper. of Kit Kat 2 Finger in Fairtrade brands competing via fierce price Fortnight 2013, as well as the first promotions, and sales experiencing Bananas remain a flagship product full year of sales of Maltesers, which a slight 4% decline. Despite this, for Fairtrade, and in 2013 sales with converted in mid-2012. As well as UK sales delivered an estimated the FAIRTRADE Mark increased a commitment by Morrisons to US$5m in premiums back to farmers’ by 9% in volume, to achieve a 35% stock Fairtrade sugar, chocolate organisations in 2013. Fairtrade tea market share by value, according to conversions also fuelled healthy retains commitments from several Nielsen (4 January 2013). growth in Fairtrade sugar sales, up retailers, especially Sainsbury’s, 25% on 2012. These generated an Coop, Waitrose and M&S, including Sales of Fairtrade cocoa rose 25% estimated US$9.3m to growers in own label and stocking other in 2013, compared with 2012, with countries including Malawi, Zambia,

37 Does Fair Trade contribute to sustainable development?

Swaziland, Belize, Fiji, Guyana Germany115 purchasing thousands of tons of and Paraguay. cocoa according to fair criteria, Certified products in Germany leading to a sevenfold increase in Sales of Fairtrade wine (up 27%), recorded revenue growth of 23 sales in the first months of the year. flowers (up 18%) and vegetables percent last year, which translates (up 316%, although still relatively into a rise in sales of 654 million II. Policy on Fair Trade small in volume overall) were all Euros. Of this amount, 95 million Due to the status of Fair Trade as further indication of continued Euros directly benefit producer a voluntary private standard, the business and public appetite for countries. EU and EU Member States do not Fairtrade in 2013. have a specific legal or regulatory Fair trade goods are perceived as framework that applies to Fair Fairtrade cotton sales declined again a viable alternative to conventional Trade. However, as Fair Trade has significantly in 2013, due to changes production, despite the price. As a grown in both commercial and in ranges made by stockists and result, these products have found a political importance, the EU, EU retailers. Supply chain issues enabling place on the shelves of large discount Members States and other public West African producers to connect retail chains such as Lidl, Penny and institutions in Europe have begun to the UK market, and the cost of Netto. to develop specific policy positions certifying a fully traceable supply on Fair Trade, initially in the context chain for cotton are key issues the Last year, another retail outlet, of their activities on development Aldi, also successfully incorporated cooperation, but increasingly also Foundation, with its partners Fairtrade bananas and coffee in its with respect to the private sector as globally, are seeking to address in regular list of products. Now that the well as consumer affairs. order to halt the decline and enable products are more visible, customers sales to grow for producers again. are increasingly going for the good- The cornerstone of the EU’s conscience option: 50 percent of approach to Fair Trade is Belgium114 bananas sold at Aldi are fair trade, 26 the European Commission percent of flowers and 20 percent of Communication on Fairtrade116, The sale of Fairtrade products in all coffee products. which outlines and clarifies the Belgium, measured by volume, Commission’s understanding of Fair increased 7.5% in 2013, bringing the While fair trade coffee currently Trade, and also discusses the EU’s total estimated value of Belgium’s has a market share of 2.5 percent, support of Fair Trade in the internal Fairtrade market up to €94 million. one out of every four roses sold in market and internationally. In the The Fairtrade products with the Germany and every other banana are Communication, the Commission greatest volume on the Belgian already being supplied by certified rightly makes the link between the market are fresh bananas, followed businesses, and a new Fairtrade objectives of the Fair Trade system, by flowers, sugar, juice and coffee. product is launched in the German and the role which preferential In terms of market value, Fairtrade market every day. market access could have in coffee tops the charts, followed supporting FT and its outcomes, by bananas and chocolate. The But sales of cocoa beans fell slightly both generally through the EU’s positive trend is mainly attributed to in 2013 and the market share stood Generalised System of Preferences, increased sales at Delhaize, Colruyt, at just 0.2 percent. A “partnership” and more specifically, for ACP Oxfam, Ethiquable, Miko and Café model is now expected to provide Countries in the context of the Liegeois. the solution. The model was Cotonou Agreement. previously used in cases of sugar Awareness of the Fairtrade and cotton, where companies were Since 2009, a number of other logo among Belgians has also obliged to partially migrate to fair EU policy documents have made increased, from 67% in 2011 to 78 trade products. reference to Fair Trade, most % in 2013, which indicates that an notably those concerning trade and increasing number of consumers Five major partners - Ferrero, Mars, development. Furthermore, other recognise the logo and know that and the supermarket chains Lidl, EU institutions such as the European it stands for products that meet Rewe and Kaufland - have been Parliament and the Committee of agreed environmental, labour, and found for cocoa. In the meanwhile, the Regions have also included Fair developmental standards. these retail outlets have been Trade and its support or promotion

38 Does Fair Trade contribute to sustainable development?

in their official documents.117 In the European countries, where consumer to collecting the top prize in the 2012 Communication on Trade awareness of, and civil society management category of the EBAE Growth and Development,118 the advocacy for Fair Trade are the 2012, the company has been named European Commission states that: highest, also tend to have the most Responsible Retailer of the Year advanced programmes and policy at the World Retailer Awards and “Trade incentives arise not only from uptakes on Fair Trade. The private Company of the Year in the Business government action, but also from sector has also played an increasingly Community’s Awards for Excellence. a shift in the market place towards important role in demonstrating the more sustainable products. Private value of Fair Trade, although not all M&S received the EBAE Management sustainability-bound schemes (e.g. parties or stakeholders in the debate Award for its project ‘Marks & fair, ethical or organic) can be an – NGOs, civil society, consumers, Spencer Plan A - Doing the Right effective way to foster sustainable private sector such as producers Thing’, which outlined a strategy and inclusive growth in developing and retailers, government and public to reduce the company’s resource countries. Public authorities can sector – see eye to eye on different impact by meeting 180 sustainable promote these initiatives. We aspects of Fair Trade. commitments. Launched in will strengthen our support for 2007, Plan A sets out objectives developing country producers taking (a) EU Support of Fair Trade to be achieved in the areas of part in sustainable trade schemes Following the Communication on green procurement, fair trade, by further mobilising cooperation, Fair Trade, the EU has become more waste management, biodiversity including AfT measures, improve strongly and directly engaged in conservation, corporate social monitoring of related activities support of Fair Trade, either through responsibility, carbon emissions and continue to encourage our funding or collaboration. reduction and energy efficiency. partner countries to promote fair and ethical trade. We also intend “Handicraft and Business through The company has made significant to further facilitate fair and ethical Regional Integration and Fair Trade progress in terms of achieving the purchasing choices by public Market” Plan A objectives. A report published authorities in Europe in the context in June 2012 confirms that M&S is of the upcoming review of public Central Asia Crafts Support the first major retailer to become procurement directives.” Associations’ Resource Centre in carbon neutral. The ‘2012 How We Kyrgyzstan (CACSARC-kg) and Do Business Report’ states that 138 More recently, the European Bishkek Business Club (BBC) were of the Plan A commitments have Commission issued a Communication the chief organizers of the Festival, already been achieved, while a on the Private Sector and whose main components were further 30 are currently on schedule. Developing Countries, which funded by the European Union under According to the report, M&S now noted that “[a]dherence to social, the project “Handicraft and Business recycles 100% of its waste – ensuring environmental and fiscal standards through Regional Integration and nothing goes to landfill. It also states is also considered a precondition Fair Trade Market”. The project has that 31% of M&S products now have for any EU engagement with, or a 2-year duration and, as part of the a ‘Plan A attribute’ – meaning they public support to, the private sector. EU Central Asia Invest Program, will are either free range, produced at Responsible business practices reinforce the cooperation among an ‘eco-factory’ or made from by companies will be reinforced Tajikistan and Kyrgyzstan in the recycled material. through the promotion of consumer handicraft sector.120 awareness concerning sustainable In line with its Plan A commitments, consumption and production European Business Awards for M&S introduced a new clothes patterns and practices, and the the Environment: M&S delivers on recycling policy known as promotion of fair and Plan A commitments to become ‘Shwopping’. First launched in April ethical trade.” 119 Responsible Retailer of the Year 2012, the Shwopping initiative encourages customers to bring any Many Member States have also Thanks to the achievements of Plan brand of unwanted clothing to M&S included Fair Trade as a priority A – an ambitious environmental and clothes stores. The company believes issue in both their internal and ethical programme – the international that unwanted clothes should be put international affairs (in the retailer Marks & Spencer (M&S) has to good use, not just thrown away. It context of trade and development continued to meet its commitment to is therefore asking its customers to cooperation). Northern and Western become carbon neutral. In addition ‘shwop’ – donate an unwanted piece

39 Does Fair Trade contribute to sustainable development?

of clothing every time they buy a An example of one of their activities KfW, the German Development new one.121 is the documentary in Fair Trade Bank together with Incofin and coffee. The Trade for Development Grameen Foundation and Fairtrade The EU Horizon 2020 Work Centre commissioned a documentary International work jointly to improve Programme for 2014-2015, also aims about fair trade coffee from Kivu access to finance for Fairtrade to support Fair Trade under the for TV5Monde. The documentary is certified producers through the chapter on Food security, sustainable now available, with English subtitles. Fairtrade Access Fund. agriculture and forestry, marine and A camera crew visited three coffee maritime and inland water research organisations in Kivu: RAEK, Sopacdi -- German International and the bioeconomy.122 The Call for and COOPAC. It shows how fair trade Development Cooperation Sustainable Food Security ‘SFS- coffee can positively impact the living (GIZ)132 15-2014: Proteins of the future’ is conditions of the local population, even expected to have, as one of its when the circumstances are tough.126 Fairtrade collaborates with GIZ to impacts “A clear contribution to provide certification advice to cocoa social innovation due to Fair Trade/ DFID The British Department for farmers in Liberia. fairer trade, as well as an increase in International Development provides socio-economic and environmental financial support through grants to -- Irish Aid133 / Solidaridad sustainability.” A budget of the Fairtrade Foundation (UK), which €128,000,000 was allocated to is the national Fairtrade Organisation Fairtrade partnered with Irish Aid this Call.123 of the UK. DFID has also signed a and Solidaridad to enhance the Programme Partnership Agreement capacities of producer organizations Members States are also part of the of £12 million with FLO from 2011 to in Central America (Guatemala, EU equation when it comes to Fair 2014127 to help scale up DFID’s work Honduras, Nicaragua and El Trade, and a number have increased supporting farmers in developing Salvador) and East Africa (Kenya, their support via official development countries to access better terms of Tanzania, Uganda, Ethiopia). The assistance programmes through trade in global markets. DFIDs funding main emphasis of the partnership their development cooperation has also helped support smallholders has been in the coffee sector institutions. This is in line with the directly in a number of ACP countries, supporting sustainable production shared competency between the such as Fintea Growers Co-operative for both Fairtrade and Utz certified European Commission and Members Union in Kenya.128 producers. States on development cooperation, whereas the European Commission Fairtrade International lists among -- Swiss State Secretariat for has exclusive competency with its partners several other EU and Economic Affairs (SECO)134 regards international trade in the European national development EU, which since the Lisbon Treaty, agencies and public institutions:129 SECO has supported Fairtrade has also included the area of foreign International since 2008 in the direct investment (FDI). 124 -- Agence Française de framework of the Strategic Funding Developpement (AFD)130 Consortium alongside DFID, IrishAid, Belgium The Trade for Development ICCO and NORAD. SECO has now Centre, which is a Belgian A project financed by French extended its funding to Fairtrade Development Agency (BTC) Development agency (AFD), the International, in particular assisting programme, supports Fair Trade African Association of Cotton us in developing new markets and in through its work to promote fair Producers (AProCA), an execution the ongoing work on Fairtrade gold. and sustainable trade as a means to institution, and implementation This work will conclude in 2015. decrease poverty.125 It works around partners like Fairtrade International, three main themes: Max Havelaar France and Helvetas, -- UK’s Department for International work together to assist West African Development (DFID)135 -- Trade Support cotton producers to as they improve their competitiveness and access to DFID provides longer-term -- Awareness Raising markets. funding for selected civil society organisations through its Programme -- Spreading and exchanging -- German Development Bank Partnership Arrangements (PPAs). information. (KfW)131 Fairtrade International currently

40 Does Fair Trade contribute to sustainable development?

receives PPA funding for 2011- The EU legal framework had been Passing judgement on the 10 May 2014, part of the Strategic Funding criticised for its lack of clarity 2012, the CJEU concluded that the Consortium. An extension for the PPA as the European Parliament has Province had not respected the funding until 2016 has been granted. repeatedly pointed out. As a result current EU Public Procurement various interpretations of the legal Directive by requiring products to (b) Fair Trade and Public framework exist, creating legal bear a specific label and for the way Procurement in the EU insecurity for contracting authorities it required bidders to prove suitability Perhaps the most concrete example and inhibiting expansion of fair requirements and minimum capacity of the inroads that Fair Trade has trade public procurement. This levels. However, the Court clarified made into EU policy has been the resulted in the revision of EU public that it is compatible with the current inclusion of Fair Trade in the EU procurement directives which could EU Public Procurement Directive to Public Procurement Directive of help bring clarity.137 define the minimum requirements 2014136. This development followed of products in the technical years of wrangling between EU Some examples of the challenges specifications plus to give extra institutions, Members States, that Member States face are points in the award criteria based public bodies and even led to a explored by Fisher, E. and Sheppard, on considerations of environmental Member State being taken by the H. (2012), in their overview of the or social nature and to products ‘of Commission before the European case that the European Commission fair trade origin’ (CJEU, 2012). It also Court of Justice. brought against the Netherlands gave advice that to incorporate an concerning the terms of a call for ethical trade label, the underlying As a growing proportion of European tender issued by province in the criteria should be identified and citizens care more and more about Netherlands which made reference the label used as means of proof. contributing towards sustainable to Fair Trade138: This ruling is the subject of SMO economic and social development in advocacy for incorporation of a more developing countries through their An example of legal dynamism progressive position on fair trade purchasing preferences, notably relates to a 2012 ruling from the into procurement law (Fairtrade buying Fair Trade, this concern has Court of Justice of the European Foundation, 2012), assuming no legal also transferred to preoccupation Union (CJEU), which is the first appeal is successful. about sourcing of goods and services piece of European case law on fair by public bodies. trade (Fairtrade Foundation, 2012). Fisher and Sheppard (2012) also In May 2010 the EC referred the provide the examples of other This concern of consumers for Fair Netherlands to the CJEU over a initiatives where EU public bodies or Trade, more common in western call for tender for the supply and governments had tried to promote European Member States than in the management of automatic coffee Fair Trade without falling foul of rest of the EU, has been relayed by machines by Noord-Holland Province procurement rules, for example the civil society, local authorities, and (EC, 2010b), due to a complaint to Welsh Government’s initiative on Fair also echoed at EU level by the EU the EC by Douwe Egberts (Scholten Trade procurement. institutions, notably the European Verheijen, 2011). The Province Parliament. wanted to procure sustainably In 2010, the first major recognition of with regards to environmental and Fair Trade in EU public procurement Public authorities in the EU can socially responsible methods of came through the European play an active role in sustainable production. The EC argued that Commission publication “Buying development through their it was infringing EC procurement Social: A Guide to Taking Account purchasing decisions, by promoting regulations because the notice of Social Considerations in Public Fair Trade in their procedures, for tenders requested bidders to Procurement”139. According to this while respecting the fundamental supply beverages with specific publication, the existing Public principles of EU law. Some public labels: EKO and/or Max Havelaar Procurement Directive 2004/18/ authorities are already putting fair (EC, 2010b). Although equivalent EC140 allowed a contracting authority trade procurement into practice, by labels were acceptable, the Province which wished to purchase goods introducing Fair Trade considerations did not specify substantive criteria which make a contribution to into the different stages of public regarding which labels would be sustainable development (hereafter procurement procedures. considered equivalent. referred to as “ethical trade goods”) to do so, provided it complied with

41 Does Fair Trade contribute to sustainable development?

certain rules. Such an authority instance refer to the fact that the goods are concerned. Furthermore, was allowed to take appropriate product concerned is of fair trade some of the NGOs and other considerations into account in origin, including the requirement institutions which have played a the tender specifications, but it to pay a minimum price and price strong role in advocating in favour could not require the products to premium to producers. Contract of Fair Trade at national, regional bear a specific ethical trade label/ performance conditions pertaining to and international levels have come certification because this would limit environmental considerations might from Africa, the Caribbean and the access to the contract for products include, for example, the delivery, Pacific. Needless to say, in the context which are not certified but meet package and disposal of products, of global commodities trade, the similar sustainable trade standards. and in respect of works and services balance of power has often not been contracts, waste minimisation or on the favour of producers or even The revision of the Public resource efficiency. countries in the ACP region, and so Procurement Directive in 2014 led to Fair Trade has presented an attractive a specific recognition that: This finally established under EU law opportunity for the producers and that Fair Trade could constitute a increasingly even for governments [...]with a view to the better legal criteria or condition in EU public to leverage the critical role that the integration of social and procurement provided it is framed ACP region plays in the production environmental considerations in the in accordance with the decision of of agricultural and non-agricultural procurement procedures, contracting the EU Court of Justice. Namely, the commodities. The unique and very authorities should be allowed to social conditions concerned with the asymmetrical relationship between use award criteria or contract process by which the goods being the ACP and the EU in trade terms performance conditions relating to procured were produced could be has also been recognised by Fairtrade the works, supplies or services to be defined in a public tender, provided International, which has launched provided under the public contract in the conditions apply to specific a number of initiatives to support any respect and at any stage of their goods, as opposed to being of a ACP FT producers in the face of life cycles from extraction of raw general nature.141 A number of EU preference erosion and the changing materials for the product to the stage Member States, such as Belgium, trade dynamics with the EU. of disposal of the product, including Germany, the Netherlands, Sweden factors involved in the specific and the UK have included some I. Data process of production, provision aspects of Private Certification (a) Fair Trade Production or trading and its conditions of System, particularly relating According to Fairtrade International, those works, supplies or services to sustainability, in their public there are a total of 37 ACP countries or a specific process during a later procurement and tenders142. In which have certified FT production stage of their life cycle, even where the case of the UK, Sweden and out a total of 79 countries in the such factors do not form part of the Netherlands, the criteria have Group, which constitutes almost half their material substance. Criteria included Fair Trade obligations. of ACP countries. and conditions referring to such a production or provision process are Fair Trade is also included in the new The figures from the Fairtrade for example that the manufacturing Directive on concession contracts,143 Monitoring Report144 show that of the purchased products did not which also includes a paragraph there are more Fairtrade farmers involve toxic chemicals, or that the permitting award criteria or in Africa than in any other region purchased services are provided conditions based on Fair Trade. EU in the world. Their data for 2012, using energy-efficient machines. In Member States have until April 2016 shows that 61 percent of all farmers accordance with the case-law of the to transpose the new rules into their and workers within the Fairtrade Court of Justice of the European national law. system lived in Africa and the Union, this also includes award Middle East. Latin America and the criteria or contract performance Caribbean accounted for 21 percent conditions relating to the supply 5.2. Fair Trade in the of all farmers and workers within or utilisation of fair trade products ACP the Fairtrade system, and Asia and in the course of the performance Oceania for 18 percent—similar to of the contract to be awarded. Fair Trade has had a long presence in the relative proportions in 2011145. In Criteria and conditions relating to the ACP region as far as certification fact, East Africa alone has 652,900 trading and its conditions can for of producers and production of FT Fairtrade farmers and workers, the

42 Does Fair Trade contribute to sustainable development?

14 MONITORING THE SCOPE AND BENEFITS OF FAIRTRADE FIFTH EDITION 2013

Figure 22:

FIGURE 3.2 Global distribution of Fairtrade farmers and workers 2012

Africa and the Middle East Asia and Oceania Latin America and the Caribbean World Farmers 781,500 Farmers 156,500 Farmers 287,200 Farmers 1,225,200 Workers 78,600 Workers 99,400 Workers 9,500 Workers 187,500 Farmers and workers 860,100 Farmers and workers 255,900 Farmers and workers 296,700 Farmers and workers 1,412,700

1,600,000

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

0 Africa and Latin America the Middle East Asia and Oceania and the CaribbeanWorld

FIGURE 3.3 Source: Fairtrade International Distribution of Fairtrade farmers and workers by sub-region 2012 most of any sub-region in Africa or hired labour organizations, though by Africa and the Middle East (390 Farmers in Fairtrade small producer organizations Workers in Fairtrade hired labour organizations Total farmers and workers the rest of the world. Ethiopia showed strong growth or 34%) and lastly Asia and Oceania in worker numbers since the 2012 (161 or 14%). The Report also noted that Fairtrade report. The growthCentral inAsia certification of Northern Africa in Kenya grew further in 2012, withand the Middleflower East plantations makes Ethiopia In the Asia and Oceania region, to Eastern Asia several large smallholder coffee the fourth most important country which the ACP Pacific countries organizations entering Fairtrade. in the Fairtrade system in terms of belong, there are three countries Caribbean Southern Asia Combining all farmers and workers, worker numbers. which have Fairtrade certified

19 percent of all farmers andCentral workers America farmers organisations (FOs),Melanesi namelya in the Fairtrade system are now Africa also registered the fastest Papua New Guinea (5), Fiji (3) found in Kenya. Côte d’Ivoire is a growth in the rate of Fairtrade and Timor Leste (1). Despite their new entrant into the top ten lists in certification in 2012, which increased limited numbers, these FOs are 2012, while numbers in Ghana also Westerbyn Africa23% as 74 new producer Easternstrong Africa performers in the region. For grew significantly, reflecting the organisations were certified. Latin example in terms of the five top rapid growth of certification within MiddleAmerica Africa and the Caribbean hasSouth-Easter premiumn Asia receiving countries with the cocoa industry in West Africa. the greatest number of certified FOs in this region between 2011 and India continues to have the largest Southerorganisations,n Africa at 588 or just over half 2012, Fiji and Papua New Guinea number of workers among Fairtrade (52%) of the global figure, followed performed well, with 19% and 7% South America

Latin America and Africa and the Caribbean the Middle East Asia and Oceania Caribbean 37,800 1,700 39,500 Eastern Africa 591,300 61,600 652,900 Central Asia 1,100 0 1,10430 Central America 114,200 2,000 116,200 Middle Africa 5,700 0 5,700 Eastern Asia 6,000 0 6,000 South America 135,200 5,800 141,000 Northern Africa and Melanesia 19,200 0 19,200 Total 287,200 9,500 296,700 the Middle East 5,900 2,800 8,700 South-Eastern Asia 53,500 100 53,500 Southern Africa 2,400 9,800 12,200 Southern Asia 76,700 99,400 176,100 Western Africa 176,200 4,400 180,600 Total 156,500 99,400 255,900 Total 781,500 78,600 860,100 15 MONITORING THE SCOPE AND BENEFITS OF FAIRTRADE FIFTH EDITION 2013

The vast majority of workers on Fairtrade certified plantations are located in East Africa—where they work primarily in horticulture and tea cultivation—and in Southern Asia, where the major product is tea. Countries in East Africa continue to have the highest numbers of farmers in Fairtrade certified producer organizations. Fairtrade in Kenya grew further in 2012, with several large smallholder coffee organizations entering Fairtrade. Combining all farmers and workers, 19 percent of all farmers and workers in the Fairtrade system are now found in Kenya. Côte d’Ivoire is a new entrant into the top ten lists in 2012, while numbers in Ghana also grew significantly, reflecting the rapid growth of certification within the cocoa industry in West Africa. India continues to have the largest number of workers among Fairtrade hired labour organizations, though Ethiopia showed strong growth in worker numbers since the 2012 report. The growth in certification of flower plantations makes Ethiopia the fourth most important country in the Fairtrade system in terms of worker numbers (see Figure 3.8).

Does Fair Trade contribute to sustainable development?

Figure 23: FIGURE 3.4 Regional distribution of all Fairtrade farmers and workers 2012

10% South America

Caribbean 3% 46% Eastern Africa Central America 8%

South America 10%

Eastern Africa 46% 8% Central America Middle Africa 0%

Northern Africa and the Middle East 1% 3% Caribbean Southern Africa 1%

Western Africa 13%

Central Asia 0%

Eastern Asia 0% 12% Southern Asia Melanesia 1%

South-Eastern Asia 4%

Southern Asia 12% 4% South-Eastern Asia

1% Melanesia

1% Northern Africa and the Middle East 1% Southern Africa

13% Western Africa

Source: Fairtrade International of the regional share respectively, (5), Jamaica (2), Saint Lucia (1) and line with the growth of the middle putting them in second and third. Saint Vincent and the Grenadines class in select ACP countries, and Timor Leste and Fiji were also in the (1). From the ACP Group, Dominican also growing awareness of and top-five countries with Fairtrade Republic is sixth and Haiti eighth consumer action in response to farmers and workers in 2012. in the rankings of the top ten Latin concerns about food production and American and Caribbean countries the conditions of farmers and rural Latin America and the Caribbean Fairtrade farmers and workers 2012. communities in their own or other is the most successful region in In terms of FT Premium receipts developing countries. terms of FT Premium, receiving for 2012, Dominican Republic, 66% of all Fairtrade Premium Belize and the Windward Islands South Africa represents the flows for their Fairtrade coffee, all features in the top ten, with the biggest consumer market in the bananas, sugar, and fine-flavour Dominican Republic boasting a ACP region146, with a Fairtrade cocoa. In total, there are eight ACP 12% share of the entire region’s retail sector worth approximately Caribbean countries which have Fairtrade Premium. €23 million in 2013. After five Fairtrade certified small producer years in operation, Fairtrade organisations: Belize ( 2) Cuba (b) Fair Trade Consumption in the Label South Africa (FLSA), the (18), Dominican Republic (21, with ACP national Fairtrade Organisation an additional 12 Hired Labour The ACP region is emerging a of South Africa, has achieved the Organizations), Guyana (7), Haiti consumer of Fair Trade products, in following milestones:

44 107 MONITORING THE SCOPE AND BENEFITS OF FAIRTRADE FIFTH EDITION 2013

TABLE 8.1 Fairtrade in Africa and the Middle East 2012

Number of members and workers in Fairtrade Premium Fairtrade producer receipts 2011–12 organizations 2012 (€ millions) Small Producer Organizations 781,500 14.1

Hired Labour Organizations 78,600 5.6

Africa and the Middle East Total 860,100 19.7

Percentage of global total Small Producer Organizations 64% 19%

Percentage of global total Hired Labour Organizations 42% 46%

Percentage of global total overall 61% 23%

108 MONITORING THE SCOPE AND BENEFITS OF FAIRTRADE FIFTH EDITION 2013 Does Fair Trade contribute

toFairtrade sustainable in Africa anddevelopment? the Middle East: Top ten Fairtrade Premium receiving countries 2011–12

Percentage of total Africa and the Total Fairtrade Middle East Fairtrade Figure 24: Premium revenues (€) Premium revenues Ghana 4,808,000 24% FairtradeKenya in Africa and the Middle East: Top ten countries Fairtrade4,157, 000farmers and workers 202112% Côte d’Ivoire 2,348,000 12%

Tanzania 2,289,000 Percentage of 12all% the Fairtrade farmers and Ethiopia Total1,88 farmers9,000 workers in Africa10 %and and workers the Middle East Malawi 1,062,000 5% Kenya 265,800 31% South Africa 925,000 5% Tanzania 157,400 18% Mauritius 676,000 3% Ethiopia 121,900 14% Rwanda 345,000 2% Ghana 95,400 11% Uganda 217,000 1%

UgandaTop te n countries total 18,71748,,000000 95%6% Côte d’Ivoire 35,000 4%

Malawi 25,900 3%

Rwanda 18,900 2%

Mali 16,400 2%

Burkina Faso 13,500 2%

Top ten countries total 798,200 93%

Source: Fairtrade International

Figure 25: FIGURE 8.1 Fairtrade in Africa and the Middle East: Fairtrade Premium distribution by product 2011–12

35% Cocoa

Cocoa 35% 20% Flowers and Plants Flowers and Plants 20%

Coffee 17%

Tea 12%

Cane Sugar 7%

Wine Grapes 3%

Fresh Fruit 2%

Herbs, Herbal Teas and Spices 1%

Seed Cotton 1%

Other 2%

17% Coffee

2% Other

1% Seed Cotton

1% Herbs, Herbal 12% Tea Teas and Spices

2% Fresh Fruit 7% Cane Sugar

3% Wine Grapes

Source: Fairtrade International

45 Does Fair Trade contribute to sustainable development?

-- 2010, May - FLSA starts actively beverages sold at Woolworths Fairview, owned by Charles Back, promoting Fairtrade to local cafes are Fairtrade certified. becomes Fairtrade certified. consumers. The first products Woolworths also launches a range to become available are some of Fairtrade coffees in-store. -- 2014, March - Fairtrade leads locally produced Fairtrade wines the research on sustainable and one coffee brand made with -- 2012, Dec - The list of Fairtrade consumerism and shows that 70% Fairtrade beans from East African products available to consumers of South Africans are potential co-operatives. has grown. South Africans can consumers of Fairtrade and other now choose between a variety sustainable products. -- 2011, June - Kraft Foods SA of wines, teas, coffees and some announces that their Cadbury food products. Kenya joined South Africa in 2012 Dairy Milk [plain chocolate] is to to become the second retail market achieve Fairtrade certification. -- 2013, May - The sales report for Fairtrade in Africa, and along The chocolates will appear in for 2012 is ready: in 2012 South with India (which also became a store in November 2011. Africans bought R234m worth new market in 2012) and Brazil, of Fairtrade products - a 220% these four countries represent -- 2011 - Over 15 South African growth from 2011. the emerging and growing South- companies are selling Fairtrade South production and consumption labelled products locally. Local -- 2013, July - Protea Hotels switch markets, namely countries that both Fairtrade sales increase fourfold, to Fairtrade coffee - the first produce and consume a substantial from ZAR 18.4m in 2010 to ZAR African hotel chain to make a amount of Fairtrade produce. The 73m as South African consumers Fairtrade commitment. potential of South-South Fair Trade choose Fairtrade. has also been explored in a report -- 2014, September - One of South by BTC (a Belgian Development -- 2012, May - All coffee based Africa’s must loved wine company Agency (BTC) programme ).147

Figure 26 : Estimated Fairtrade retail sales by country 2013

Country 2012 (in €) 2013 (in €) Growth rate Kenya - 51,064 n/a South Africa 22,263,619 22,573,605 22%* Total 22,263,619 22,624,669 2%

* Growth rate is based on the percentage increase reported in the local currency, not the value converted into Euros.

II. ACP Policy and Partnerships on with development institutions or sectors agreed by the beneficiaries Fair Trade multilateral institutions, donors and the Fund Manager: i.e., and so on, have undertaken policy- obtaining international certification Although there is no framework or related activities or created action to access export markets or guiding document for Fair Trade for plans for Fair Trade. Swaziland, internationally recognised quality the ACP Group, the principles which for example, explicitly included certification (i.e.: FSC, ISO, Fair the Fair Trade movement pursues Fair Trade in its 11th EDF National Trade, etc.)149 are in part captured in the Cotonou Indicative Programme with respect Agreement Article 23(i), which calls to EU support for agriculture with Centre for the Development of for ACP-EU cooperation to achieve an emphasis on food security148. Enterprise Project: Enhancement of “trade development, including Uganda has also partnered with the Sugar productivity in Swaziland the promotion of fair trade”. EU in the implementation of a Small Likewise, there is no framework Agribusiness Development Fund The sugar industry is the mainstay of on voluntary standards related which would, through the matching the Swaziland economy. Beneficiaries to sustainable or ethical trading. grant facility, provide additional of the industry as a whole are However, individual ACP countries financial support in order to estimated at well over 30-40% of or regions have, often in partnership improve the capacity in specialised the population. CDE assisted the

46 Does Fair Trade contribute to sustainable development?

Swaziland Sugar Association (SSA) demand as a programme for small eliminating sugar beet production in 2012 with the view to increase farmers in their countries.” quotas on the one hand, and the production output of the sugar ACP Group and EU refinery sector industry and facilitate access to In 2013, Fairtrade Foundation (UK) position of maintaining EU quotas markets for sugar products. Through also lobbied and campaigned on until 2020, and extending the ‘sugar CDE assistance, the Swaziland behalf of producers in the ACP protocol accompanying measures’ Sugar Association has been able to during the reform process for the EU funding programme154 for the ACP capacitate sugar SMEs to obtain fair- Sugar Regime. With the abolition of sugar sector. Additionally, the ACP trade certification which is key for European sugar beet quotas by 2017 sugar producing countries will also accessing regional and international now posing a threat to future market have to contend with increased markets. In addition, a service level access for cane producers, work competition from sugar producing agreement review was undertaken on to win financial support for these economies with higher production 4 Miller cum planters, 12 experienced producers, enabling them to diversify and lower costs, notably Brazil. In planters and 24 new growers. In and find alternative markets will light of this, Fairtrade International 2013, the project will address the continue in 2014.151 has proposed the following challenges of access to finance, recommendations for the ACP sugar procurement and application of The specific aim of Fairtrade producing countries: inputs. The project will also benefit International’s sugar strategy is the SSA stakeholders such as the very clear:152 -- expand domestic production Swaziland Cane Growers Association (SCGA), Swaziland Cane Millers Fairtrade’s global strategy for sugar -- invest in infrastructure and export Association (SCMA), Swaziland focuses on supporting farmers in facilities and/or attract foreign Water and Agricultural Development ACP (African, Caribbean and Pacific) investment Enterprise (SWADE), Federation of and least-developed countries, Swaziland Employers and Chambers recognizing that sugar farmers there -- maintain or increase their of Commerce (FSE & CC).150 experience very low prices and are competitiveness with other EU not prepared for the challenges of suppliers such as Brazil and Cuba Fairtrade Support for the ACP Sugar operating in fully liberalized trade (for cane sugar) and the Balkans sector environments. New rules in Europe (beet sugar). abolishing quotas for sugar beet and Fairtrade International has itself isoglucose from 2017 will negatively According to Fairtrade International, launched a campaign to support impact on farmers in these countries. eighty per cent of Fairtrade sugar the ACP Group sugar producers Fairtrade is working with producers is produced by the ACP or LDCs, in light of the anticipated end of and companies to consider how we where sugar is often the most the EU sugar quotas in 2017, which can develop adaptation strategies. important source of income. There could have seriously negative are now 69 Fairtrade certified sugar consequences for Fairtrade ACP In the January 2013 Fairtrade and cane producer organisations, in 15 sugar. As the principal importer of Sugar Commodity Briefing, Fairtrade countries: Belize, Brazil, Costa Rica, cane sugar in the world, the EU is International outlined the six main Cuba, Ecuador, Fiji, Ghana, Guyana, the number one export market for challenges facing the Fairtrade Sugar India, Malawi, Mauritius, Paraguay, ACP sugar, especially Fairtrade sugar sector: liberalisation of the EU sugar Peru, Philippines, and Zambia. which is produced in the following market, volatile world prices, rising ACP countries: Fiji, Jamaica, production costs, competition from In addition to the strong role played Malawi, Mauritius, Mozambique and alternative sweeteners, the impacts by Fairtrade in terms of certifying Swaziland. In fact, the sugar sector of climate change, and food security sugar producers in ACP countries, plays a very strong role in the uptake and poverty in the communities that Fairtrade has also established a of Fairtrade certification in Africa, grow sugar cane. The phasing out of specific Producer Services and where a Fairtrade Sugar network has the reference prices for imports of in- Relations (PSR) unit which, through been established, and according to quota white and raw sugar between Liaison Officers, provides targeted Fairtrade International, “Mauritius, 2006 and 2010, has already cost ACP support for capacity building Swaziland, Jamaica and Fiji have sugar exporters an estimated €462m for small producer and worker made policy supporting Fairtrade, in lost export earnings.153 Efforts organisations to help them achieve and are supporting Fairtrade are ongoing to find a common sustainable development through certification connected to market ground between the EU position of fair trade. Its general functions

47 4.3 The growth of Fairtrade sugar Figure 8: Fairtrade sugar cane producer cane producer organisations organisations and members by region

Strong growth in sales of Fairtrade sugar since 2007 Region Producer has been matched by increases in the number of Organisations Members certified producer organisations supplying sugar Africa 35 10,100 and in the value of Fairtrade Premiums received Latin America by these groups. 31 21,100 and Caribbean Asia and Oceania 3 6,000 TOTAL 69 37,200 Fairtrade producer organisations: production, sales and premiums Source: Fairtrade International

• Eighty per cent of Fairtrade sugar is Figure 9: Fairtrade sugar exports by top 5 produced by ACPs or LDCs, where sugar is countries 2010-11 often the most important source of income. Country Tonnes • There are now 69 Fairtrade certified sugar cane producer organisations, in 15 countries: Belize 69,900 Belize, Brazil, Costa Rica, Cuba, Ecuador, Fiji 40,700 Fiji, Ghana, Guyana, India, Malawi, Mauritius, Zambia 30,000 Paraguay, Peru, Philippines, and Zambia. Paraguay 20,700 Malawi 8,500 • The number of individual farmer members Others 15,000 more than doubled between 2010 and 2011, TOTAL 184,800 from 17,600 to 37,000. Source: Fairtrade International • Producer organisations sold 185,000 tonnes of Fairtrade cane sugar in 2011. Does FairThis Trade generated contribute an estimated additional to sustainableincome ofdevelopment? €7.4m in Fairtrade Premiums for their members.

Figure 27: Fairtrade Figure 7: sugar Fairtrade cane sugarproducer cane organisations producer by country, 2012 farmers have shown renewed interest (totalorganisations 69) by country, 2012 (total 69) in their farms, their environment and in the better functioning of their co- Costa Rica 6% operatives. Meanwhile, as awareness of Fairtrade has grown, other Cuba 6% cane-farming groups have become motivated to join Fairtrade.

Guyana Mauritius In July 2012, liaison officers 12% Mauritius in Mauritius provided pre-audit 46% support over 15 days to 32 sugar co- operatives. They found that most of Others 15% the co-operatives had grown much stronger since their first audits, and that the first Fairtrade Premium Paraguay investments were having an impact 15% on farmers’ communities and the profitability of their businesses. Source: FLO Producers had used their premiums to invest in subsidised fertilisers and specific activities in ACP -- supporting networking and and a tractor to reduce the cost of sugar producing countries are partnership development. delivering cane to the collection point. outlined below: 4.3 The growth of Fairtrade sugar Figure 8: Fairtrade sugar cane producerGuyana In Guyana in 2011, PSR Swaziland and Mozambique Liaison cane producer organisations -- organisationsproviding training and inmembers local by regionorganised extended training for officers provided post-audit support languages seven sugar cane co-operatives inCutting cane,to three Kasinthula producer Cane organisations Growers association, in Malawi Strong growth in sales of Fairtrade sugar since 2007 Region Producer meeting Fairtrade standards. This Swaziland, and one in Mozambique, has been matched by increases in the number of -- offering guidance on FairtradeOrganisations alsoMembers presented an opportunity for to enable them achieve Fairtrade certified producer organisations supplying sugar certification requirements producers to interact and share certification in autumn 2012. This Africa16 35 10,100 Fairtrade and Sugar and in the value of Fairtrade Premiums received experiences, and they held detailed brought the number of sugar -- facilitatingLatin America relationships with discussions on how to use premiums, producer organisations in the region by these groups. 31 21,100 buyersand Caribbean and access to new markets supported with advice from the to 40, in response to increased Asia and Oceania 3 liaison 6,000officer. One year on, the demand for Fairtrade sugar. -- supporting producer involvement groups had used the premium to TOTAL 69 37,200 Fairtrade producer organisations: in consultations on Fairtrade replant long-abandoned fields and Jamaica In Jamaica, PSR supported production, sales and premiums Source:Standards Fairtrade and Pricing International replace old and poor-yielding cane six sugar cane producer organisations with new plants. Since the initiative, that were going through the last

• Eighty per cent of Fairtrade sugar is FigureFigure 28: 9: Fairtrade Fairtrade sugar sugar cane exports producer by top organisations 5 Figure 29: Fairtrade sugar exports by top 5 countries produced by ACPs or LDCs, where sugar is countries4.3 Theand 2010-11 growthmembers byof region Fairtrade sugar Figure 8:2010-11 Fairtrade sugar cane producer often the most important source of income. cane producer organisations organisations and members by region StrongCountry growth in sales of FairtradeTonnes sugar since 2007 • There are now 69 Fairtrade certified sugar Region Producer cane producer organisations, in 15 countries: hasBelize been matched by increases in the69,900 number of Organisations Members certified producer organisations supplying sugar Belize, Brazil, Costa Rica, Cuba, Ecuador, Fiji 40,700 Africa 35 10,100 and in the value of Fairtrade Premiums received Fiji, Ghana, Guyana, India, Malawi, Mauritius, Zambia 30,000 Latin America by these groups. 31 21,100 Paraguay, Peru, Philippines, and Zambia. Paraguay 20,700 and Caribbean Malawi 8,500 • The number of individual farmer members Asia and Oceania 3 6,000 Others 15,000 more than doubled between 2010 and 2011, TOTAL 69 37,200 TOTALFairtrade producer organisations:184,800 from 17,600 to 37,000. production, sales and premiums Source: Fairtrade International Source: Fairtrade International • Producer organisations sold 185,000 tonnes of Fairtrade cane sugar in 2011. • Eighty per cent of Fairtrade sugar is Figure 9: Fairtrade sugar exports by top 5 This generated an estimated additional produced by ACPs or LDCs, where sugar is countries 2010-11 income of €7.4m in Fairtrade Premiums for often the most important source of income. 48 their members. Country Tonnes • There are now 69 Fairtrade certified sugar cane producer organisations, in 15 countries: Belize 69,900 Figure 7: Fairtrade sugar cane producer Belize, Brazil, Costa Rica, Cuba, Ecuador, Fiji 40,700 organisations by country, 2012 (total 69) Fiji, Ghana, Guyana, India, Malawi, Mauritius, Zambia 30,000 Paraguay, Peru, Philippines, and Zambia. Paraguay 20,700 Costa Rica 6% Malawi 8,500 • The number of individual farmer members Cuba 6% Others 15,000 more than doubled between 2010 and 2011, TOTAL 184,800 from 17,600 to 37,000. Source: Fairtrade International Guyana • Producer organisations sold 185,000 12% Mauritius tonnes of Fairtrade cane sugar in 2011. 46% This generated an estimated additional Others income of €7.4m in Fairtrade Premiums for 15% their members. Paraguay 15% Figure 7: Fairtrade sugar cane producer Source: FLO organisations by country, 2012 (total 69)

Costa Rica 6% Cuba 6%

Cutting cane, Kasinthula Cane Growers association, Malawi Guyana 12% Mauritius 46% 16 Others Fairtrade and Sugar 15%

Paraguay 15%

Source: FLO

Cutting cane, Kasinthula Cane Growers association, Malawi

16 Fairtrade and Sugar Does Fair Trade contribute to sustainable development?

steps towards Fairtrade certification. worth £118m, Fairtrade now accounts 5.3. ACP Opportunities It hired a consultant to work directly for 36 per cent of the £326m UK retail with the farmers to help them bagged sugar market. for Fair Trade meet the standards by addressing nonconformities identified Around 1,500 Fairtrade certified Fair Trade presents a number of during their initial inspections. sugar and sugar products from ways in which ACP countries and Despite the disruption caused by 180 companies are now available. regions can improve their trading Hurricane Sandy, the first group Of those, 18 per cent comprise opportunities and to leverage their was successfully certified in early packaged sugar, 79 per cent are characteristics as key commodity November 2012. composite products containing exporters with a long-standing sugar, and 3 per cent are beauty trade relationship with the EU Africa Fairtrade Africa and PSR jointly products with a sugar ingredient. and a growing domestic middle organised a meeting for African The range of Fairtrade packaged class. With these opportunities, Fairtrade sugar producers ahead sugar includes white granulated, raw potential qualitative and quantitative of the Africa Fairtrade Conference cane, demerara, soft light brown, improvements can be made to the in Addis in November 2012 – a joint soft dark brown, muscovado and economic and social conditions of effort that will strengthen information caster sugar. Many are also available farmers in ACP countries, as the sharing and networking amongst in cubes, sachets and catering Fair Trade system looks to address sugar producers. sticks. Billington’s range of Fairtrade both issues. In summary, these key unrefined sugars is also widely opportunities are: On the retail side, Fairtrade available, while branded Fairtrade International and the Fairtrade packaged sugar is available in most i. Revision of the European Union Foundation (UK) have also played a UK supermarkets, along with own- Public Procurement rules strong role in the expansion of the label ranges in The Co-operative, Fairtrade sugar retail market, and Marks & Spencer, Sainsbury’s, Tesco The latest revision to the European increased use of Fairtrade sugar and Waitrose. Since 2008, all sugar Directive on Public Procurement, in consumer products, through sold in The Co-operative Food stores which was signed into law in 2014 commitments for sugar sourcing – branded and own label – has been introduced Fair Trade (and other from major confectionary producers. Fairtrade, and in 2012 Morrisons environmental and social standards) A notable success story is that of the switched the majority of its sugar for the first time as permissible UK, in 2011, the value of the Fairtrade range to Tate & Lyle Fairtrade criteria or obligations for the award sugar retail market was £464m. granulated and baking sugars. of public procurement tenders and also concession contracts, by virtue Fairtrade sugar was launched in the Outside of retail, Fairtrade sugar of a new European Directive on UK in 2000, pioneered by alternative can be found almost everywhere Concession Contracts. trade organisations Traidcraft and – in sachets on Virgin Atlantic and Equal Exchange. Sales of Fairtrade BA planes, on ScotRail and First Producers of Fair Trade products sugar products have grown fourfold Great Western trains, and in cafés and goods now have a legally since 2008, driven by Tate & Lyle including Greggs, Pret and Eat. It secure access to the EU public converting 100 per cent of its retail is available in cubes and bags from sector, which opens up a market branded sugar to Fairtrade in 2008- nearly all wholesalers, including of immense value for ACP Fair 9. As an ingredient in chocolate, Brakes, 3663 and Booker, as well as Trade exporters. According to the Fairtrade sugar sales have been catering companies such as Sodexo European Commission, “[t]otal public boosted by the commitment of and Compass where Fairtrade sugar expenditure on goods, works and Traidcraft, Divine Chocolate and Ben & is standard. And all sugar at the services accounts for a large part of Jerry’s, along with major conversions London 2012 games was Fairtrade. economic activity – amounting to to Fairtrade by Cadbury Dairy Milk, Fairtrade sugar is also used as over €2 trillion in 2009.”155 four-finger Kit Kat, Maltesers and an ingredient in more than 1,100 Green & Black’s entire range of Fairtrade products. The huge range ii. Expansion of the range of chocolate products. UK consumers includes cakes, biscuits, chocolates, products which can be certified spent £464m on Fairtrade sugar sweets, hot chocolate, ice cream, products in 2011, with a total volume jams, marmalade, baked beans, beer, In 2013, Fairtrade International of almost 101,000 tonnes. With sales moisturisers and body scrubs. launched a new standard for

49 Does Fair Trade contribute to sustainable development?

Fairtrade Gold and Precious Metals, in the UK and in South Africa. ACP is the preference erosion that has following the lead of some national countries could capitalise on this arisen as a result of the lowering of Fairtrade Organisations which had opportunity to serve growing local EU import tariffs across the board for begun to approve Fairtrade gold. A and regional markets. many products that are key exports public consultation on the Revision commodities for ACP countries and of Standard for Gold and Associated iv. Reforms to the ACP-EU the signing of preferential trade Precious Metals from Artisanal and trade regime agreements between the EU and Small-scale Mining was concluded in other countries that export products 2014, with a view to responding to The phasing out of duty-free which directly compete with those changes in regulation and legislation preferential market access for from the ACP countries.157 in the gold industry. A key goal of exports from the ACP Group to be this undertaking is for Fairtrade to replaced by trade agreements (as In response to this changing eventually be able to offer “a small, Economic Partnership Agreements) trade dynamic between the ACP but scalable solution to companies or the EU’s Generalised System and the EU, and also with a view looking to source gold from artisanal of Preferences has presented an to leveraging their role as key and small-scale miners that can ongoing threat to ACP exports to commodity exporters, a number demonstrate conformance with the EU for a substantial period of of ACP countries have responded the OECD Due Diligence Guidance time. Exacerbating this challenge by promoting value addition for for Responsible Supply Chains of Minerals from Conflict-Affected and Figure 30: High-Risk Areas.”156

A Fairtrade standard for gold Winners and losers: Changes in volume of It is therefore possible to look at the trend in and precious metals which is in bananas imported into Britain 2002 – 2012 UK import prices in the context of the trade line with global guidelines that By origin (Metric tonnes) with the three largest exporting countries already apply to business in most Source: Eurostat of the economically developed that account for over 70 percent of all countries in the world would open banana imports into Britain. up new markets for ACP gold 200000 and mineral exporting countries, As explained in section 4.3, the real value and also respond to calls from both developing and developed of the import price has declined due to countries for Fairtrade to apply 150000 inflation, and this was illustrated in respect to a greater number of non- to the trend in consumer prices in Britain. agricultural exports. But farmers and workers in Colombia, iii. New Fair Trade markets 100000 the Dominican Republic and Ecuador are and expansion of South-South affected not by inflation in Britain but by the Fair Trade rising cost of living in their own countries. Consumers in emerging and growing 50000 economies in the ACP, such as Inflation in producing countries has been South Africa and Kenya, as well as Cameroon Jamaica Costa Rica Islands Windward much higher than in Britain; an average those in other regions of the world, 0 notably Brazil and India, are leading of 6.4 percent in Colombia, 8 percent to an increase in the demand of Fair in Ecuador and 21.65 percent in the Trade products. As food and other Ecuador Dominican Republic. If we look at the UK consumer products become more -50000 Colombia

global, producers are increasingly Cote d’Ivoire import costs from those countries minus the keen to harmonise their supply costs of shipping to the UK and track the chains across different regions, which -100000 Dominican Republic net value against inflation in the producing is especially evident in the chocolate countries, we can see how the value has industry. For example, Cadbury Dairy Milk is now sold as Fairtrade both Source: Fairtrade Foundation (UK) changed over the past decade.

This shows that the price in Colombia 50 appears to be stagnating, while in the UK import prices of bananas from major origins, less Dominican Republic the price when selling shipping costs, adjusted for local inflation 2002 – 2012 to the UK market has fallen by 48 percent US$ per kg (at constant 2012 prices) and in Ecuador by 81 percent. Source: UK import prices from Eurostat, minus shipping costs (estimates by CIRAD, as before) see methodology section (Appendix 9.1) Declining import prices in the UK are mirrored in origin countries. In order to $0.90 understand what this means for farmers and workers we will now consider how $0.80 this compares to the costs of sustainable

$0.70 production.

$0.60

$0.50

$0.40

$0.30 many felloW producers have $0.20 dIsappeared because they couldn’t $0.10 $- bear the hIgh costs of productIon. 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 they had to get out of the market Ecuador Colombia Dominican Republic because everythIng Is goIng up here. thIngs are goIng up and not goIng doWn – goIng up every day.

Smallholder farmer, the Dominican Republic

30 Britain’s Bruising Banana Wars 4/ The banana value chain 31 Does Fair Trade contribute to sustainable development?

their exports, including by means rules of origin for Least Developed applies to circumstances where the of applying standards that assure Countries have already gained same good will comply with distinct quality, sustainability or other widespread support.162 This issue standards which concern different social considerations. In the ACP has been particularly pertinent in issues – one increasingly common Group, the Dominican Republic the context of Fairtrade composite example in the ACP is Fair Trade and the Windward Islands158 are products,163 where various Fairtrade and organic certification. Whereas the top exporters of Fairtrade products can be sourced from these are not equivalents of each bananas, and in both markets, different developing countries, but other, they are nevertheless found to virtually all of the bananas grown the resulting loss of preferential correlate across certain commodities, for export are Fairtrade certified.159 access for the final product means with some very high incidences in In the Dominican Republic, up to that there would be little incentive the bananas sector, as well as with 60 percent of banana production for composite products to be made other commodities such as sugar, for export is organic certified, in developing countries.164 tea, coffee and so on. with a very high proportion of Organic Fairtrade certification.160 Case Study 1: Bananas in the Increasing supply and seeking a 5.4. Case studies of Dominican Republic: organic as a very high standard certification has Fair Trade in the complement to Fair Trade seen imports of bananas from the ACP – EU Context Dominican Republic to the UK soar Sources: Potts J. et al. (2014) IISD over the past ten years. Fairtrade Foundation (2014) The case studies in this section In order to truly maximise the are taken directly from articles, a. Context potential of increased standard journals, reports, presentations and Fairtrade certified bananas account certification (Fair Trade or Organic other sources. They are structured for approximately 0.5 per cent of and Fair Trade) for both agricultural in order to give an overview of the global banana production, with and non-agricultural goods, Fairtrade context, opportunities, challenges 550,000 metric tons of production Organisations and other equitable and lessons learnt on the application certified in 2012 on 28 thousand trade institutions and advocate have of Fair Trade in various contexts – hectares, up 4 per cent per annum called on greater reforms to the at the producer, local, national or from 2008. In 2011, two-thirds of EU’s trade and internal regulations even regional level, and with regards Fairtrade production was sold as in order to support Fair Trade specific commodities or markets. Fairtrade certified, representing 2 per and its objectives. Some specific Although neither comprehensive nor cent of the total world banana trade. targets have been the EU’s internal definitive, they do provide a glance Both sales and production have budget rules which do not allow for into some of the potential avenues grown relatively consistently from the targeted application of tariff for Fair Trade to develop within 2008 to 2011, with the exception of a revenues. This effectively means that the ACP-EU trade and cooperation dip in production in 2011 due in part the EU at present cannot apply the framework. to the effect of Hurricane Thomas in revenue from banana import tariffs the Windward Islands (St-Vincent, to support Fair Trade, despite the 5.4.1 Dual Certification St-Lucia, Dominica, Grenada and fact that supporting Fair Trade is line Martinique) (FLO, 2012). Fairtrade with its commitments under Cotonou As the number, scope and expects its certified banana sales Agreement.161 In terms of the EU significance of private standards volumes will grow about 10 per cent trade rules, another potential means for sustainability and traceability in 2013 and reach a level of 400,000 of supporting Fair Trade would be in consumer goods grows, so does metric tons in 2014 (M. Blaser, a revision to the EU rules of origin the incidence of dual certification Fairtrade, personal communication, to allow increased cumulation for or labelling by exporters of September 13, 2013). Almost all Fair Trade inputs. More flexible EU commodities and products. This (94 per cent) of Fairtrade banana

51 Does Fair Trade contribute to sustainable development?

sales occurred in four countries: relatively low presence of Organic box (Panama) and US$12.20 per Colombia, the Dominican Republic, banana production. Organic banana box (Caribbean, excluding the Ecuador and Peru. The Windward production has remained relatively Dominican Republic and Windward Islands accounted for only 3 per stable over the period under analysis, Islands) (Fairtrade International, cent of Fairtrade banana sales but averaging around an estimated 0.8 2013b). The Fairtrade social premium exported 90 per cent Fairtrade million metric tons, even though a represents 17 per cent and 8 per cent bananas, and bananas account for major increase was noted from 2008 of the abovementioned minimum 20 per cent or more of the domestic to 2009. prices, respectively. In October economy (Fairtrade Foundation, 2013, Fairtrade raised its minimum 2012). Also notable is that Fairtrade A very significant proportion prices for bananas, but conventional has increased production capacity of bananas from the Dominican banana prices have been rising in in Africa to 600,000 metric tons in Republic are certified organic. The recent years and remained higher 2013 (in itself more than doubling country is the number one exporter than Fairtrade minimum prices in total 2011 production capacity from of organic bananas in the world, and some regions; for example, Central all regions), from virtually nothing in more than 60 percent of banana American export prices were around 2011 (M. Blaser, Fairtrade, personal production for export is organic US$11 (producer’s port) per box in communication, September 13, 2013). certified. Almost three quarters of October 2013 (IndexMundi, 2013a), banana producers in the Dominican which is about US$3 higher than Organic bananas have been on the Republic are organic – 100 percent in Fairtrade minimums set during the market for more than two decades, the southern region and 60 percent same month. Fairtrade estimates but growth has been especially in the northern region. However, that US$18 million of its premiums strong since the early 2000s, albeit the Eurostat figures for imports have been transferred on the specific tapering more recently. The growth do not allow specific volumes and premium accounts of producer in Organic banana production and values for organic bananas to be organizations in 2012 alone, which sales slowed to under 2 per cent identified, and the average price corresponds with 327,000 metric per annum from 2008 to 2012. As of calculated for bananas traded tons sold at US$1 per box (about 2011, more than 780,000 metric tons on the conventional market (i.e. the same as the 332,000 metric of Organic bananas were produced, excluding Fairtrade) includes both tons reported sold). Like Fairtrade accounting for 1 per cent of global organic and non-organic. To make minimum prices, premiums for production. During the same year, a single comparison with Fairtrade, Organic bananas vary not only by 488,000 metric tons of bananas a composite of the two minimum country of production, but also by were sold as Organic, accounting prices has been used assuming that country of consumption. European for 3 per cent of global exports. just 50 percent of Fairtrade sales markets are reportedly willing to pay Organic certified bananas are are organic ($0.67 per kilo). This more for Organic bananas than their grown throughout the world, with is a cautious estimate and almost American counterparts are (Fresh a particular concentration in Asia certainly understates the true picture. Plaza, 2012), which may be explained and Latin America. The Dominican Producers supplying the Fairtrade in part by the more developed Republic (29 per cent), Ecuador market also receive a premium market for double-certified (25 per cent) and Peru (15 per cent) payment of $1 per 18.14 kilogram box Fairtrade/Organic bananas in the account for almost three-quarters of ($55 per tonne), which is earmarked European market. Fairtrade minimum global Organic banana production. for social and economic investment prices for double-certified Fairtrade/ While four of the top five producers but which can also be used as cash Organic bananas ranged from US$8 of Organic bananas (Ecuador, Peru, payments for farmers and for other per box (Peru) to US$13 per box the Philippines and Colombia) forms of economic support for (Caribbean, excluding the Dominican control similar levels of market share workers in some circumstances. On Republic and Windward Islands) in relative to their banana exports, the average 24 percent of the premium 2013 (Fairtrade International, 2013b). Dominican Republic stands out as the is used in this way. As a reference, Organic bananas most important source of Organic imported into the United States bananas, despite its being a relatively Fairtrade is the only standard that from Colombia in November 2013 small player on the international fixes price premiums. By October hovered around US$20 per box (U.S. export market. Guatemala, on 2013, the Fairtrade social premium Department of Agriculture, 2013b). the other hand, which serves as a was US$1 per box, and minimum Like Fairtrade conventional bananas, major exporter of bananas, has a prices were between US$6.05 per double-certified Fairtrade/Organic

52 Does Fair Trade contribute to sustainable development?

bananas received a fixed social Fairtrade bananas go to Europe.’ economic, social and political premium of US$1 per box, equivalent As SAVID’s owner, Jetta has clear disadvantages. A study conducted to 13 per cent and 8 per cent of the sight of the pressures on the banana in 2010 by the Dominican Ministry above-mentioned minimum prices, trade, and top of her list is the need of Labour concluded that 66 respectively. for long-term commitments from percent of all banana workers were buyers. ‘A major issue is ensuring Haitian, varying from 54 percent Double-certified Fairtrade/Organic commitments to volume. Volumes are in the south to 77 percent in the minimum prices range from about not guaranteed but can go up and north west. It also showed that 30 to 40 per cent above Fairtrade down quickly from 6,000 to 30,000 86 percent of field workers and minimum prices, which is in line boxes per week which is unworkable. 69 percent of packhouse workers with a separate study’s observed Supermarkets run tenders every year, were Haitian, while 61 percent of prices for Organic bananas relative but for stability we need five-year supervisors (field and packhouse) to conventional bananas from 2007 contracts,’ she says. SAVID does not were Dominicanciv. Fairtrade has to 2010. The study estimated that sell directly to supermarkets, but to actively supported the movement farm gate prices for non–Fairtrade/ intermediary ripening companies. to legalise Haitian migrant labour Organic bananas averaged 38 per But supermarket price wars are still a and improve working conditions for cent over conventional banana worry. Jetta says: ‘Buyers are under a migrants. Only very recently, and as prices between 2007 and 2010, with lot of pressure to negotiate the best a result of international campaigns Organic prices displaying modestly price possible. They are working in a to highlight the situation of migrant improved stability over conventional context where bananas are used for workers, have Dominican trade bananas (Evans & Gordon, 2011). price fights between supermarkets.’ unions started to take an interest in However, Organic premiums can She sees a lot of pressure from organising Haitian banana workers, be even higher where niche buyers buyers to pass costs on to producers. even though nothing in the national and markets are considered, such ‘We experience problems after legislation prevents migrant workers as in one report of 75 per cent contracts have been agreed, asking from joining a union. In 2012 banana premiums for Organic bananas in the for retrospective discounts,’ she adds. workers were for the first time Philippines (Business World Online, issued so-called ‘NM1’ visas, giving 2013). If it were not for the Fairtrade and them full permission to work and Fairtrade Organic bananas the access to the social security system. b. Opportunities producer sells Jetta is sure that SAVID However, the process for getting Going organic in the Dominican would be in trouble. She says: ‘The a passport in order to qualify for Republic conventional market does not pay the the visa is complicated, costly and amount we would need to meet costs time-consuming for many workers. Jetta Van Den Berg is the owner of production. With the Fairtrade Employer-worker labour relations and President of SAVID, a banana Minimum Price it is enough to cover are characteristically informal and producer in the Dominican Republic. costs.’ She also speaks proudly of the based on verbal contracts. National Jetta explains the set up: ‘We have ways in which the Fairtrade Premium statistics state that 66 percent our own farms and also work with has been used: ‘This has been used for of producers do not register any small producers. On our own farms housing, medical care, and education of their workers with the Ministry we have 400 workers. We also work programmes, among other things,’ of Labour. Data from 2010 shows with six small farmers’ organisations she adds. that there are substantial wage and associations. We run model farms differences between Dominican and to teach good farming practices.’ The c. Challenges Haitian employees. Dominican Republic is an important In the Dominican Republic migrants origin for bananas, with around 30 from Haiti have made up much of d. Lessons on organic as a percent of SAVID’s production going the agricultural labour force since complement to Fair Trade to the UK. Jetta says: ‘For the last few the 1920s, but the country has From the perspective of the bottom years we have been selling roughly maintained labour laws requiring line, producers in the Dominican 50-60 containers of bananas per at least 80 percent of a firm’s Republic have shown the value week. 75-80 percent is Fairtrade and employees to be Dominican. This addition they have gained from having 75 percent is organic. Most of the forces migrants to work illegally double certification of both Fair Trade conventional Fairtrade bananas go and without documents, which and organic for their bananas. In to the UK, and most of the organic then leaves them vulnerable to addition to receiving the mandatory

53 Does Fair Trade contribute to sustainable development?

FT premium for the bananas sold as countries). This development 2011). Until the reform of 2004 FT and FT Organic, the producers of goes some way towards breaking European regulations were largely the Dominican Republic have also the historical “one or the other” characterized as neoliberal and achieved a disproportionately strong dichotomy that marked the focused on competition and the position in the European organic concept and goals of Fair Trade creation of the single market banana retail market due to the vis-à-vis the reality of the global without focussing on social criteria higher demand in Europe for organic multilateral trading framework, (Rolfstam, 2009). In the beginning bananas. These advantages appear and reinforces that the pursuit of of the 20th century – and especially notwithstanding the cost of both Fair Trade is not a priori contrary during the negotiations of a new forms of certification, and the overall to global multilateral trade rules or Directive on public procurement, fall in the price of bananas in the retail systems. As such, EU governments a debate on social standards in market, most notably in the UK. at national and state (local) levels the economically based process are free to influence the purchasing of tendering gained momentum The labour challenges faced by choices made with tax-payer money (Rolfstam 2009; Scherrer et al., the Dominican Republic in its in favour of Fair Trade, bringing 2010); this resulted in an intrusion of banana sector are not unique to this concept to a broader audience. social criteria in Directive 2004/18 this country, and the ubiquity of Likewise, Fair Trade producers may (Scherrer et al., 2010: 118). Also at migrant, undocumented and informal now consider how to broach and the national level, social criteria labour in the agricultural sector is pursue a new market which may became more important (Kahlenborn in fact one of the issues which Fair demand the supply of Fair Trade et al., 2011; Schulten et al., 2012; Trade deals with very closely and products for extended periods of Sack, 2012). Seeing that public directly. In fact, because organic time. procurement is based in competition certification is primarily concerned and market building these goals, with traceability and production Case Study 2: Fair Trade in EU Public however, are only taken into account standards that deal with specific Procurement – the approach of up to a certain point and if they are inputs into the production process, Bremen (Germany) treated rather restrictively. the need for Fair Trade will continue to exist in order have a standard Sources: Sarter E.K., Sack D. and In brief, public procurement is – which incentivises producers to Fuchs S. (2014) “Public Procurement as every purchase – based on a comply with national labour laws as Social Policy? An introduction to succession of decisions and choices: or ILO rules for the benefit of the social criteria in public procurement The first decision, which also lays farm workers. in Germany” Working Paper No. 1 ground for the purchase, is the Working Paper Series Comparative decision to purchase a certain good 5.4.2 Fairtrade in EU Public Governance‘ August 2014 or service. Secondly, the specific Procurement Universität Bielefeld; characteristics of that good or Dr. Wiese, K. and Schmidt, T. service to be purchased have to Public procurement represents the (2014) “Bremen on its way be decided. Thirdly, the criteria on new frontier in Fair Trade, where to socially and ecologically which the choice between different the dynamic has changed from responsible procurement” options will be based have to be one of private consumer purchase LANDMARK Bremen, Freie decided on: thus, how important will choices, to one of public spending Hansestadt Bremen the price be and which other criteria and the role of public authorities will be taken into account and to and bodies as consumers. A key a. Context which extend? outcome of this debate has been Public Procurement – i.e. the whether private standards are or purchase of goods and services The criteria of public purchasing are can be compatible with global trade by public sector bodies – accounts of great interest not only to business rules such as those concerning for nearly one fifth of GDP in but also politically: Due to the high Government Procurement in the the European Union (European volumina spent, public procurement WTO (notwithstanding that the GPA Commission, 2012). In Germany, can be used to influence economic is not obligatory to all WTO Member public procurement by general and social outcomes. By purposefully States, only includes signatories government and state-own and strategically choosing and such as the EU and numerous utilities is estimated to account purchasing, the authority can foster other OECD and middle income for about 17% of GDP (OECD, employment opportunities for

54 Does Fair Trade contribute to sustainable development?

Sarter/Sack/Fuchs: Public Procurement as Social Policy? distinct groups, distinct sorts of exist. Furthermore, in some Länder, In Germany, the inclusion of businessesformulated (e.g. SMEs by law or minority must berun stateddecrees by exist.the bidder.[note: the These Federal statements Fairtrade are asmainly a criterion to bine public found businesses) or societal goals. Public law is superior and exceeds Federal procurement is relatively new. It procurementrelating tothereby gender can equality be used asstipulations States’ laws]. or reconciliation measures.was first introduced in North Rhine- “a powerfulA third toolway for to policy show making.” compliance is to use labels and certificates.Westphalia Given the (§18.1 fact TVgG that NRW) labels in (Bovis, 1998: 226) According to the stipulations of § 2012. The only other Land that holds and certificates only exist for certain97.1 and areas §97.2 GWB(e.g. theFairtrade), general the usea stipulation of labels on is Fairtrade already in stru its c- Being placed in the context of principles of public procurement public procurement laws until now competitionturally restricted. law [legal regulation Therefore, it arecomes defined as asno competition, surprise that labelsis and Schleswig-Holstein, certificates are where mainly it was regardingused thein order economy to proof are (with compliance transparency with ILO and Core non-discrimination. Labour Standards introduced and Fairtrade one year, despitelater, in 2013 the the exception of certain areas) Within this framework, tenders are (§18.1 TTG). partfact of what that is the commonly implementation referred of awardedthis principle to the “mostdiffers economically in the single states: Bremen, for example, to as “competitive legislation advantageous tender” (§97.5 GWB). Next to the specific criteria used (‘konkurri-erendedefines certain Gesetzgebung‘)], certificates thatSince can the be reform used of in 2009, a dedicated the decreein the distinct(BremKernV) public procurement whereas public procurement is regulated at GBW (which already had been in laws, their specific design varies. Saxony-Anhalt only regulates, that „suitable certificates or self-declarations‟ can be used as a national as well as at subnational place since 1958), allows social and Thus, while some criteria tend level.proof At national of compliance level the Anti- with the ILOecological Core Labourcriteria in Standards public tendering (§12.2 toLVG be mandatory LSA). This requirements use of self - Trust Law (Gesetz gegen Wett- are explicitly admitted as criteria in (e.g. the compliance with bewerbsbeschränkungen,declarations or other GWB) not specifiedpublic proofs tendering: is an §97.4 alternative states that in all minimumstates with wages), ILO others or Fairtrade (such regulates public purchasing. At the criteria used may include ‘social, as integration or reconciliation of the Federalstipulations level asif wellno aslabel in exists forenvironmental a group of or productsinnovative aspectsor if an independentwork and family) proof tend cannot to be be somefound. States, statutory decrees as long as these are related to the optional for the procurer. regulate public purchasing or subject matter and made explicit specificA fourth aspects possibility therefore toeven provide proofin the specifications.’with certain stipulations [authors’ is theFurthermore, use of official variance attestations can be further. At sub-national level, the translation] While the GWB does found regarding the type of Federalof governmental States (Länder) agenciesare also . Theynot may specify be these required criteria, as today, proof that theproof bidder‟s of compliance declarations with a certain are stipulation; this differs heavily entitledright to and adopt are Federal mainly State to be foundspecifications regarding are regulations to be found inof inclusion of disabled persons or laws on public procurement, which, the Federal States’ public between different types of criteria in 2014,participation 15 out of 16 in Länder the systemdid. of procurementDual Vocational laws and Training the – thus, andin field, the different where Federalofficial Statesdocu- However, next to the GWB and specific Federal States’ decrees. laws. If specified, as a general the publicmentation procurement exists forlaws other of reasons. line, four modes of proofs are the Länder, further regulations to be found:

FigureTable 31: Types 1: Types of proofs of proofs

Type of proof Mostly used for… Issued by… Provider‟s Declarations Minimum wages, minimum working Bidder (Eigenerklärungen) conditions, compliance with collec- tive agreements Statements on how compliance is Gender equality, reconciliation, Bidder reached integration

Certificates and Labels ILO Core Labour Standards, Independent agencies Fairtrade Official attestations Participation in Dual Vocational Public administration/Chambers of Training, employment of persons craft/Chambers of commerce/ with disabilities Trade Unions Source: Own compilation

Given the fact that declarations made by bidders are of paramount importance as a means to provide ‚proof„ of compliance with social criteria, and compliance with only few criteria are 55 relying on externally provided proof, measures and methods of control gain importance. Without going into detail, it has to be stated, that in most Federal States control can hardly be said to be widespread. Evidence reveals that the actual enforcement of social considerations

Working Paper No. 1, August 2014 | 25 Sarter/Sack/Fuchs: Public Procurement as Social Policy?

collective agreements was seeked that was conform to European legislation. In this context, minimum wage provisions for public procurement were of paramount importance. Starting in 2010, the focus shifted and a further aspect of labour market-regulation became prominent on the agenda: Equal Pay stipulations. After addressed these „traditional‟ wage and labour market concerns, Federal States began to address a growing number of societal issues in their procurement laws, e.g. in the field of integration or gender equality and vastly extended the scope of the regulations. The focus widened in another sense, too, as pro- curement laws began to broaden the focus from criteria with „domestic‟ reach to „global‟ prob- Does Fair Trade contribute lemsto sustainable, inaugurating development?Fairtrade and compliance with Core Labour Standards in their public pro- curement regulations. Today, compliance with ILO Core Labour Standards for goods used in public contracts is one of the most common social criteria in German procurement law. In

A third2014 way not to only show did compliance more Federal is ILO States Core Labourinclude Standards criteria andrelating toor social self-declarations” considerations can be in used their as to use labels and certificates. Given Fairtrade, despite the fact that the a proof of compliance with the ILO thestipulations. fact that labels Also and certificatesthe number implementationof specific criteria of this principleand their scopeCore widenedLabour Standards (see Figure (§12.2 LVG 2). onlyHowever, exist for certain up to areas now (e.g. there is nodiffers real in thesign single of anstates: end Bremen, in this „policyLSA). Thisexpansion use of self-declarations‟: the laws of Fairtrade), the use of labels is already for example, defines certain or other not specified proofs is an structurallyLower Saxony restricted. and Therefore, Schleswig -certificatesHolstein, whichthat can had be usedbeen in alegislated alternative in 2013, in all containedstates with ILO more or it comes as no surprise that labels dedicated decree (BremKernV) Fairtrade stipulations if no label 8 andcriteria certificates than areany mainly of the used laws before;whereas a 2014 Saxony-Anhalt draft law only from Hesseexists follows for asuit. group of products or if an in order to proof compliance with regulates, that “suitable certificates independent proof cannot be found.

FigureFigure 32: Expansion 2: Expansion of social of criteriasocial incriteria German in procurement German procurement law law

Promotion of families Family & Job Disabled people Equal opportunities (m/f) Integration Advancement of women Fair Trade ILO Core Standards Employment of long-time unemployed Equal Pay (m/f) Equal Pay (temp. employees) Equal Pay (general) Apprenticeship Minimum Wage

Source: Own compilation; Notes: Criteria relating to the promotion of SMEs as well as ecological criteria were excluded.

Today,8 15 out of 16 German as the specific criteria and their -- Advice for tenderers in Bremen Federal For example,States have the public newly elected governmentmode of ofregulation. Hesse plans to reform the states‟ procurement law in 2014. The recent draft contains criteria of all areas mentioned here, e.g. Fair Trade, Minimum Wage, Gender Equality or procurement laws; 14 of these -- Events: seminars, trainings, reconciliation of family and job (Hess. LT-Drs. 19/401 v. 13.5.2014). included social criteria. However, b. Opportunities and challenges company-dialogues, multi- it seems important to stress that Bremen on its way to socially media exhibitions and closing this10 does | Working not mean Paper that No. the1, August 2014 and ecologically responsible conference specific criteria or their regulation procurement: LANDMARK are similar. Rather, the stipulations -- Networking of the procurers in the Federal States’ laws are LANDMARK Bremen (as well with NGOs and other highly divergent regarding the communes and states) number of social criteria as well Priorities in Bremen:

56 Does Fair Trade contribute to sustainable development?

New Bremian tariff- and allocation- Tiered verification process: law: 1. Verification of compliance of the § 19 Eco-friendly procurement Public ILO-core labour norms by valid procurers have to… seal, label or certificate or proof of membership to an initiative consider environmental features of (according to a list published by goods when allocating services of the administration; or seal, label, construction, delivery or of public certificate or membership of equal Framework in Bremen interest value). Tenderer has to proof equivalence. or 1. Budget consolidation: § 18 Consideration of social criteria disproportional personnel Public allocators have to… 2. Self-declaration, if no certificate reduction for internal services exists. “I hereby declare that in the (such as purchase) aim towards goods - for services of process of extraction or production construction, delivery or of public of the goods the agreements of 2. Instruction to take into account interest - not being objects produced paragraph 1 of the supplementary social and ecological procurement under conditions violating the contract conditions ‘ILO - core criteria as a result of the 2007 and minimum labour standards of the labour 2011 coalition agreement International Labour Organization (ILO). norms’ have been met. Information 3. Decision of the parliament against regarding extraction of resources exploitative child labour (2008) The Regulation of Core Labour and production of the goods as well Standards of the city of Bremen as a list of involved companies will 4. Bremen laws on collective (since 2011) immediately be given upon request. bargaining or public procurement I regularly inform myself about the (2009) Area of usage for certain sensitive labour conditions during the process categories of goods: of extraction and/or production of 5. Bremen core labour standard the good. […]” provision (2011) -- Uniforms and working clothes, fabrics and other textiles: Fair 3. Verification after conclusion of the -- ‘’Multilateral order situation’’ for Wear Foundation, Ethical Trade contract Tenderers which have a systematic reorganisation of Initiative, Fair Labour Association, given a self-declaration are obliged public procurement Social Accountability International to answer any questions regarding Standard 8000 the compliance of the ILO – core -- Not ‘solely’ implementation of labour norms in the production of additional award criteria -- Natural stone and products made the goods to be delivered. of natural stone: Fair Stone, Advisory board for socially WGDN (Werkgroep Duurzame Corporate dialogue as a new tool and ecologically responsible Natuursteen), Xertix ‘A LANDMARK-Product’ administrative action alongside LANDMARK -- Tea-, coffee- and cocoa products: Fairtrade, Rainforest Alliance, 4C -- Since 2011 supplier dialogues -- Directly linked to the Senator of Association focused on social and ecological Finance, Mayoress Linnert requirements -- Flowers: Fairtrade, Rainforest -- Knowledge transfer between Alliance, Flower-Label-Program -- Classification within the Public science, NGOs and administration Procurement Law: formally it is -- Toys and sports balls: Fairtrade, not a procurement procedure but -- Effective project consulting Social Accountability International market exploration! Standard 8000, certificate in line -- Arrangement of joint projects with the ICTICodex -- Conversation guide for procurers for orientation and support

57 Does Fair Trade contribute to sustainable development?

-- Result example: Idea for a pilot working- and social-standards in -- Effects of changed procurement with life-cycle chip, integration of the production of the machine behaviour on working conditions further services (first reporting obligation of its have not been sufficiently proved kind in the country). Landmark-events regarding sensitive -- Controlling of suppliers during the products Pilot-call example: ‘pinafores’ duration of the contract

-- Clean buying, but how? – buying Recognized standards: ILO-labour -- Consolidation of the reformation uniforms etc. from the Fair Wear standards and eco-friendly features process Foundation (2012) -- 1.000 pinafores for 500 cleaners Lessons learned: “Keeping up the -- Company-dialogue “Working- good work! Managing actively!” clothes and uniforms” (2012) -- Consultation of the tendering process by NGOs (Clean 1. Socially and ecologically oriented -- Clean buying, but how? – Clothes Campaign, Christian public procurement works – as well recognizing eco-friendly and Initiative Romero and Fair in times of budget crisis. socially produced clothing. Wear Foundation) to be able to Example GOTS (2013) approach tenderers 2. Structures for systematic procurement control are -- Getting started – fair nature Pilot-call example: ‘congress hall necessary. stones for Bremen, in cooperation carpet’ with WIN=WIN Fair Stone (2012) 3. Awareness raising of procurers Made of highland-wool from Nepal. and consumer is fundamental. -- Fair buying, but how? – buying flowers, in cooperation with -- Proof of meeting social criteria 4. Dialogue with NGOs are beneficial vamos e.V. (2013) with the ‘Label-Step’- certificate. for the process of implementation

-- Sustainable wood (2013) -- ‘Label Step’ accompanies the 5. Dialogues with companies production process in Nepal. are fundamental. (articulating -- Fair-played: toys in Bremen – demand!) eco-friendly, social and -- No additional costs by meeting economical buying, in cooperation social criteria (budget: 100k €). 6. Implementation of environment with KiTa Bremen and Clean criteria, where alternative products Clothes Campaign (30.09.2013) Next steps? What stays problematic? have been established on the market, is realistic. -- Fair-play means fair-pay: -- Establishing new mandates for recognizing socially and eco-friendly working clothes and protective 7. Buying all products in compliance produced sports balls (19.11.2013) clothing, disposal services and with the ILO-core labour norms electronic equipment at service stays a challenge. Pilot-call example: IT-Procurement provider IB by the states (Bremen, Hamburg and c. Lessons on Fair Trade in public Schleswig Holstein) -- Partly lacking supply of certain procurement products/labels The case study demonstrates clearly -- Consultation by LANDMARK that there is little uniformity in the -- Dealing with unexpected social and environmental dimension -- Duration of 4 years, budget ca. 70 additional costs, complicated self of public procurement in the EU, Mil. € declarations let alone in one country such as Germany. As a result of the latest -- Demands of negotiation -- Standardization and bundling to Directive on Public Procurement, procedures: Designing a concept increase effects the overall framework of public of compliance with the ILO – procurement in the EU has been agreement by the tenderers -- Further development of planning clarified, insofar as it has made it processes (corporate dialogues explicitly clear that fair trade criteria -- Reporting regularly about and procurement conferences) can be included in a public tender,

58 Does Fair Trade contribute to sustainable development?

but the Directive does not go so far of Fair Trade has also come under increase of 7,5% over the previous as to outline the way these criteria increasing scrutiny, particularly the year), Uganda (3,1 million), Ivory are to be set and evaluated. In effects on the ability of farmers Coast (2,2 million), PNG (1,1 Germany, the situation is made even in the long term to become more million) and Tanzania and Kenya more complex by the fact that both resilient, by having greater access to (approximately 0,9million). national and state (Federal States) finance, having a stronger position Over the 2001-2010 period, ACP authorities can legislate on public in the supply chain, improving countries accounted for less than procurement. their knowledge and skills in terms 15 per cent of the total coffee of farming processes, standards production, showing a decreasing Germany has demonstrated that Fair and rules and also the impact on trend if compared with the 19 per Trade has a strong potential in public more vulnerable and marginalised cent share they held in 1990 and procurement and that for certain members of farming communities, 25 per cent in the 1980s. The EU tenders, for example those involving such as women and children. The accounts for over 40 per cent of food and drinks, as well as textiles, ancillary effects of Fair Trade have the total coffee consumption in ACP producers can now gain access increasingly become a key issue in importing countries, and remains to a potentially lucrative market. Some the analysis of the overall value that the most important market for ACP public authorities have approached farmers and cooperatives get out producers. ACP countries’ share in social and environmental public of the often expensive and onerous global coffee exportation almost procurement proactively, such as certification process. halved over the last 20 years, due Bremen with the Landmark Project. In to a production increase in non- this case, a lot of effort has gone into Case Study 3: Fair Trade Coffee in ACP countries, such as Indonesia not only establishing sustainability Kenya, Uganda and Ethiopia and Vietnam. However, production criteria into the tender process, but value in some ACP countries has a substantial amount of outreach Sources: Potts J. et al. (2014) been increasing since 2000, and and events with stakeholders such as IISD Hoebink P., Ruben R., Elbers at a higher rate than other NGOs have also been initiated. W. and van Rijsbergen, B. (2014) non-ACP countries. “The Impact of Coffee Sustainable public procurement also Certification on Smallholder Coffee is generally regarded as provides an incentive for both private Farmers in Kenya, Uganda and the pioneering industry for sector bidders and the producers Ethiopia”, Centre for International sustainability standards and of Fair Trade goods to enter into Development Issues Nijmegen certification (Reinecke, Manning supply agreements for the purposes (CIDIN), Radboud University & von Hagen, 2011). As with many of delivering the services or goods Nijmegen, The Netherlands For other primary commodities, under the tender. Solidaridad Bagal, M. (2013) the global coffee market has “Study on the potential of been defined by high volatility 5.4.3. Long term implications for Fair marketing of Kenyan Coffee and long-term declining prices. Trade certification as Geographical Indication Notwithstanding international Case study related to the study efforts to secure more stability and Coffee is a key commodity for the on the potential for marketing predictability in the relationship ACP region, and has been the subject agricultural products of the ACP between supply and demand of of the greatest variety of certification countries using geographical coffee through the International schemes. As the Fair Trade system indications and origin branding” Coffee Organization (ICO), growing is itself quite mature in the coffee European Commission global production, speculation sector, numerous studies have and climatic uncertainty have been undertaken to evaluate the a. Context continued to drive price volatility longer term effects of certification All major ACP (African, Caribbean and long-term price decline within of coffee growing cooperatives, and Pacific region Countries) the sector. With coffee production especially looking beyond just the coffee producers are located being dominated by smallholder issue of the FT premium, which in Africa, with an exception for producers in tropical regions, historically was the initial measure Papua New Guinea (PNG). The themselves often subject to of the impact of FT certification for main ACP producers in 2009- conditions of poverty and in close farmers and cooperatives. The social 2010 were Ethiopia (with almost interaction with highly biodiverse and capacity-building dimension 7,5 million bags produced, and an biomes, the coffee sector has

59 Does Fair Trade contribute to sustainable development?

provided fertile ground for the Organic certified coffee, and lowest exceptional in that it works only development and adoption of premiums were observed for with democratically organized sustainability standards. 4C-compliant coffee. smallholders (i.e., those organized into cooperatives), while also While certification initiatives for The coffee sector indeed has the specifying a fixed social premium sustainable coffee have been highest presence of sustainability to be distributed to the producer around for more than 20 years, standards among major agricultural organizations for reinvestment in the the past decade has seen a rapid commodity sectors in regards to local community. increase in the development of new both supply and demand; both schemes and mainstream uptake of continue to grow across all voluntary Up until the end of the twentieth sustainable coffees. Many labels and sustainability standards active within century, Organic, Fairtrade certifications for coffee exist. The the sector. The pervasiveness of and Rainforest Alliance shared most important in terms of volumes these standards throughout the the market for certified coffee certified include Nespresso AAA sector has been driven by many principally by leveraging market Sustainable Quality, 4C Association4, factors, but can in large part be niches within the specialty coffee Starbucks Coffee And Farmer Equity attributed to the maturity of the sector. Total sales of sustainable (C.A.F.E.) Practices, Fairtrade, market, the 2001 coffee crisis coffee by 2000 were still under 1 Organic (IFOAM is the standard- and corresponding consumer per cent of global production. Media setting body), Rainforest Alliance and private sector awareness, campaigns by NGOs arising out of (Sustainable Agriculture Network and the high concentration in the 2001 coffee crisis (e.g., Oxfam is the standard-setting body) and manufacturing, as well as the through its Coffee Rescue Plan UTZ Certified. In 2012, 3.3 million limited processing between [Oxfam, 2002]) called for action metric tons of coffee were produced production and consumption, and by governments, NGOs, consumers in compliance with a voluntary retail products with one single or and the private sector to commit sustainability standard (40 per cent very few ingredients. The last two to sustainable development and of global production), of which factors allow for easier consumer procurement of coffee. Although 840,000 metric tons were sold as recognition of certified ingredients. Fairtrade, Rainforest Alliance and standard compliant (25 per cent Organic certification already had of standard-compliant production, Coffee pricing is well known for its well-established markets by 2001, 10 per cent of global production volatility and long-term decline in the depth of the crisis led to an and 12 per cent of global exports). real terms over the past century. unprecedented convergence among Brazil and Vietnam were the largest major private sector players through producers of standard-compliant The first certification initiative to a number of pre-competitive coffee by volume in 2011/2012. explicitly target trade itself as a tool initiatives, including the Common for improving farmer livelihoods was Code for the Coffee Community Standard-compliant coffee the Max Havelaar label, established (otherwise known as “4C production grew 26 per cent per in Holland in 1988. The Max Havelaar Association”) and the Sustainable annum from 2008 to 2012. Regional model, which required licensees Agriculture Initiative (SAI) Platform. importance Brazil (40 per cent), (manufacturers) to pay a minimum These initiatives set the stage for Colombia (17 per cent) and Vietnam price for coffee while also ensuring a paradigm shift in the manner (15 per cent) produce the lion’s other trade benefits, was quickly in which mainstream businesses share of the world’s standard- adopted in other countries; these integrate multistakeholder, compliant coffee. Premiums for eventually came together to form standards-based initiatives across standard compliant sales have been Fairtrade Labelling Organizations their supply chains (Alvarez, reported at 1 to 30 per cent over the International (FLO) in 1997. In Pilbeam, & Wilding, 2010). 2011–2012 period. Highest premiums addition to the specification of were observed for Fairtrade/ a minimum price, Fairtrade is Although neither Fairtrade nor

60 Does Fair Trade contribute to sustainable development?

Organic, the two oldest initiatives, from just three countries: represents 20 per cent or more of have secured the same level of domestic production. Notably, in growth experienced by UTZ and Colombia (28 per cent), Peru 2012, while no Fairtrade coffee was Rainforest Alliance under the new (16 per cent) and Brazil (13 per produced in Vietnam, Indonesian mainstream paradigm, they have cent). Although Fairtrade is one Fairtrade production (27,100 metric continued to benefit from the of the pioneers in sustainability tons) was higher than that of any of growing corporate and consumer certification, sales of Fairtrade the other sustainability initiatives. interest in sustainable sourcing, with coffee, although still experiencing Similarly, Fairtrade’s presence in constant growth well beyond that of growth, have not kept up with Tanzania shows its potential to the conventional coffee sector as a the pace of growth within the develop strong markets in non– whole. The latest reported sales for sector more generally. With sales Latin American countries. both Fairtrade (2012) and Organic of 128,000 metric tons in 2012, (2011) are in the range of 130,000 Fairtrade sales were the lowest b. Opportunities and challenges metric tons (each approximately 2.1 among the other four competing In July 2008 Solidaridad started per cent of the 2012 coffee trade), global initiatives. Per-annum the implementation of the 5-year making them major players in total growth of Fairtrade production programme called “Building sales of sustainable coffee. Beyond and sales were identical, at 13 per Trade Capacity and Sustainable the usual demand constraints facing cent over the last five years, giving Livelihoods through Fairtrade the entire sustainability sector, rise to a constant ratio of sales to and Ethical Trade” in Ethiopia, both Organic and Fairtrade do face production (30 per cent) over the Tanzania, Kenya and Uganda. This potential challenges in expansion, same period. Although the ratio programme is funded by Irish Aid despite their current oversupply. between sales and demand for via Solidaridad’s partner Irish Fair In 2011, 60 per cent of Organic Fairtrade (34 per cent) is slightly Trade Network. The overall objective production came from only three above the industry average (25 of this coffee support programme is countries: Peru, Ethiopia and Mexico. per cent), the potential importance to improve the income position of Nearly half of Fairtrade coffee of sales versus production is small-scale coffee producers in East production came from Colombia arguably greater within the Africa through Utz and Fairtrade and Peru during the same year. context of Fairtrade, where many certification and strengthen the The role and importance of these of the criteria relate to the trading producer organizations. two standards will depend on their relationship itself and therefore ability to maintain a broad supply depend upon actual sales for their The main component of the base within the context of major fulfilment. For example, farmers Solidaridad support programme uptake of voluntary sustainability seeking to secure the minimum is to assist small-scale farmers standards within mainstream Fairtrade price may produce all of in achieving Utz and Fairtrade supply chains. the Fairtrade compliant coffee they certification. Training programmes like, but without actual sales will not in good agricultural practices have In 2012, 430,000 metric tons of be able to benefit from this element been implemented to improve the Fairtrade certified coffee were of the system. Notwithstanding coffee production and outcomes produced, making it the third-largest its relatively lower growth rates, for farmers. Since producer supplier of sustainable coffee on the Fairtrade remains a major player in organizations play an important role global market. As with many of the both the production and sales of for farmers in East Africa, Solidaridad other coffee initiatives, Fairtrade’s sustainable coffee. In 2012 Fairtrade works (e.g. in Kenya) directly with production has relied heavily on accounted for 10 per cent of total cooperatives to reach the farmers Latin American sources, with an certified or verified production and strengthen the organizations estimated 77 per cent of Fairtrade and 5 per cent of global coffee in the areas of management and coffee production coming from Latin production. In Colombia, Peru, record keeping. Additional support America and 57 per cent coming Nicaragua and Tanzania, Fairtrade activities are implemented with local

61 Does Fair Trade contribute to sustainable development?

Figure 33: Sample size and composition

Kenya Uganda Ethiopia Utz farmers 77 302 FT farmers 74 280 FT organic 280 FT + Utz 62 140 Control (non certified) 280 271 TOTAL 493 573 700

Source: Hoebink P., Ruben R., Elbers W. and van Rijsbergen, B. (2014)

partners in improved market linkage, in Kenya. When less than one third (4) Behavioural change diversification (e.g. beekeeping of the FT and Utz certified coffee in in Ethiopia) and addressing social Kenya is sold as certified, this means Many farmers are scarcely informed issues like gender integration and that only one ninth or one twelfth about certification and its different youth involvement in coffee. of farmers’ income comes from aspects. This influences their coffee which is sold at a certified attitudes towards investments (1) Production effects price. While most certified farmers and risk, both at cooperative maintain a stronger specialization in and intra-household level. Such In general, involvement in Utz- coffee, other farmers also invest in behavioural changes only occur if certification enhances knowledge other crops, livestock and non-farm cooperative trust and loyalty are of good agricultural practices employment. Particularly in Kenya, sufficiently guaranteed. Certification and initially increases production this leads to wealth accumulation hardly reduced the incidence of and yield levels. FT certification and income diversification amongst external shocks, but farmers do basically leads to expansion of coffee farmers. become less risk-averse if the areas and farmers become overly cooperative framework offers dependent on coffee. Within the (3) Graduation effects sufficient guarantees. This becomes same region, noncertified farmers particularly important when (FT) also adjust their input use and thus Farmers selected for FT certification farmers’ income is more dependent the volume-effect of certification are usually found in sub-optimal on coffee and thus less alternative is largely socialized over time. production areas. Consequently, livelihood options are available. Prices paid to Utz producers remain initial gains from certification are positive compared to FT certification usually high, but these tend to (5) Gender relations in Kenya, and are usually better than spread once non-certified farmers prices for non-certified producers, catch up in the process. Utz farmers Certification influences decision- even if the coffee is not sold under maintain their relative advantage making procedures in the certification. In Uganda, fewer effects in expenditure levels compared to cooperative domain, but women’s on coffee systems are registered, FT farmers, but differences with bargaining position in the private due to stronger free market price non-certified farmers become domain remains largely unaffected, equalization tendencies. considerably smaller (in Kenya) or unless women are accepted as full eventually disappears (in Uganda). members of the cooperative and (2) Welfare effects Most initial gains from trade are thus are included in the board. Women spread through spatial externalities. are a very small minority in the The effect of the price payments Most important certification effects cooperatives and among coffee associated with FT and Utz occur at the beginning of the coffee farmers and play a limited role in certification on the total (gross) life cycle and gradually even-out the governance structures. Case income of farmers is modest and over time. studies in Ethiopia and Kenya fairly limited. On average, coffee show that independent female makes up roughly only one third to cooperative membership, female a quarter of farmers’ total income land/tree-ownership and more

62 Does Fair Trade contribute to sustainable development?

female education can increase their of primary producers in the final disentangle the effects of bargaining position. consumer price of (certified) coffee cooperative reinforcement from still remains low (approx. 6-8%) and the outcomes of certified market (6) Cooperative governance has not structurally been changed. exchange. Reinforcing cooperatives This is partly due to over-certification organization precedes the generation Membership of coffee cooperatives and is otherwise influenced by the of individual welfare effects. The proved to be a key mediating increasing quality segmentation in initial selection of marginal coffee variable for reinforcing the use of the coffee market. Pre-finance is producers as FT target groups good agricultural practices. Certified scarcely available and late payments guarantees pay-offs in the early farms are generally fairly satisfied drive farmers to sell outside the stage of certification, but this with the technical assistance cooperative. advantage can only be sustained provided by their cooperatives. if further development of dynamic Certification leads to reduced Based on the finding from the competitive advantages takes membership of other organizations, comparative field study and the in- place. Utz certification (or other thus limiting the networks in which depth case studies we can identify private labels) then provides an smallholders are usually involved. the following main challenges for adequate continuation to FT. Instead The certified market only absorbs coffee certification programs: of competing, the labels should between a quarter and a half of total reinforce each other in a sequential coffee production. Cooperatives are (1) Support programmes manner. therefore forced to sell a substantial share of certified coffee on From our group interviews it can (3) Cooperatives loyalty and trust conventional markets. As shown in be concluded that farmers were the Ethiopia study, multi-certification very positive about the trainings in Considerable differences are then provides an attractive good agricultural practices. It means observed between cooperatives in alternative. Moreover, many that if certification is accompanied terms of internal organization, trust members are frequently involved by training and capacity building, and quality of service provision. FT in side sales (‘hawking’) to receive the effects are likely to be more is more pro-poor oriented, while for earlier payments. These side sales significant. The coffee support Utz certification some self-selection range from at least 25% in Kenya and programme in East Africa, takes place. In some cases (Uganda), Uganda up to 50% in Ethiopia. implemented by Solidaridad over this was based on accumulated the past 5 years, focussed indeed experience from earlier projects. Side (7) Chain effects on training and capacity building sales are strongly related to lack of linked to Utz and FT certification cooperative trust and absence of All certification programmes and diversification. Diversification pre-finance. Whereas the provision exercise a decisive influence on the is an important element to increase of technical assistance is generally improvement of coffee production other sources of income for farmers. appreciated by members, more systems, but change hardly anything Furthermore, multi-certification has attention should be devoted to in the structure of the value chain. proven to be a successful strategy the strengthening of cooperative Reliance on production knowledge for coffee cooperatives to increase bargaining power and reinforcing alone has a positive impact on yields benefits from certification. internal social coherence. and quality but turns out to be insufficient for guaranteeing long- (2) Selection of partners (4) Regional targeting of certification term welfare gains. In general, Utz certification proved of little help for Certification programmes tend Differences in regional conditions generalizing improved marketing to select potential partners in strongly influence prices and market and bargaining skills amongst areas where farmers’ organisation opportunities. Where FT certification cooperative members. The share is effective. It is difficult to focuses more on relatively poor

63 Does Fair Trade contribute to sustainable development?

farmers living in marginal regions, was 64 years (in Uganda: 47 years). cotton in certified cooperatives by initial effects are likely to be Young farmers seem to be opting-out 7 percentage points (pp), and that considerable, but these effects are of coffee farming. Scarce disclosure of it has large spilllover effects as the dispersed once regional market premium payments makes the system impact of FT on neighbouring non- integration has been strengthened vulnerable for corruption. FT cooperatives is a 5pp rise in and non-certified farmers equally the top quality cotton”. Therefore, benefit. Returns from certification are (c) Lessons learnt from FT certified the margin of profit between FT highest in remote areas characterized coffee production and non-FT in the same region or by high dependence on coffee The FT certified coffee market is a within neighbouring FT and non-FT farming where less alternative mature one, and perhaps one of the cooperatives or farms may decrease livelihood options are available. In most demonstrable cases of the long- over time. more commercialized regions, other term challenges of FT certification, alternatives out-compete coffee, particularly with the advent of Nevertheless, a key outcome of especially if coffee prices decline. newer, commodity specific forms of this case study on FT coffee is that Coffee marketing margins for Utz voluntary certification schemes and support programmes and capacity certified farms are more stable labels. Furthermore, coffee is also building are viewed by certified while for FT certified farms the price one of the commodities which has farmers to be one of the most positive margin reduces over time. seen a boom in private sector led and outcomes of certification. This echoes developed certification schemes. the analysis on the ancillary benefits (5) Structural changes of certification of certification, which demonstrates One of the big issues in the context that the long-term benefits of FT Structural change of bargaining of FT is whether in the long run, go beyond the pecuniary, and more relations throughout the coffee chain it is an investment of diminishing broadly support the resilience of hardly occurred. Resources for pre- returns. Perhaps if assessed purely farmers by providing assistance finance are scarce and certification from the bottom line, looking at the through programmes addressing does not provide farmers sufficient level of additional income gained capacity or finance or other needs of incentives for in-depth investments. from the FT Premium, then as the smallholders and cooperatives. Farmers are scarcely informed about case study in Kenya, Uganda and certification and only observe short- Ethiopia indicated, this may be the In a direct response to the issue term effects. Certification has not case. The positive ripple effects that of growing number of private resulted in a widespread perception certification has on neighbouring certification schemes, the case that coffee farming is a profitable uncertified producers has been study recommends that instead of business venture. Many coffee farmers shown to also occur in other competing, schemes should seek to expressed worries about their children sectors, such as Fair Trade cotton find complementarities and work taking over their farms. In the Kenya in Mali, where it was shown that “FT collectively to achieve common goals. survey the average age of farmers increases the share of top quality

64 Does Fair Trade contribute to sustainable development?

GLOSSARY

Aid for Trade - Aid for Trade is Chain of Custody - Chain of Custody It differs from a public contract, an initiative that aims to assist are the steps from the start of where a company is paid a fixed developing countries, particularly the primary production, including amount for completing the required least-developed countries, in building the growing, handling, processing work or providing a service. their supply-side capacity and trade- and retailing up to buying by the related infrastructure to expand their consumer. Example of a contract: a private trade opportunities, and to integrate company builds and manages a better into the multilateral rules- Child - Child means any person less motorway for a fixed price. based trading system. Launched than 15 years of age, unless otherwise at the World Trade Organization’s defined by local legislation. Example of a concession: a private (WTO) Hong Kong Ministerial company builds and manages a Conference in December 2005, Aid Child Labour - Child labour means motorway and is remunerated for Trade has four pillars (Aid for any work carried out by a child. through tolls, running the risk that Trade Agenda): trade policy and the revenue generated will not regulations, trade development, Code of Practice/Conduct - Code cover its investment and other costs trade-related adjustment and of practice/conduct means, in the incurred. infrastructure, and building context of ethical trading, a set of productive capacity. rules concerning labour practices Conformity - Conformity is the adopted by a company and meant fulfilment of a requirement. Certification Committee - to apply internationally, and, in Certification Committee (CC) is a particular, to the labour practices of Consensus - Consensus is an body which controls and advises on its suppliers and subcontractors. agreement supported by all parties the quality of certification decisions, concerned without using the rule of policies and procedures of a Collective Bargaining Agreement majority, but by taking into account certification body. (CBA) - Collective Bargaining the views of all parties concerned Agreement (CBA) means the and by reconciliation of any Certification of Trade - Certification right for workers’ organisations conflicting arguments. of Trade (Or Trade transactions): the to negotiate with employers or process by which a certification body employers’ organisations on behalf Constitution - Constitution is a determines operator’s compliance of their members to determine legally binding document that with Fairtrade Standards for traders working conditions and terms of defines how the power and authority and related certification policies and employment. are distributed and limited within an contracts. organisation or company. Commercial Price - For some Certification system - Certification products, no Fairtrade Minimum Continuous Improvement - System is a system with its own rules, Price exists. The paid price is a Continuous Improvement is, as a procedures and management for negotiated price between the seller management concept, a system of carrying out certification. and the buyer. constant or ongoing incremental improvements to a process or Certification Unit - Certification Concession - A concession is a product based on constant or Unit (CU) is the unit which evaluates kind of partnership between the ongoing examination and evaluation operator’s compliance with Fairtrade public sector and a (usually) private of the process or product. Standards and certification policies company whereby the company is and contracts. There are two remunerated mostly through being Contract Production - Contract Certification Units in FLO-CERT: permitted to run and exploit the Production (CP) means unorganised Producer Certification and Trade work or service and is exposed to a farmers who are contracted for Certification. potential loss on its investment. performing specific production tasks to sell their products to a service

65 Does Fair Trade contribute to sustainable development?

provider. In the Fairtrade context, certified as Fairtrade Producers or be counted as qualifying content CP also means the partnership Traders. regardless of whether the processing between the promoting body and is sufficient to confer originating the Fairtrade Producers. Cumulation - Cumulation allows status on the materials themselves. producers from a Preferential Trade Conventional Product - Conventional Agreement country to import non- Distributor - Distributor means any product is any product not originating materials from other operator or entity that purchases produced or traded according to the member countries without the final certified products for sale and does requirements of Fairtrade Standards. product’s originating status being not transform that product in any way. affected. The EU’s GSP rules of Corporate Social Responsibility origin are, in principle, based on the Draft Standards - Draft Standard is a (CSR) - Corporate Social concept of single-country origin, proposed standard that is available Responsibility (CSR) is a concept of that is, the origin requirements must generally for comment, voting or business ethics based on the idea be fully met within one exporting approval. that companies have stakeholders preference-receiving country, which who are broadly defined as anyone must also be the country where the Empowerment - Empowerment or a group affected by the activities finished products are manufactured. means increased opportunity for of the company. The idea of CSR Cumulation, however, permits women and men to control their life. is that a company should by beneficiary countries to consider It gives power to make decisions, to accountable to its stakeholders. For inputs from other countries as have your voice heard, and/or put this reason, the subjects of CSR focus originating content, and the European things on the agenda. on how companies should identify Union GSP rules of origin allow and “engage” stakeholders and how several possibilities for cumulation. Ethical Trade – Ethical trade is they should determine, measure and There are three types of cumulation trade that contributes to sustainable report the impact of their activities rules: bilateral, diagonal, regional and development. on others. full cumulation. Bilateral cumulation applies to trade between two Ethical trade label/ certification Corrective Action - Corrective partners, allowing country A to use - ethical trade label/certification’ Actions are measures taken to inputs from country B without the means any non-governmental trade address existing non-conformance final good’s originating status being related sustainability assurance or to prevent recurrence of non- affected, provided that the inputs scheme (for example, Fair Trade, conformance. themselves originate in country B (i.e. Fairtrade, Max Havelaar, UTZ, they satisfy the area’s Rules of Origin). Rainforest Alliance, etc.). Cost of Sustainable Production Under diagonal cumulation, producers (COSP) - Cost of Sustainable can use materials originating in any Evaluation - Evaluation means Production (COSP) are the costs member country of the PTA as if interpreting and analysing related to sustainably producing a those materials originated in the the monitoring data against product in a social, economic and country where the processing is requirements of Fairtrade Standards. environmental way in conformity undertaken. Regional cumulation with Fairtrade Standards. is a form of diagonal cumulation, Fair Trade - Fair Trade is a trading which only exists under the GSP partnership, based on dialogue, Criterions Fairtrade Standards - and operates between members transparency and respect that Fairtrade Standards (Fairtrade of a regional group of beneficiary seeks greater equity in international Generic Standards and Fairtrade countries (e.g. ASEAN). Finally, trade. It contributes to sustainable Product-specific Standards) are the under full cumulation, all stages development by offering better set of requirements that producers of processing or transformation trading conditions to, and securing and traders have to meet to be of a product within the PTA can the rights of, marginalized producers

66 Does Fair Trade contribute to sustainable development?

and workers – especially in the South. Fairtrade Certification - Fairtrade Fairtrade Label - Fairtrade Label Fair Trade organisations, backed by Certification is the process by which means any product certification consumers, are engaged actively in a certification body determines label owned by FLO or one or supporting producers, awareness operator’s compliance with relevant more of its members that is used raising and in campaigning for Fairtrade Standards and certification to denote compliance with changes in the rules and practice policies and contracts. Fairtrade Standards. of conventional international trade. (FINE’s definition). Fairtrade Certified - Fairtrade Fairtrade Labelling - Fairtrade Certified means that a determination Labelling means FLO e.V., FLO-CERT Fair Trade’s rules guarantee: a against Fairtrade Standards has and all Labelling Initiatives. living wage in the local context, been made and that an operator/a offering employees opportunities product is in compliance with Fairtrade Standards - Fairtrade for advancement, providing Fairtrade Standards. Standards (Fairtrade Generic equal opportunities for all people, Standards and Fairtrade Product- particularly the most disadvantaged, Fairtrade Certified Producer - specific Standards) are the set of engaging in environmentally Fairtrade Certified Producer requirements that producers and sustainable practices, being open to is a Fairtrade Producer which traders have to meet to be certified public accountability, building long- has been certified against the as Fairtrade Producers or Traders. term trade relationships, providing Fairtrade Standards relevant to that healthy and safe working conditions organisation. Fairtrade Minimum Price - Fairtrade within the local context, providing Minimum Price (where it exists) is financial and technical assistance to Fairtrade Certified Trader - the minimum price that must be producers whenever possible. Fairtrade Certified Trader is an paid by buyers to producers for a exporter, importer, manufacturer or product to become certified against Fairtrade - Fairtrade (FT) means processor which has been certified the Fairtrade Standards. The FMP is all or any part of the activities, against the Fairtrade Standards a floor price which covers producers’ standards and certification systems relevant to that organisation. average costs of production and (in particular products or operators) allows them access to their product of FLO e.V., FLO-CERT and its Fairtrade Explanatory Documents - markets. The FMP represents a Labelling Initiatives. Fairtrade explanatory documents are formal safety net that protects documents which further detail how producers from being forced to sell Fairtrade benefits - Fairtrade the Fairtrade Standards need to be their products at too low a price benefits are those means created interpreted and put into practice. when the market price is below through the Fairtrade system that the FMP. It is therefore the lowest allow small farmers and workers to Fairtrade Generic Product Standards possible price that the Fairtrade improve their standard of living. - Fairtrade Generic Product payer may pay to the producer. Standards are the set of requirements When the relevant market price for a Fairtrade benefits include amongst that producers or traders must meet product is higher than the Fairtrade others facilitated market access, irrespective of the product produced minimum price, then at least the long-term trade relationships, better or traded to be certified as Fairtrade market price must be paid. trading conditions and, in most Producers or Traders. cases, a Fairtrade minimum price Fairtrade Premium - Fairtrade for the product as well as a Fairtrade Generic Standards - Premium is an amount paid to Fairtrade premium. Fairtrade Generic Standards are the producers in addition to the payment set of requirements that producers for their products. The use of the Fairtrade Bodies - Fairtrade Bodies or traders of any Fairtrade Products Fairtrade Premium is restricted is a term referring to any unit, have to meet to be certified as to investment in the producers’ organisation or decision-making Fairtrade Producers or Traders. business, livelihood and community body in the Fairtrade system; (for a small producer organization comprising, for example, the FLO Fairtrade Import - Fairtrade Import or contract production set-up) or to Board, the Standards Committee, is the first purchase of a Fairtrade the socio-economic development of PBU, FLO CERT, LIs. Product from the original producing the workers and their community (for country. a hired labour situation). Its specific

67 Does Fair Trade contribute to sustainable development?

use is democratically decided by the contracted to provide services to Hired Labour - Hired Labour (HL) producers. it) responsible for the Fairtrade means employed workers who work inspection and/or certification of for somebody else, for example a The level of the Fairtrade Premium is producers and traders. commercial farm or a factory. set by FLO Standards Unit (SU) for each specific product and is available Forced Labour - Forced Labour Horizon 2020 - Horizon 2020 is the in the FLO product standards (see means work or service undertaken by financial instrument implementing http://www.fairtrade.net/product_ a person under duress or menace of the Innovation Union, a Europe 2020 standards.html for more details). The penalty in circumstances where the flagship initiative aimed at securing amount of Fairtrade Premium that person has not offered him/herself Europe’s global competitiveness. a Fairtrade organization receives voluntarily. It is the biggest EU Research and will depend on the quantity of Innovation programme ever with Fairtrade products that have been Freedom of association - nearly €80 billion of funding available sold. The Fairtrade Premium is not Freedom of association is the over 7 years (2014 to 2020). Europe paid to the company, but instead is right of all workers to join or 2020 is the European Union’s ten- paid directly into a separate bank form a trade union of their own year growth and jobs strategy that account, managed by the Joint choosing and carry out trade was launched in 2010. Five headline Body. The Fairtrade Premium is paid union activities without interference targets have been set for the EU separately from payments for the from their employer or from to achieve by the end of 2020. product and the company does not public authorities. These cover employment; research own the Fairtrade Premium. The and development; climate/energy; Fairtrade Premium is intended to be Government Procurement – The education; social inclusion and used for the benefit of the workers, Agreement on Government poverty reduction. their families and their communities, Procurement (GPA) is a “plurilateral” within the framework of Fairtrade WTO agreement and only binds International Fairtrade Certification Premium projects. The Fairtrade signatory states. The GPA has Mark - International Fairtrade Premium may not be used for currently 15 Parties, mainly major Certification Mark (ICM) is a expenditure for which the company industrialised economies: Armenia, trademark owned by FLO and used is legally responsible, nor may it Canada, European Union, Hong by all Labelling Initiatives except for be used to support the company’s Kong, Iceland, Israel, Japan, Korea, Max Havelaar Switzerland, Transfair running costs or costs of compliance Liechtenstein, the Netherlands Canada and Transfair USA. The mark with Fairtrade standards. with respect to Aruba, Norway, identifies the related product as Singapore, Switzerland, Chinese being Fairtrade Certified. Fairtrade Producer - Fairtrade Taipei and the United States. The Producer means any entity located GPA lays down rules guaranteeing International Labour Convention - in a producing country that has been fair and non-discriminatory International Labour Convention certified under the Generic Standards conditions for international has the force of international law, for Small Farmers’ Organizations, competitive tendering. Participating and states that ratify them are Generic Standards for Hired Labour governments are required to put required to incorporate the principles Situations or Contract Production in place domestic procedures by in national law and to ensure the standards of FLO. which aggrieved private bidders implementation of the law. In can challenge procurement addition, all ILO member states, FLO-CERT - FLO CERT/FLO- decisions and obtain redress in regardless of ratification, are obliged CERT GmbH is the wholly-owned the event such decisions are found to respect, promote and realise the subsidiary of FLO (including any to be inconsistent with the rules of principles contained in the core body partly or wholly owned by the agreement ILO Conventions, which address FLO-CERT/FLO-CERT GmbH or freedom of association and the right

68 Does Fair Trade contribute to sustainable development?

to collective bargaining, forced document, notice, label, ring or to keep administration of the volume labour, discrimination and equal collar accompanying or referring to going in and out of the unit. remuneration. a product referred to as a certified product. Membership fee - Fixed fee paid by International Labour Organisation - a buyer in the supply chain on an International Labour Organisation Labelling Initiative – Labelling annual basis. (ILO) is the UN specialised agency Initiatives are national organizations which seeks the promotion of which license companies to use Minimum Requirements - Minimum social justice and internationally the FAIRTRADE Mark on consumer Requirements are Fairtrade recognised human and labour products and promote Fairtrade in Standards requirements which all rights. It formulates international their countries. Labelling Initiative producers must meet from the labour standards in the form of shall mean full member organisations moment they join Fairtrade. Conventions and Recommendations of FLO with an exclusive, defined setting minimum standards of basic geographical territory whose main Monitoring - Monitoring means labour rights. purpose is to licence a Fairtrade label measuring a set of indicators that are and which are responsible for local tracked over time to identify trends Joint Body - To ensure that the licensing of a Fairtrade label as well Fairtrade Premium is managed for as marketing, promoting sales of Organic Differential - For some the benefit of the workers and their Fairtrade Products and education in certified organic products, a families and communities, the FLO respect of Fairtrade. minimum organic differential is set. It Generic Standards for Hired Labour is the lowest possible differential that require that the Fairtrade Premium Liaison Officer- Liaison Officer (LO) is producers must receive in addition is owned by a separate legal body a consultant working for FLO e.V. and to the Fairtrade Minimum Price or representing all the workers. The carrying out information and support market price, whichever is higher. If Joint Body is an elected group functions with Fairtrade Producers. a Premium is set for the conventional of worker representatives and Liaison officers assist Fairtrade product variety, this Premium also management representatives who Producers in understanding and applies to the organic product, are responsible for ‘jointly’ managing, meeting requirements (certification) unless stated differently. investing and spending the Fairtrade and are involved in supporting market Premium on behalf of this legal body. access and development. In the case of Fairtrade coffee for In other words, the workers and example, buyers pay the Fairtrade management of the company work License fee - License fee is the Minimum Price or the market price, together to achieve improvements fee which Licensees pay to a whichever is higher, and a Premium in the workers’ lives using the Labelling Initiative for the use of the for conventional coffee. For organic Fairtrade Premium. The Joint Body International Fairtrade Certification coffee, an organic differential needs has two main responsibilities: firstly Mark on a Fairtrade Product. to be paid on top of price and to inform and consult all the workers Premium. of the company about the Fairtrade Licensee - Licensee is an standards and the Fairtrade Premium organisation licensed by a Labelling Conventional coffee: Minimum Price and its use; and secondly to manage Initiative to use a Fairtrade label on or market price + Premium and invest the Fairtrade Premium Fairtrade Products. transparently and responsibly. Organic coffee: Minimum Price or Mass balance - Principle means that market price + organic differential + Labelling - Labelling means any certified produce may be mixed with Premium words, particulars, trademarks, conventional produce. At any stage brand names, pictorial matter or of the supply chain, certification Outgrowers - Outgrowers are symbol placed on any packaging, systems require the respective actors understood as all small producers

69 Does Fair Trade contribute to sustainable development?

not yet certified under the Fairtrade Producer Organization - The registered producers in complying Generic Standard for Small Producer producer organization is a with this standard. Organizations from whom Fairtrade group of registered producers Fresh Vegetables are being sourced contracted and/or supported by Public procurement - Public by the certified Hired Labour operator. the promoting body. Its purpose is procurement is the purchase of to enable the registered producers goods and services by governments Policy Coherence for to democratically decide on the and state-owned enterprises. Development – Policy Coherence Fairtrade Premium use and negotiate It encompasses a sequence of for Development (PCD) is a with the promoting body over terms related activities starting with the principle which obliges the EU to of trade. The producer organization assessment of needs through award take into account of the objectives is expected to become stronger over to the contract management and of development cooperation in all time and become an autonomous final payment. policies that it implements which are small producer organization which likely to affect developing countries, can comply with the Fairtrade Quick Entrance - Quick Entrance and that these policies support Standard for Small Producer is the name of a procedure development objectives. It has three Organizations. When producer allowing new products in existing legal bases: Treaty of Maastricht organization is referred to in the text, categories to enter Fairtrade without (1992), Art. 130v. ‘The 3 Cs’; the it can mean one or more than one Fairtrade minimum price, only with Lisbon Treaty (2009), Art. 208; and producer organization. a Fairtrade premium, during one the Cotonou Agreement (2000; full annual production and trading revised 2010), Art. 12. Progress Requirements - For season. Meanwhile the paid price companies: these are requirements is a negotiated price between the Producer - Grower or farmer of against which certified companies seller and the buyer. The Fairtrade Certified Fairtrade products must demonstrate performance premium is paid in addition of the or efforts towards long-term negotiated price. Sellers and buyers Producer Business Unit - Producer improvement and which should are explicitly asked to ensure that Business Unit (PBU) is the FLO be developed according to a plan the negotiated price covers the business unit that advises producers agreed by the management of the costs of sustainable production on compliance with Fairtrade company, some within a specified (COSP). Standards and assists in market period of time. access and development. After one full annual production and For Small Farmers: these are trading season thanks to the Quick Producer certification - Producer requirements on which certified Entrance, producers are asked to Certification (PC) is the certification producers must show permanent feedback data to the pricing unit of of producers against the Fairtrade improvement. Fairtrade International. Currently, for Standards relevant to them. almost all Herbs and Spices, this rule Promoting Body (PB) - The is extended without time limit. Producer Executive Body (PEB) - promoting body is the intermediary The producer executive body organization that either contracts Registered producers - Registered comprises elected representatives of and/or supports small producers producers refer to all the small all the registered producers. It is the in producing and marketing one producers contracted and/or intermediary between the registered or more crops. It is responsible for supported by the promoting body producers and the promoting body supporting these producers to get and participating in Fairtrade. until the producer organization can organized. The promoting body The registered producers form adequately represent the producers’ can either be a trader (exporter/ the membership of the producer interest and manage the Fairtrade processor), or non- trader (NGO organization once it is established. Premium money. Once the producer or private) which is a legal entity organization has developed these forming a partnership with the Requirement - Requirement is a capacities, the producer executive producers it contracts and/ provision that conveys criteria to be body can, if so wished, assume the or supports, i.e. the registered fulfilled. function of a structure similar to an producers. The promoting body is executive committee. the holder of the Fairtrade certificate Review - Review is an activity of and is responsible for supporting the checking a document or process

70 Does Fair Trade contribute to sustainable development?

to determine whether it is to be management skills, little knowledge in the Treaty for the European reaffirmed, changed or withdrawn. management and risk aversion. Union (TFEU) and the Procurement Directives. Revision - Revision is an introduction Small Farmers - Small Farmers of all necessary changes to the (SF) are producers who are not Socio-economic development - substance and presentation of a structurally dependent on permanent FLO considers socio-economic document or process. hired labour and who manage their development to be a process production activity mainly with own resulting in changes which improve Rules of origin - Rules of origin are and family labour. the capacity of a community to the criteria needed to determine the fulfil its aspirations. The aim is to national source of a product. Their Small farmers Organisation - empower individuals and groups with importance is derived from the fact Small Farmer Organisation (SFO) the skills they need to identify their that duties and restrictions in several is a group primarily consisting of needs and priorities and to develop cases depend upon the source of organised small farmers who work plans and projects to address these. imports. for themselves, for example a co- The Fairtrade Premium is intended to operative or association. be used both for the empowerment There is wide variation in the practice of workers, and also for investing of governments with regard to the Social Responsibility - Social in plans and projects for social and rules of origin. While the requirement responsibility means actions of an economic improvement in the wider of substantial transformation organisation to take responsibility community. The Fairtrade Premium is universally recognised, some for the impacts of its activities cannot solve all the social and governments apply the criterion on society and the environment, economic problems and needs of the of change of tariff classification, where these actions are consistent workers and the community. But if others the ad valorem percentage with the interests of society it is invested wisely and builds the criterion and yet others the criterion and sustainable development; capacity of workers to change their of manufacturing or processing are based on ethical behaviour, own lives, the Fairtrade Premium can operation. compliance with applicable law and have long-lasting benefits. intergovernmental instruments and Segregation - Principle implies that are integrated into the ongoing Standards - Standard is a set certified produce may not be mixed activities of an organisation. of defined criteria giving the with conventional produce at any requirements which must be stage of the supply chain. Socially responsible public attained. A standard provides, for procurement (SRPP) - ‘SRPP’ means common and repeated use, rules, Smallholder farmer - The term procurement operations that take guidelines or characteristics for ‘smallholder’ refers to the limited into account one or more of the products or related processes and resource endowments of certain following social considerations: production methods. It may also farmers relative to other larger scale employment opportunities, decent include terminology, symbols, and more commercial farmers. The work, compliance with social and packaging, marking or labelling precise definition differs among labour rights, social inclusion requirements. Standard requirements (including persons with disabilities), are meant to comply with and are countries with variations in farm equal opportunities, accessibility based on stated objectives. size, allocation of resources, use design for all, taking account of of external inputs and proportion sustainability criteria, including Standards Body - Standards Body of food crops that are marketed. ethical trade issues and wider is a recognised body at national, Smallholder farmers characteristically voluntary compliance with corporate regional or international level that have limited business skills, low social responsibility (CSR), while has as a principal function, by virtue financial literacy and financial observing the principles enshrined of its statutes, the preparation,

71 Does Fair Trade contribute to sustainable development?

approval or adoption of standards Transformer - Transformer means World Shop - A World Shop is that are made available to the public. any operator or entity that alters defined as: the characteristics of a Fairtrade Standards Committee - Standards Product through the use of physical -- A shop that endorses, through its Committee (SC) is a committee or chemical or similar processes. own mission or values statements, created by the FLO Board and publicity material and actions, the made up of representatives of Verification - Verification is the definition and principles of Fair the stakeholders for Fairtrade confirmation through the provision of Trade. Standards. It acts as a decision evidence that specified requirements maker and provides guidance in the have been fulfilled. Verification -- The primary purpose for existing development of Fairtrade Standards. can be first party/internal (self as a shop is to promote Fair assessment), second party (by an Trade. Fairly traded products Standards Unit - Standards Unit entity of the supply chain leading therefore take up the most (SU) is the FLO business unit that to approval) or third party/external important share of the shop’s manages the development of (by an independent party leading to stock. Fairtrade Standards. certification). -- The shop reinvests the profits Sustainability - Sustainability means Worker - Worker refers to all from its sale of products into the the capacity of economic, social, workers contracted by a company Fair Trade system. institutional and environmental or producer organisation including aspects of human activity, and the migrant, temporary, seasonal, sub- -- The shop informs the public non-human environment, to continue contracted and permanent workers. about its aims, the origin of the into the long-term. It is not limited to field workers products, the producers and but includes all other hired labour about world trade. It supports Traceability - Traceability is the personnel, e.g. employees working campaigns to improve the ability to trace the history, application in the administration. The term, situation of producers, as well and/or location of a product. however, is limited to personnel as to influence national and which is entitled to join unions and international and international Trade Certification - Trade therefore normally excludes middle policies. Certification (TC) is the certification and senior management. of traders against the Fairtrade Standards relevant to them Workers Committee - Workers Committee (WC) is a committee Trader - Buyer, seller, manufacturer, of representatives of workers of a transformer of a Certified Fairtrade company dealing with workers’ rights product and working conditions.

72 Does Fair Trade contribute to sustainable development?

ACRONYMS

ACP African, Caribbean and Pacific group of States

AfT Aid for Trade

ATOs Alternative Trade Organizations

BCI Better Cotton Initiative

BTC Belgian Development Agency

CARICOM Caribbean Community and Common Market

CARIFORUM Forum of the Caribbean Group of African, Caribbean and Pacific (ACP) States

CDE Centre for the Development of Enterprise (ACP-EU)

CmiA Cotton made in Africa

CSR Corporate Social Responsibility

DFID British Department for International Development

EAC East African Community

EBAE European Business Awards for the Environment

ECOWAS Economic Community of West African States

EDF European Development Fund (ACP-EU)

EFTA European Fair Trade Association

EPA Economic Partnership Agreement

ET Ethical Trade

ETI Ethical Trade Initiative

ETP Ethical Tea Partnership

EWAD Environmental Women in Action for Development, Uganda

FAO Food and Agriculture Organization of the United Nations

FINE FLO, IFAT, NEWS and EFTA group

FLO Fairtrade Labelling Organizations International (“Fairtrade” or “Fairtrade International”)

73 Does Fair Trade contribute to sustainable development?

FLO-CERT Fairtrade Labelling Organizations International Certification Body

FLSA Fairtrade Label South Africa

FSC Forest Stewardship Council

FT Fair Trade

GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (German Agency for International Cooperation)

GMO Genetically Modified Organism

GPA Government Procurement Agreement (WTO)

GPP Green Public Procurement

GSP Generalised System of Preferences

GTS generic trade standards

IADB Inter American Development Bank

IFAT International Federation for Alternative Trade and International Fair Trade Association

IFOAM International Federation of Organic Agriculture Movements (“Organic”)

IIED International Institute for Environment and Development

IISD International Institute for Sustainable Development

ILO International Labour Organisation

ISEAL International Social and Environmental Accreditation and Labelling Alliance

ISO International Organization for Standardization

ITC International Trade Centre

NEWS Network of World Shops

NGO non-governmental organization

OECD Organisation for Economic Co-operation and Development

PDC Policy Coherence for Development (EU)

74 Does Fair Trade contribute to sustainable development?

PPM production and processing method

PSR Producer Services and Relations

RA Rainforest Alliance

RSB Roundtable on Sustainable Biomaterials

RSPO Roundtable on Sustainable Palm Oil

RTRS Round Table on Responsible Soy

SADC Southern African Development Community

SAN Sustainable Agriculture Network

SPS Sanitary and Phyto-Sanitary Agreement

SRPP Socially Responsible Public Procurement

SSI State of Sustainability Initiatives

TFEU Treaty on the Functioning of the EU

UNCTAD United Nations Conference on Trade and Development

VSS voluntary sustainability standard

WFTO World Fair Trade Organization (formerly IFAT)

WTO World Trade Organisation Agreement

TBT Technical Barriers to Trade

ZAR South African Rand

75 Does Fair Trade contribute to sustainable development?

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research%20documents/general%20 Cotton_Fairtrade_Foundation_ items/imagevalues/000/000/383/ briefing%20papers/annual%20 summary_and_response.pdf original/2011_Taking_Root_ reports/2013%20annual%20 Fairtrade_in_Malawi.pdf?1383843714 report%20and%20financial%20 Nelson, V. and Smith, S. (2012) statements%202013.ashx “Impact of Fairtrade Cotton” Natural Fairtrade Foundation “Cocoa Resources Institute, (NRI) University Commodity Briefing”. August 2011 Fairtrade Foundation ‘Annual Review of Greenwich (UoG), Institute http://www.fairtrade.net/fileadmin/ 2012-2013’, 2013. of Development Studies, (IDS) user_upload/content/2009/ http://www.fairtrade.org.uk/~/ University of Sussex. resources/2011_Fairtrade_and_ media/fairtradeuk/what%20is http://server-e9-11.hosting.imerja. cocoa_briefing.pdf %20fairtrade/documents/policy com/includes/documents/cm_ %20and%20research%20 docs/2012/I/1_Impact%20of%20 Fairtrade Foundation. “Fairtrade Tea: documents/general%20briefing Fairtrade%20Cotton%20-%20 Early Impacts in Malawi”. June 2010 %20papers/annual%20 main%20report%20-%20final%20 http://www.fairtrade.net/fileadmin/ reports/2012-2013.ashx Apr2012.pdf user_upload/content/2009/ resources/2010_Fairtrade_Tea_ Fairtrade Foundation ‘How Fairtrade Foundation “Coffee Early_Impacts_in_Malawi.pdf businesses are going further to make Commodity Briefing”. May 2012. international supply chains work for http://www.fairtrade.net/fileadmin/ Fairtrade Foundation. “Impacts of smallholder farmers’, February 2013 user_upload/content/2009/ Fairtrade in South Africa” . June 2010 http://www.fairtrade.org.uk/~/media/ resources/2012_Fairtrade_and_ http://www.fairtrade.net/fileadmin/ fairtradeuk/what%20is%20fairtrade/ coffee_Briefing.pdf user_upload/content/2009/ documents/policy%20and%20 resources/2010_Impact_of_ research%20documents/general%20 Smith, S. (2011) “Fairtrade in Fairtrade_in_South_Africa.pdf briefing%20papers/how%20 the Banana Sector”, Institute of businesses%20are%20going%20 Development Studies Nicholls, A. (2007) “Thriving in a further%20to%20make%20 http://server-e9-11.hosting.imerja. Hostile Environment: Fairtrade’s Role international%20supply%20chains com/includes/documents/cm_ as a Positive Market Mechanism for %20work%20for%20smallholder%20 docs/2011/F/Fairtrade%20in%20 Disadvantaged Producers”, Fairtrade farmers%20final.ashx the%20Banana%20Sector_IDS%20 Foundation, Final%20Report%20December%20 http://www.fairtrade.at/fileadmin/ Fairtrade Foundation ‘Making 2011.pdf user_upload/PDFs/Fuer_ international supply chains work for Studierende/FL_alex_nichols.pdf smallholder farmers: A comparative Fairtrade Foundation “Summary and study of six fair trade value chains’. Fairtrade Response to Fairtrade in Fairtrade Foundation “Is Fairtrade May 2012 the Banana Sector”. December 2011. a subsidy that encourages farmers http://www.twin.org.uk/sites/ http://server-e9-11.hosting.imerja. to grow more coffee and therefore default/files/images/Making_ com/includes/documents/cm_ contribute to global oversupply and international_supply_chains_work_ docs/2013/F/FT_Banana_Summary_ low prices?” 2008 for_smallholder%20farmers.pdf FINAL%20TO%20UPLOAD_V2.pdf http://server-e9-11.hosting.imerja. com/includes/documents/cm_ Fairtrade Foundation “Impact Pound, B. and Phiri, A. (2011) “Taking docs/2008/F/1_Fairtrade_and_ of Fairtrade Cotton – Fairtrade Root: Fairtrade in Malawi”. Fairtrade oversupply.pdf Foundation Response”. May 2012. Foundation and Natural Resources http://www.fairtrade.net/fileadmin/ Institute, University of Greenwich Fairtrade Foundation Farmers: user_upload/content/2009/ http://s3-eu-west-1.amazonaws. Bananas resources/2012_Impact_of_Fairtrade_ com/maxhavelaar.nl/keplarcms/

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‘WINFA, St Lucia’, 2014. ‘Neknasi Coffee Growers Cooperative ‘Iriaini Tea Factory Ltd, Kenya’, 2014. http://www.fairtrade.org.uk/en/ Society, Papa New Guinea’, 2014. http://www.fairtrade.org.uk/en/ farmers-and-workers/bananas/ http://www.fairtrade.org.uk/en/ farmers-and-workers/tea/iriaini-tea- dorothy-agard farmers-and-workers/coffee/ factory-ltd neknasi-coffee-growers-cooperative- http://www.fairtrade.org.uk/en/ society ‘Satemwa Tea Estates Ltd, Malawi’, farmers-and-workers/bananas/ 2014. sandra-joseph ‘Oromia Coffee Farmers Co- http://www.fairtrade.org.uk/en/ Operative Union, Ethiopia’, 2014. farmers-and-workers/tea/satemwa- Cocoa: http://www.fairtrade.org.uk/en/ tea-estates-ltd ‘CONACADO, Dominican Republic’, farmers-and-workers/coffee/oromia- 2014. coffee-farmers ‘Sireet OEP, Kenya’, 2014. http://www.fairtrade.org.uk/en/ http://www.fairtrade.org.uk/en/ farmers-and-workers/cocoa/ Cotton: farmers-and-workers/tea/sireet-oep conacado ‘MOBIOM, Mali’, 2014. http://www.fairtrade.org.uk/en/ ‘Sukambizi Association Trust, ‘ECOOKIM, Ivory Coast’, 2014. farmers-and-workers/cotton/ Malawi’, 2014. http://www.fairtrade.org.uk/en/ massatoma-mounkoro http://www.fairtrade.org.uk/en/ farmers-and-workers/cocoa/ecookim farmers-and-workers/tea/sukambizi- Flowers: association-trust ‘KUAPA KOKOO, Ghana’, 2014. ‘Bigot Flowers Ltd, Kenya’, 2014. http://www.fairtrade.org.uk/en/ http://www.fairtrade.org.uk/en/ FAIR TRADE LABELLING farmers-and-workers/cocoa/kuapa- farmers-and-workers/flowers/bigot- ORGANIZATIONS (FLO)/ kokoo flowers-ltd FAIRTRADE INTERNATIONAL

Coffee: ‘Primarosa Flowers Ltd, Kenya’, 2014. FLO ‘Fairtrade consultation to align ‘Gikanda Farmers Cooperative http://www.fairtrade.org.uk/en/ Standard for Gold with international Society, Kenya’, 2014. farmers-and-workers/flowers/ regulations on conflict-minerals, http://www.fairtrade.org.uk/en/ primarosa-flowers-ltd 15/09/2014, Fairtrade International’ farmers-and-workers/coffee/ (accessed October 2014) gikanda-farmers-cooperative-society ‘Ravine Roses, Kenya’, 2014. http://www.fairtrade.net/single- http://www.fairtrade.org.uk/en/ view+M5f883191e7a.html ‘Gumutindo Coffee Co-Operative farmers-and-workers/flowers/ravine- Enterprises Ltd, Uganda’, 2014. roses FLO ‘Fairtrade Standard for Small http://www.fairtrade.org.uk/en/ Producer Organizations’ 2014. farmers-and-workers/coffee/ Sugar: http://www.fairtrade.net/fileadmin/ gumutindo-coffee-cooperative- ‘BSCFA, Belize’, 2014. user_upload/content/2009/ enterprises-ltd http://www.fairtrade.org.uk/en/ standards/documents/2014-07-16_ farmers-and-workers/sugar/bscfa SPO_EN.pdf ‘KDCU, Tanzania’, 2014. http://www.fairtrade.org.uk/en/ ‘Kasinthula Cane Growers FLO ‘Fairtrade Standard for Hired farmers-and-workers/coffee/kdcu Association, Malawi’, 2014. Labour’, 2014. http://www.fairtrade.org.uk/ http://www.fairtrade.net/fileadmin/ ‘KPD, Tanzania’, 2014 en/farmers-and-workers/sugar/ user_upload/content/2009/ http://www.fairtrade.org.uk/en/ kasinthula-cane-growers-association standards/documents/generic- farmers-and-workers/coffee/kpd standards/2014-07-16_HL_EN.pdf Tea: ‘MZUZU Coffee Planters Co- ‘Fintea Growers Co-Operative Union FLO, ‘Fairtrade Standard for Contract Operative Union, Malawi’, 2014. Ltd, Kenya’, 2014. Production’, 2014. http://www.fairtrade.org.uk/en/ http://www.fairtrade.org.uk/en/ http://www.fairtrade.net/fileadmin/ farmers-and-workers/coffee/mzuzu- farmers-and-workers/tea/fintea- user_upload/content/2009/ coffee-planters-cooperative-union growers-cooperative-union-ltd standards/documents/generic- standards/2014-02-28_CP_EN.pdf

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FLO ‘Composite products’ (accessed FLO ‘Explanatory document for in developing countries – A review October 2014) the Fairtrade Trade Standard’, 2011. of the literature”, 2014. Food and http://www.fairtrade.net/composite- http://www.fairtrade.net/fileadmin/ Agriculture Organization, Rome. products.html user_upload/content/2011-12-29_ http://www.fao.org/3/a-i3682e.pdf Explan_Doc_GTS_EN.pdf FLO ‘Explanatory Document for Liu, P. (2009) “Private standards the Fairtrade Standard for Small FLO ‘Geographical Scope policy in international trade: issues and Producer Organizations’, 2014 http:// of Producer Certification for opportunities”, Food and Agriculture www.fairtrade.net/fileadmin/user_ Fairtrade International’, 2011. http:// Organization, WTO Workshop upload/content/2009/standards/ www.fairtrade.net/fileadmin/ on Environment-related Private documents/2014-01-15_EN_SPO_ user_upload/content/2009/ Standards, Certification and Labelling Explan_Doc.pdf standards/documents/generic- Requirements http://www.fao. standards/2014-07-16_Geographical_ org/fileadmin/templates/est/AG_ FLO ‘Fairtrade International Scope_policy_EN.pdf MARKET_ANALYSIS/Standards/ Monitoring the Scope and Benefits Private_standards___Trade_Liu_ of Fairtrade, fifth edition’, 2013. FLO ‘Annual Report 2007: An WTO_wkshp.pdf http://www.fairtrade.net/fileadmin/ inspiration for change’, 2007. http:// user_upload/content/2009/ www.fairtrade.net/fileadmin/user_ Pay, E. (2009) “The Market for resources/2013-Fairtrade- upload/content/FLO_AR2007_low_ Organic and Fair-Trade Coffee: Monitoring-Scope-Benefits_web.pdf res.pdf Increasing incomes and food security of small farmers in West and Central FLO ‘Fairtrade International FLO ‘Annual report 2006-2007: Africa through exports of organic and Monitoring the scope and benefits of Shaping Global partnership’, 2007. fair-trade tropical products” FAO Fairtrade, fourth edition’ 2012 http://www.fairtrade.net/uploads/ http://www.fao.org/fileadmin/ http://maxhavelaar.be/sites/ media/Final_FLO_AR_2007_01.pdf templates/organicexports/docs/ default/files/fairtrade_monitoring_ Market_Organic_FT_Coffee.pdf report_2012_internal.pdf FLO ‘Explanatory Document. Introducing Fairtrade and its Pay, E. (2009) “The Market for FLO, ‘Fairtrade and Sugar organisations’, 2006. Organic and Fair-Trade Cocoa: Commodity Briefing’, January 2013 http://www.fairtrade.net/uploads/ Increasing incomes and food security http://www.fairtrade.net/fileadmin/ media/Explan_Doc_Introducing_ of small farmers in West and Central user_upload/content/2009/ Fairtrade.pdf Africa through exports of organic and resources/2013_Fairtrade_and_ fair-trade tropical products” FAO Sugar_Briefing.pdf Challenge and Opportunity. http://www.fao.org/fileadmin/ Supplement to Annual Review 2010 templates/organicexports/docs/ FLO ‘Fairtrade and Sugar Commodity -11. 2010 Financials and Global Sales Market_Organic_FT_Cocoa.pdf Briefing’, January 2013 Figures. 2010 http://www.fairtrade.net/fileadmin/ http://www.fairtrade.net/fileadmin/ Pay, E. (2009) “The Market for user_upload/content/2009/ user_upload/content/2009/ Organic and Fair-Trade Cotton and resources/2013_Fairtrade_and_ about_us/FLO_Annual-Financials- Fibre Products: Increasing incomes Sugar_Briefing.pdf Sales_2010.pdf and food security of small farmers in West and Central Africa through FLO’ Fairtrade Product FOOD AND AGRICULTURE exports of organic and fair-trade Classification’, 2013. ORGANIZATION (FAO) tropical products” FAO http://www.fairtrade.net/fileadmin/ http://www.fao.org/fileadmin/ user_upload/content/2009/ FAO “Impact of international templates/organicexports/docs/ standards/documents/2013-12-10_ voluntary standards on Market_Organic_FT_Cotton.pdf Product_Classification_.pdf smallholder market participation

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Pay, E. (2009) “The Market for http://www.iied.org/pubs/ Cadbury Goes Fairtrade, International Organic and Fair-Trade Mangoes pdfs/15500IIED.pdf Trade Forum - Issue 4/2009 and Pineapples: Increasing incomes http://www.tradeforum.org/ and food security of small farmers Sustainable Products and the PPMs Cadbury-Goes-Fairtrade/ in West and Central Africa through Dilemma: how the international exports of organic and fair-trade community can help in resolving International Trade Centre ‘Fair trade tropical products” FAO developing countries’ concerns, ‘will survive’ economic crisis’ World http://www.fao.org/fileadmin/ Sustainable Development Opinion, Export Development Forum, 2008 templates/organicexports/docs/ 2004 http://www.intracen.org/WorkArea/ Market_Organic_FT_Pineapple_ http://www.iied.org/pubs/ DownloadAsset.aspx?id=43688 Mango.pdf pdfs/11042IIED.pdf Fair Trade: What’s Behind the Label?, Fay Bell, W. (2009) “Organic Standards and sustainable trade, 2000 International Trade Forum - Issue Agriculture and Fair Trade in Pacific http://www.iied.org/pubs/pdfs/ 1-2/2008 Island Countries”, FAO G02162.pdf http://www.tradeforum.org/Fair- http://www.fao.org/3/a-ak356e.pdf Trade-Whats-Behind-the-Label/ INTERNATIONAL TRADE CENTRE Hallam D., Liu P., Lavers G., (ITC) Lost in labels, International Trade Pilkauskas P., Rapsomanikis G. and Forum - Issue 1-2/2008 Claro J. (2004) “The market for non- International Trade Forum Magazine http://www.tradeforum.org/Lost-in- traditional agricultural exports”, FAO ‘Ethical Trade’ (accessed October labels/ Commodities and trade technical 2014) paper, FAO http://www.tradeforum.org/ Fair Trade on ITC’s Radar Screen, ftp://ftp.fao.org/docrep/fao/007/ themes/?taxids=1101 International Trade Forum – Issue y5445e/y5445e00.pdf 2/2006 International Trade Centre ‘The http://www.tradeforum.org/Fair- INTERNATIONAL INSTITUTE FOR Interplay of Public and Private Trade-on-ITCs-Radar-Screen/ ENVIRONMENT AND DEVELOPMENT Standards (Literature Review Series (IIED) on the Impacts of Private Standards Fair Trade, International Trade Forum – part III)’ 2011 http://www.intracen. – Issue 2/2006 Frank, J. and Penrose Buckley, C. org/uploadedFiles/intracenorg/ http://www.tradeforum.org/Fair- (2012) “Small-scale farmers and Content/Publications/The%20 Trade/ climate change. How can farmer Interplay%20of%20Public%20 organisations and Fairtrade build and%20Private%20Standard.pdf Fair Trade as a business model, the capacity of smallholders?”, IIED, International Trade Forum – Issue London Fairtrade: New business model taps 2/2006 http://pubs.iied.org/pdfs/16518IIED. markets in the South, International http://www.tradeforum.org/Fair- pdf? Trade Forum - Issue 3/2010 Trade-as-a-Business-Model/ http://www.tradeforum.org/ Potts J., van der Meer J. and Fairtrade-New-Business-Model-Taps- Who’s who in Fair Trade, Daitchman J. (2010) “The State of Markets-in-the-South/ International Trade Forum – Issue Sustainability Initiatives Review 2010: 2/2006 Sustainability and Transparency” Voluntary standards in developing http://www.tradeforum.org/Whos- IIED, London Agricultural Countries: The potential of Who-in-Fair-Trade/ Commodities, Trade and Sustainable voluntary standards and their role Development, 2005 in international trade, International FT has limits as a model for http://www.iied.org/pubs/ Trade Forum - Issue 3/2010 development, International Trade pdfs/16500IIED.pdf http://www.tradeforum.org/ Forum – Issue 2/2006 Voluntary-Standards-in-Developing- http://www.tradeforum.org/Fair- Challenging preconceptions about Countries-The-Potential-of- Trade-Has-Limits-as-a-Model-for- trade in sustainable products. Voluntary-Standards-and-their-Role- Development/ Towards win-win-win for developing in-International-Trade/ countries, 2005

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Fisher, E. and Sheppard, E. (2012) http://www.ipu.org/splz-e/trade11/ United Kingdom House of Lords, “Pushing the Boundaries of the outcome.pdf ‘European Union, Developments Social: Private Agri-food Standards in EU Trade Policy Report, House and the Governance of Fair Trade BTC (2014) « Ethical product trends of Lords Select Committee on the in European Public Procurement” in South Africa » BTC Belgian European Union, Ch. 5: Trade and Int. Jrnl. of Soc. of Agr. & Food, Vol. Development Agency, Brussels Development, 2008, (accessed 20, No. 1, pp. 31–49 http://ijsaf.org/ http://www.befair.be/sites/default/ October 2014) archive/20/1/fisher_sheppard.pdf files/all-files/brochure/South%20 http://www.publications.parliament. Africa%20final%20raport_0.pdf uk/pa/ld200708/ldselect/ Jaffee, D. (2012) “Weak Coffee: ldeucom/200/20008.htm Certification and Co-optation in Dimopoulos, A. (2010). The effects of the Fair Trade Movement” Social the Lisbon Treaty on the principles United Kingdom House of Commons, Problems, Vol. 59, Issue 1, pp. 94–116 and objectives of the Common International Development http://cftn.ca/sites/default/files/ Commercial Policy. European Committee Fair Trade and AcademicLiterature/Weak%20 Foreign Affairs Review, 15(2), 153-170 Development, 2007 Coffee.pdf https://pure.uvt.nl/portal/ http://www.publications.parliament. files/1361591/Dimopoulos_ uk/pa/cm200607/cmselect/ International Markets Bureau (2012) The_Effects_of_the_Lisbon_ cmintdev/356/356i.pdf “Socially Conscious Consumer Treaty_111104_publishers_check_ Trends Fair Trade”, Canada copyrights.pdf Hiscox, M. J. (2007) ´Fair Trade http://www5.agr.gc.ca/resources/ as an Approach to Managing prod/Internet-Internet/MISB-DGSIM/ Liu, P. (2009) “Private standards Globalization”, Conference on ATS-SEA/PDF/6153-eng.pdf in international trade: issues and Europe and the Management of opportunities”, Food and Agriculture Globalization https://www.princeton. Steering Committee of the State- Organization, WTO Workshop edu/~smeunier/Hiscox_Fair%20 of-Knowledge Assessment of on Environment-related Private Trade%20and%20Globalization.pdf Standards and Certification (2012). Standards, Certification and Labelling Toward sustainability: The roles Requirements http://www.fao. Bisaillon V., Gendron C. and Turcotte and limitations of certification. org/fileadmin/templates/est/AG_ M.-F. (2006) Fair Trade and the (Executive summary.) Washington, MARKET_ANALYSIS/Standards/ Solidarity Economy: the Challenges DC: RESOLVE, Inc Private_standards___Trade_Liu_ Ahead, Les cahiers de la Chaire – http://www.resolv.org/site- WTO_wkshp.pdf collection recherché, n. 05-2006, assessment/files/2012/06/ University Of Quebec Chair of Social Toward-Sustainability-Executive- ECLAC, “Impact of changes in the Responsibility and Sustainable Summary.pdf European Union Import regimes Development (CRSDD) for sugar, banana and rice on http://www.crsdd.uqam.ca/Pages/ World Fair Trade Organization Selected CARICOM countries” 2008. docs/pdfCahiersRecherche/ (WFTO) Annual Report 2012 http:// Economic Commission for Latin 2006/05-2006.pdf www.wfto.com/index.php?option America and the Caribbean (ECLAC) =com_docman&task=doc_ http://www.ilocarib.org.tt/trade/ Gendron C., Bisaillon V. and Otero download&gid=2247&&Itemid=1 documents/understanding_epa/ A. I. (2006) The Institutionalization overview/L.168.pdf of Fair Trade: More than a Degraded Inter-Parliamentary Union and the Form of Social Action, Les cahiers de European Parliament ‘Outcome Sidwell, M. (2008) “Unfair Trade”, la Chaire – collection recherché, n. 12- Document of the Annual 2011 session Adam Smith Institute, London, 2008 2006, University Of Quebec Chair of of the Parliamentary Conference on http://www.adamsmith.org/images/ Social Responsibility and Sustainable the WTO’ Geneva, 22 March 2011 pdf/unfair_trade.pdf Development (CRSDD)

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http://www.crsdd.uqam.ca/Pages/ http://www.eldis.org/fulltext/UK ILO ‘Creating Market Opportunities docs/pdfCahiersRecherche/ food_brief_fairsuplychains_0905.pdf for Small Enterprises: experiences 2006/12-2006.pdf of the Fair Trade Movement’, 2002, UNEP, ‘The Trade and Environmental International Labour Organization. WTO Public Forum 2006: “Equitable Effects of Ecolabels: Assessments http://www.ilo.org/dyn/empent/ Trade: creating a level playing field and Responses’, UN Environment docs/F1057768373/WP30-2002.pdf for men and women” http://www. Programme, 2005 wto.org/english/ http://www.unep.ch/etb/ Fair Trade: Overview, Impact, forums_e/public_forum_e/ publications/Ecolabelpap141005f.pdf Challenges. Study to Inform DFID’s session_26_num31_e.htm Support to Fair Trade, 2000 Lindsey, B. (2004) ‘Grounds for http://portals.wi.wur.nl/files/docs/ Hayes, M. and Moore, G. (2005) “The complaint? “Fair trade” and the ppme/ACF3C8C.pdf Economics of Fair Trade: a guide in coffee crisis’, Adam Smith Institute. plain English http://www.adamsmith.org/sites/ EU-ACP Joint Parliamentary http://www.udbs.dur.ac.uk/ default/files/images/uploads/ Assembly ‘Resolution on trade based fairtraderesearch/The%20 publications/groundsforcomplaint.pdf on fairness and solidarity’, OJ C_062, Economics%20of%20Fair%20 27 February 1997 Trade%20plain%20guide.pdf IADB ‘Brazil, Promotion of socially http://eur-lex.europa.eu/LexUriServ/ responsible market opportunities – LexUriServ.do?uri=CELEX:21997P022 Tallontire, A. and Vorley, B. (2005) Donors Memorandum’, 2002, Inter- 7(29):EN:HTML “Achieving fairness in trading American Development Bank between supermarkets and their http://idbdocs.iadb.org/wsdocs/ agrifood supply chains”, UK Food getdocument.aspx?docnum=1041483 Group Briefing 2005

85 Does Fair Trade contribute to sustainable development?

WEBSITES

Africa Fairtrade Network (AFN) European Fair Trade Association - International Federation of Organic http://www.fairtradeafrica.net/ EFTA Agriculture Movements (IFOAM) http://www.european-fair-trade- http://www.ifoam.org/ Altereco association.org/ www.altereco.com International Organic Accreditation Fair Gold Service (IOAS) Befair (BTC – Belgian Development http://www.fairgold.org/ http://www.ioas.org/ Agency) http://www.befair.be/ Fair Trade Advocacy Office International Social and http://www.fairtrade-advocacy.org/ Environmental Accreditation and Catholic Relief Services Labelling (ISEAL) http://www.catholicrelief.org/ Fair Trade Federation http://www.isealalliance.org/ www.fairtradefederation.org Conacado, Dominican Republic Landmark Project http://conacado.com.do/ Fair Trade Foundation http://www.landmark-project.eu/ Conservation Agriculture Network http://www.fairtrade.org.uk/ (CAN) Lutheran World Relief http://www.rainforest-alliance.org/ Fair Trade Institute – Documents www.lwr.org/fairtrade/index.asp index.cfm Gateway http://www.fairtrade-institute.org/ Marine Stewardship Council (MSC) Consumers International - CI database/publications.php?lang=en http://www.msc.org/ http://www.consumersinternational. org/ Fairtrade Labelling Organizations Max Havelaar Foundation (FLO)/ Fairtrade International http://www.maxhavelaar.nl/ World Fair Trade Organization Africa http://www.fairtrade.net/ (formerly Cooperation for Fair Trade Oikocredit – Fair finance, Fair trade in Africa – COFTA) Fair Trade Original, the Netherlands http://www.oikocredit.coop/ http://www.wfto-africa.org/ www.fairtrade.nl Organic Consumers Association Coordinadora Latinoamericana y Fair Trade Resource Network www.organicconsumers.org del Caribe de Comercio Justo - www.fairtraderesource.org Latin American and Caribbean People Tree, United Kingdom Network of Small Fair Trade FINE www.peopletree.co.uk Producers (CLAC) http://www.fairtrade-advocacy.org/ http://clac-comerciojusto.org/ Plate-Forme pour le Commerce FLO-CERT Équitable De Evenaar, the Netherlands http://www.flo-cert.net http://www.commercequitable.org/ www.de-evenaar.nl Forest Stewardship Council (FSC) Root Capital (formerly EcoLogic Divine Chocolate Ltd (UK), United http://www.fscus.org/ Finance) Kingdom http://www.rootcapital.org/ www.divinechocolate.com Green America (formerly Co-op America) Savanna Farmers Marketing EL PUENTE, Germany http://www.greenamerica.org/ Company Limited, Ghana www.el-puente.de programs/fairtrade/ www.acdep.org

Equi’Sol, France Global Exchange Social Accountability International www.equisol.org www.globalexchange.org (SAI) http://www.sa-intl.org/

86 Does Fair Trade contribute to sustainable development?

Ten Thousand Villages, Canada Weltladen-Dachverband, Germany www.tenthousandvillages.ca www.weltladen.de

United Students for Fair Trade World Fair Trade Organization www.usft.org (WFTO) http://www.wfto.com/index.php

87 Does Fair Trade contribute to sustainable development?

ENDNOTES

1 Vihinen, L. and Lee, H.J (2005) ‘Fair Trade and Commercial Policy. European Foreign Affairs Different Poverties, Different Policies, IDPM, the Multilateral Trading System’ , OECD Papers, Review, 15(2), 153-170 Manchester 10-12 September 2001, Natural Volume 5, Number 2, July 2005, OECD http://www. https://pure.uvt.nl/portal/files/1361591/ Resources and Ethical Trade programme, NRI, ingentaconnect.com/content/oecd/16091914/2005/ Dimopoulos_The_Effects_of_the_Lisbon_ http://www.greenbeanery.ca/bean/documents/ 00000005/00000002/0205021ec001 Treaty_111104_publishers_check_copyrights.pdf conf01tallontire.doc

2 Inter-American development Bank, Brazil, 15 Euractiv ‘ French fair-trade sector seeks revival after 31 Alvarez, A (2014) “The inclusion of market- Promotion of socially responsible market crisis dip’ (07/05/2013, accessed October 2014) driven supermarkets in Fairtrade: concerns and opportunities – Donors Memorandum, http:// http://www.euractiv.com/health/french-fair-trade- implications for farmers” Evolving Globalisation idbdocs.iadb.org/wsdocs/getdocument. seeks-revival-news-519566 http://evolving-globalisation.org/category/ aspx?docnum=1041483 BTC ‘Fair trade and the economic crisis’ BTC international-trade/ Belgian Development Agency, Brussels 2012 http:// 3 European Parliament, Committee on International www.befair.be/sites/default/files/all-files/brochure/ 32 Communication from the European Commission Trade ‘“Fairer and more equitable trade starts with Fair%20Trade%20and%20the%20economic%20 to the European Parliament, the Council and the conclusion of the Doha Round”, say world’s crisis.pdf European Economic and Social Committee Retail parliamentarians” 2011 International Trade Centre ‘Fair trade ‘will survive’ market monitoring report “Towards more efficient http://www.europarl.europa.eu/pdfs/news/expert/ economic crisis’ World Export Development and fairer retail services in the internal market for infopress/20110318IPR15858/20110318IPR15858_ Forum, 2008 http://www.intracen.org/WorkArea/ 2020” Brussels, 5.7.2010 COM(2010)355 final http:// en.pdf DownloadAsset.aspx?id=43688 ec.europa.eu/transparency/regdoc/rep/1/2010/ Inter-Parliamentary Union and the European EN/1-2010-355-EN-F1-1.Pdf Parliament ‘Outcome Document of the Annual 2011 16 This is the definition produced by FINE, an informal session of the Parliamentary Conference on the network that involves the Fairtrade Labelling 33 M&S aims to become world’s most sustainable WTO’ Geneva, 22 March 2011 Organizations International (FLO), the International retailer; 28/07/2011 http://www.ipu.org/splz-e/trade11/outcome.pdf Federation for Alternative Trade ((IFAT), now http://ec.europa.eu/environment/ecoap/ Inter-Parliamentary Union “Fair Trade and the World Fair Trade Organization (WFTO)), the about-eco-innovation/business-fundings/united- innovative financing mechanisms for sustainable Network of European World Shops (NEWS!) and the kingdom/488_en.htm development”, Resolution adopted unanimously by European Fair Trade Association (EFTA). the 128th IPU Assembly, March 2013 34 Commission Staff Working Document On Retail http://www.ipu.org/conf-e/128/res-2.htm 17 The term “sustainable” trade has been linked to the Services in the Internal Market Accompanying definition of sustainability used in the Brundtland document to the Report on Retail Market 4 Centre for the Law of EU External Relations ‘Linking Report and confirmed at the Rio and Johannesburg Monitoring: “Towards more efficient and fairer retail trade and non-commercial interests: the EU as a World Summits on Sustainable Development. services in the Internal Market for 2020” Brussels, global role model?’, 4 CLEER Working Papers 2013, 5.7.2010 SEC(2010) 807 editor with A. Ott and A. Dimopoulos http://www. 18 A group of FT NGOs participating in the ETI is http://ec.europa.eu/internal_market/retail/ asser.nl/upload/documents/20130919T025016- currently lobbying for a broadening of the ethical docs/100705-staff-working-document_en.pdf cleer_13-4_web.pdf trade concept to pay more attention to these issues (information supplied by Fair Trade Foundation). 35 The survey interviewed a nationally representative 5 Nindl, E. (2014) An empirical assessment of Fair Trade: Overview, Impact, Challenges. Study to quota sample of 1.947 adults throughout Great Fairtrade: A perspective for low- and middle-income Inform DFID’s Support to Fair Trade, 2000 Britain in 121 sampling points. The survey asked countries? University of Vienna Department of http://portals.wi.wur.nl/files/docs/ppme/ACF3C8C. people to identify the Fairtrade symbol, excluding Economics Working Paper No. 160 http://epub. pdf the text which is only used in the UK. This symbol wu.ac.at/4069/1/wp160.pdf (without the text) is used by FLO labeling initiatives. 19 Commission Communication on Fair Trade (1999), cit. The survey found that 53% of adults correctly 6 WFTO, 60 years of Fair Trade, http://www.wfto. associate the FAIRTRADE symbol excluding the text com/index.php?option=com_content&task=view&id 20 Fair Trade: Overview, Impact, Challenges. Study to box with “a better deal for third world producer”. =10&Itemid=11&limit=1&limitstart=3 Inform DFID’s Support to Fair Trade (2000), cit. http://www.fairtradeguernsey.com/index. php?moreinfo=80&page=5 7 European Parliament, Resolution on Fair Trade, A4- 21 OECD, Fair Trade and the Multilateral Trading 0198/98, OJ C 226/73, 20.07.1998. System, (2005), cit. 36 FLO website http://www.fairtrade.net/

8 Communication from the Commission to the Council 22 Labelling Initiatives are national organisations which 37 Fairtrade Foundation. Annual Review 2009/2010. on Fair Trade, COM(1999) 619 final, 29.11.1999, license companies to use the FAIRTRADE Mark on http://www.fairtrade.org.uk/~/media/fairtradeuk/ (European Commission Communication on Fair consumer products and promote Fairtrade in their what%20is%20fairtrade/documents/policy%20 Trade) countries. and%20research%20documents/general%20 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do? briefing%20papers/annual%20reports/2009-2010. uri=COM:1999:0619:FIN:EN:PDF 23 FLO, Shaping Global partnership. FLO International ashx Annual report 2006-2007, http://www.fairtrade. 9 Art. 23 (i) Partnership Agreement ACP-EC, signed net/uploads/media/Final_FLO_AR_2007_01.pdf 38 International Markets Bureau (2012) “Socially in revised in 2010 http://www.europarl.europa.eu/ Conscious Consumer Trends Fair Trade” , Canada document/activities/cont/201306/20130605ATT67 24 ILO, Creating Market Opportunities for Small http://www5.agr.gc.ca/resources/prod/Internet- 340/20130605ATT67340EN.pdf Enterprises: experiences of the Fair Trade Internet/MISB-DGSIM/ATS-SEA/PDF/6153-eng.pdf Movement (2002) International Labour Organization 10 Communication from the Commission, Agricultural http://www.ilo.org/dyn/empent/docs/ 39 ibid Commodity Chains, Dependence and Poverty – A F1057768373/WP30-2002.pdf proposal for an EU Action Plan, COM (2004) 89, 40 Fair Trade Equitable Trade Rules http://www. 12.02.2004. http://eur-lex.europa.eu/legal-content/ 25 European Parliament, Report on Fair Trade and fairtrade-advocacy.org/trade-justice-and-the-eu/ EN/TXT/PDF/?uri=CELEX:52004DC0089&from=EN Development, (2005/2245(INI)), Rapporteur: equitable-trade-rules Frithjof Schmidt, Committee on Development, 06 11 Communication from the Commission, Policy June 2006 41 Council backs more equitable trade preferences Coherence for Development – Accelerating progress http://www.europarl.europa.eu/sides/getDoc. http://www.eu2011.hu/news/council-backs-more- towards attaining the Millennium Development do?pubRef=-//EP//NONSGML+REPORT+A6-2006- equitable-trade-preferences Goals, COM (2005) 134, 12.04.2005. http://eur-lex. 0207+0+DOC+PDF+V0//EN&language=EN europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX: 42 WTO Public Forum 2006: “Equitable Trade: creating 52005DC0134&from=EN 26 Commission Communication on Fair Trade, (1999) a level playing field for men and women” http:// cit. www.wto.org/english/forums_e/public_forum_e/ 12 European Parliament, Resolution on Fair Trade and session_26_num31_e.htm development, P6_TA (2006)0320, 06.07.2006. 27 Inter American Development Bank (IADB), http://www.europarl.europa.eu/sides/getDoc. Brazil - Promotion of socially responsible market 43 UN Secretary-General tells World Trade do?pubRef=-//EP//NONSGML+TA+P6-TA-2006- opportunities – Donors Memorandum, cit. Organization Doha Round best route to fairer global 0320+0+DOC+PDF+V0//EN system, stressing ‘an ounce of trade can be worth a 28 European Parliament, Report on Fair Trade and pound of aid’ (1/10/2014; accessed October 2014) 13 Art. 23 (d) Partnership Agreement ACP-EU, revised Development, cit. http://www.un.org/press/en/2014/sgsm16227.doc. in 2010, cit. htm 29 UK Food Group Briefing, Achieving fairness in “Fairer and more equitable trade starts with 14 Dimopoulos, A. (2010). The effects of the Lisbon trading, cit. the conclusion of the Doha Round”, say world’s Treaty on the principles and objectives of the 30 A. Tallontire, Challenges facing Fair Trade: which parliamentarians (22/03/2011; accessed October Common way now? Paper for the DSA conference 2001, 2014) http://www.europarl.europa.eu/pdfs/news/

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expert/infopress/20110318IPR15858/20110318I the Fairtrade certificate and is responsible for Cunningham M., and Voora V. (2014) ‘The PR15858_en.pdf supporting the registered producers in complying Sustainability Initiatives Review 2014: Standards with this standard. Fairtrade Standard for Contract and the Green Economy’, State of Sustainability 44 Centre for the Law of EU External Relations ‘Linking Production, cit. Initiatives trade and non-commercial interests: the EU as a http://www.iisd.org/pdf/2014/ssi_2014.pdf global role model?’, (2013) cit. 58 Producer Organization: The producer organization is Hiscox, M. J. (2007) ´Fair Trade as an Approach a group of registered producers contracted and/or 73 In 2012, 40 per cent of coffee production and to Managing Globalization”, Conference on Europe supported by the promoting body. Its purpose is to 22 per cent of cocoa production was standards- and the Management of Globalization https://www. enable the registered producers to democratically compliant, ibid princeton.edu/~smeunier/Hiscox_Fair%20Trade%20 decide on the Fairtrade Premium use and negotiate and%20Globalization.pdf with the promoting body over terms of trade. The 74 Potts J. et al.(2014), cit. producer organization is expected to become 45 Hiscox, M. J. (2007), ibid. stronger over time and become an autonomous 75 European Commission Working document on small producer organization which can comply standards & trade of agricultural products (2013) 46 Liu, P. (2009) “Private standards in international with the Fairtrade Standard for Small Producer http://ec.europa.eu/agriculture/consultations/ trade: issues and opportunities”, Food and Organizations. When producer organization is advisory-groups/international/2013-01-28/working- Agriculture Organization, WTO Workshop on referred to in the text, it can mean one or more than document-standards_en.pdf Directorate-General Environment-related Private Standards, Certification one producer organization. Fairtrade Standard for for Agriculture and Rural Development and Labelling Requirements http://www.fao.org/ Contract Production, cit. fileadmin/templates/est/AG_MARKET_ANALYSIS/ 76 Definition of norm, (accessed October 2014) http:// Standards/Private_standards___Trade_Liu_WTO_ 59 Fairtrade Product Classification, Fairtrade www.oxforddictionaries.com/definition/english/ wkshp.pdf International http://www.fairtrade.net/fileadmin/ norm user_upload/content/2009/standards/ 77 Fair Trade has increased market share, product 47 WTO Agreement on Government Procurement documents/2013-12-10_Product_Classification_.pdf http://www.wto.org/english/tratop_e/gproc_e/ share, geographic coverage, use in public policy gp_gpa_e.htm 60 Fair Trade Advocacy Office, Fair Trade Standards forums or by public bodies e.g. local and national and their Verification in Brief, April 2007 government, as well as the private sector. 48 International Organization for Standardization (ISO) http://www.fairtrade-advocacy.org/images/Fair_ 78 International Trade Centre (2011) The Interplay of Trade_standards_and_their_Verification_in_Brief. 49 WTO Agreement on Technical Barriers to Trade Public and Private Standards (Literature Review pdf http://www.wto.org/english/docs_e/legal_e/17- Series on the Impacts of Private Standards – part tbt_e.htm 61 OECD (2005), cit. III) http://www.intracen.org/uploadedFiles/ intracenorg/Content/Publications/The%20 50 Geographical Scope policy of Producer Certification 62 UK Food Group Briefing, Achieving fairness in Interplay%20of%20Public%20and%20Private%20 for Fairtrade International http://www.fairtrade.net/ trading, cit. Standard.pdf fileadmin/user_upload/content/2009/standards/ documents/generic-standards/2014-07-16_ 63 Fairtrade publishes new gold and precious metals 79 World Fair Trade Organization (access Geographical_Scope_policy_EN.pdf standards, Fairtrade International (accessed October 2014) http://www.wfto.com/index. October 2014) http://www.fairtrade.net/single- php?option=com_content&task=view&id=890&Item 51 Fairtrade Standard for Small Producer Organizations view+M538639b3300.html id=292 http://www.fairtrade.net/fileadmin/user_upload/ content/2009/standards/documents/2014-07-16_ 64 Fairtrade consultation to align Standard for Gold 80 UNCTAD (2014) ‘Evolution of the international SPO_EN.pdf with international regulations on conflict-minerals trading system and its trends from a development http://www.fairtrade.net/single-view+M5f883191e7a. perspective’ United Nations Conference on Trade 52 Fairtrade Standard for Hired Labour html and Development, Trade and Development Board http://www.fairtrade.net/fileadmin/user_upload/ http://unctad.org/meetings/en/ content/2009/standards/documents/generic- 65 Fair Gold http://www.fairgold.org/ SessionalDocuments/tdb61d2_en.pdf standards/2014-07-16_HL_EN.pdf 66 WFTO Annual Report 2012 http://www.wfto. 81 ibid. 53 Fairtrade Standard for Contract Production com/index.php?option=com_docman&task=doc_ http://www.fairtrade.net/fileadmin/user_upload/ download&gid=2247&&Itemid=1 82 Hiscox, M.J. (2007), cit. content/2009/standards/documents/generic- standards/2014-02-28_CP_EN.pdf 67 Fair Trade Advocacy Office, Fair Trade Standards 83 Jaffee, D. (2012) “Weak Coffee: Certification and and their Verification,cit . Co-optation in the Fair Trade Movement” Social 54 Explanatory document for the Fairtrade Trade Problems, Vol. 59, Issue 1, pp. 94–116 http://cftn.ca/ Standard (2011) Fairtrade International http:// 68 Dammert, A.C. and Mohan, S. (2014) ‘A Survey of sites/default/files/AcademicLiterature/Weak%20 www.fairtrade.net/fileadmin/user_upload/ the Economics of Fair Trade’, Forschungsinstitut zur Coffee.pdf content/2011-12-29_Explan_Doc_GTS_EN.pdf Zukunft der Arbeit, Institute for the Study of Labor Dragusanu, R., Giovannucci, D. and Nunn, N. (2013) (IZA) http://ftp.iza.org/dp8167.pdf cit. 55 Tallontire, A. and Vorley, B. (2005) “Achieving Dragusanu, R., Giovannucci, D. and Nunn, N. (2013) fairness in trading between supermarkets and their ‘The Economics of Fair Trade’ Harvard University 84 Jaffee, D. (2012) Ibid. agrifood supply chains”, UK Food Group Briefing: http://scholar.harvard.edu/files/rdragusanu/files/ September 2005 http://www.eldis.org/fulltext/ jep_firstdraft_sept10_2013.pdf 85 FAO (2014) “Impact of international voluntary UKfood_brief_fairsuplychains_0905.pdf standards on smallholder market participation in 69 Fairtrade Minimum Price and Fairtrade Premium developing countries – A review of the literature”, 56 In addition to the general Standards for Contract table, Fairtrade International http://www.fairtrade. Food and Agriculture Organization, Rome. Production, there are additional standards for net/fileadmin/user_upload/content/2009/ http://www.fao.org/3/a-i3682e.pdf production of specific products: Cereals, Cocoa, standards/documents/2014-09-29_EN_Fairtrade_ Hiscox, M.J. (2007) cit. Fibre crops (including cotton) and Prepared and Minimum_Price_and_Premium_table.pdf Preserved Fruit and Vegetables. Product standards 86 Guthman, J. (2007) “The Polanyian Way? Voluntary for contract production, Fairtrade International 70 Explanatory document for the Fairtrade Trade Food Labels as Neoliberal Governance.” Antipode (accessed October 2014) Standard, cit. http://www.fairtrade.net/contract-production- 87 Dammert, A.C. and Mohan, S. (2014), cit. standards.html 71 ibid 88 FAO (2014), cit. 57 The promoting body is the intermediary 72 Standard-compliant coffee, which led in terms of 89 Potts J. et al. (2014) IISD, cit. organization that either contracts and/or supports market penetration, reached a 40 per cent market share of global production in 2012 (up from 15 per small producers in producing and marketing one 90 Steering Committee of the State-of-Knowledge cent in 2008). Other commodities with significant or more crops. It is responsible for supporting Assessment of Standards and Certification (2012). market shares (in terms of global production) in these producers to get organized. The promoting Toward sustainability: The roles and limitations of 2012 include cocoa (22 per cent; up from 3 per cent body can either be a trader (exporter/ processor), certification. (Executive summary.) Washington, in 2008), palm oil (15 per cent; up from 2 per cent or non- trader (NGO or private) which is a legal DC: RESOLVE, Inc http://www.resolv.org/site- in 2008) and tea (12 per cent; up from 6 per cent in entity forming a partnership with the producers assessment/files/2012/06/Toward-Sustainability- 2008). it contracts and/or supports, i.e. the registered Executive-Summary.pdf producers. The promoting body is the holder of Potts J., Lynch M., Wilkings A., Huppé G.,

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91 Dammert, A.C. and Mohan, S. (2014), cit. The Fairtrade Foundation (UK) Annual Report foreign direct investment. The Treaty grants Dragusanu, R., Giovannucci, D. and Nunn, N. (2013), And Financial Statements For the year ended 31 the Union exclusive competence to that effect.’ cit. December 2013 Communication from the European Commission to http://www.fairtrade.org.uk/~/media/fairtradeuk/ the European Parliament, the Council, the European 92 Nindl. E. (2014) “ An empirical assessment of what%20is%20fairtrade/documents/policy%20 Economic and Social Committee and the Committee Fairtrade: A perspective for low- and middle-income and%20research%20documents/general%20 of the Regions “Towards a comprehensive European countries?”, Vienna University of Economics and briefing%20papers/annual%20reports/2013%20 international investment policy” Brussels, 7.7.2010 Business, Department of Economics annual%20report%20and%20financial%20 COM(2010)343 final http://trade.ec.europa.eu/ http://epub.wu.ac.at/4069/1/wp160.pdf statements%202013.ashx doclib/docs/2011/may/tradoc_147884.pdf Dammert, A.C. and Mohan, S. (2014), cit. FAO (2014), cit. 114 ‘Fairtrade product sales in Belgium up 7.5%’ Expats, 125 Belgian Development Agency (BTC): Trade for 04/04/2014 (accessed October 2014). Development Centre http://www.befair.be/en/ 93 FAO (2014), cit. http://www.xpats.com/fairtrade-product-sales- content/fair-trade belgium-75 94 ibid 126 BTC Documentary on Fair Trade coffee in Kivu (2014) 115 ‘Germany a key market for fair trade products’, http://www.befair.be/en/content/documentary- 95 Jaffee, D. (2012), cit. Deutsche Welle, 07/05/2014 (accessed October fair-trade-coffee-kivu-now-available-english- FAO (2014), cit. 2014). subtitles Nindl. E. (2014), cit. http://www.dw.de/germany-a-key-market-for-fair- trade-products/a-17616111 127 Department for International Development’s 96 Dragusanu, R., Giovannucci, D. and Nunn, N. (2013), cit. Programme Partnership Arrangements (PPAs) 116 European Commission Communication on Fairtrade 97 UNCTAD (2014), cit. (accessed October 2014). (2009), cit. https://www.gov.uk/programme-partnership- 98 Steering Committee of the State-of-Knowledge arrangements-ppas Assessment of Standards and Certification. (2012), 117 European Parliament resolution of 27 September 2011 on a New Trade Policy for Europe under the cit. 128 Going further for fairtrade, DFID (8 March 2013; Europe 2020 Strategy (2010/2152(INI)) accessed October 2014) https://dfid.blog.gov. 99 Fairtrade International Annual Report 2013-2014 http://www.europarl.europa.eu/sides/getDoc. uk/2013/03/08/going-further-for-fairtrade/ http://www.fairtrade.net/fileadmin/user_upload/ do?pubRef=-//EP//NONSGML+TA+P7-TA-2011- content/2009/resources/2013-14_AnnualReport_ 0412+0+DOC+PDF+V0//EN 129 Fairtrade Partners http://www.fairtrade.net/our- FairtradeIntl_web.pdf strategic-partners.html 118 Communication from the European Commission to 100 Explanatory document for the Fairtrade Trade the European Parliament, the Council and European 130 Agence Française de Developpement (AFD) http:// Standard, cit. Economic and Social Committee “Trade, growth www.afd.fr/lang/en/home and development Tailoring trade and investment 101 Fairtrade Standards do, however, require that policy for those countries most in need” 27.1.2012 131 German Development Bank (KfW) https:// project selection and the management of the COM(2012) 22 final www.kfw-entwicklungsbank.de/Internationale- Fairtrade http://trade.ec.europa.eu/doclib/docs/2012/ Finanzierung/KfW-Entwicklungsbank/ january/tradoc_148992.EN.pdf Premium monies be made through transparent, 132 German International Development Cooperation participative, and democratic processes. This means (GIZ) http://www.giz.de/en/ that you inform your members about your plans and 119 Communication from the European Commission to the European Parliament, the Council, the European actual achievements with the Fairtrade Premium 133 Irish Aid https://www.irishaid.ie and that everybody can give their opinion what Economic and Social Committee and the Committee should be done with the Fairtrade Premium. of the Regions “A Stronger Role of the Private 134 Swiss State Secretariat for Economic Affairs (SECO) Explanatory Document for the Fairtrade Standard Sector in Achieving Inclusive and Sustainable http://www.seco.admin.ch/?lang=en for Small Producer Organizations http://www. Growth in Developing Countries” Brussels, 13.5.2014 fairtrade.net/fileadmin/user_upload/content/2009/ COM(2014) 263 final 135 Department for International Development standards/documents/2014-01-15_EN_SPO_Explan_ http://ec.europa.eu/transparency/regdoc/ https://www.gov.uk/government/organisations/ Doc.pdf rep/1/2014/EN/1-2014-263-EN-F1-1.Pdf department-for-international-development

102 Fairtrade International Annual Report 2013-2014, cit 120 EEAS Press Release EU Delegation to Kyrgyzstan 136 Directive 2014/24/EU of the European Parliament Fairtrade International Monitoring the Scope http://eeas.europa.eu/delegations/kyrgyzstan/ and of the Council of 26 February 2014 on public and Benefits of Fairtrade - fifth edition – 2013 documents/press_corner/140806_pr_handicraft_ procurement and repealing Directive 2004/18/EC http://www.fairtrade.net/fileadmin/user_upload/ en.pdf http://eur-lex.europa.eu/legal-content/EN/TXT/PD content/2009/resources/2013-Fairtrade- EU project holds first workshop on crafts F/?uri=CELEX:32014L0024&from=EN Monitoring-Scope-Benefits_web.pdf development in Kyrgyzstan (accessed October 2014). 137 Fair trade in public procurement in the EU. 103 Dammert, A.C. and Mohan, S. (2014), cit. http://eeas.europa.eu/delegations/tajikistan/press_ European Parliament. 17/7/2012 corner/all_news/news/2014/20140822_1_en.htm http://www.europarl.europa.eu/RegData/ 104 ibid bibliotheque/briefing/2012/120334/LDM_ 121 Success breeds success for EBAE 2012 winners BRI(2012)120334_REV1_EN.pdf 105 Nindl. E. (2014), cit. (accessed October 2014). http://ec.europa.eu/environment/awards/news_ 138 Fisher, E. and Sheppard, E. (2012) “Pushing 106 Potts J., Lynch M., Wilkings A., Huppé G., archives.html the Boundaries of the Social: Private Agri-food Cunningham M., and Voora V. (2014), cit. Standards and the Governance of Fair Trade in 122 Horizon 2020 Work Programme 2014 – 2015: Food European Public Procurement” Int. Jrnl. of Soc. of 107 Dragusanu, R., Giovannucci, D. and Nunn, N. (2013), cit. security, sustainable agriculture and forestry, marine Agr. & Food, Vol. 20, No. 1, pp. 31–49 http://ijsaf. and maritime and inland water research and the 108 FAO (2014), cit. org/archive/20/1/fisher_sheppard.pdf bioeconomy, European Commission Decision C 109 Nindle, E. (2014), cit. (2014)4995 of 22 July 2014) 139 European Commission “(2010) Buying Social: A See also: Dammert, A.C. and Mohan, S. (2014), cit. http://ec.europa.eu/research/participants/portal/ Guide to Taking Account of Social Considerations doc/call/h2020/common/1617612-part_9_food_ in Public Procurement” Directorate-General for 110 Fairtrade International Annual Report 2013-2014, cit security_v2.0_en.pdf Employment, Social Affairs and Equal Opportunities, Directorate-General for the Internal Market and 111 Monitoring the Scope and Benefits of Fairtrade - 123 Sustainable Food Security Call for Submissions Services http://ec.europa.eu/social/BlobServlet?do fifth edition – 2013,cit. (accessed October 2014). cId=6457&langId=en http://ec.europa.eu/research/participants/portal/ 112 Fairtrade International Annual Report 2013-2014, cit. desktop/en/opportunities/h2020/topics/2330- 140 Directive 2004/18/EC of the European Parliament sfs-15-2014.html#tab1 and of the Council of 31 March 2004 on the 113 International Markets Bureau (2012), cit. coordination of procedures for the award of public Fairtrade International Facts and Figures: 124 ‘Investment presents itself as a new frontier for works contracts, public supply contracts and public 2012/2013 Highlights in Numbers the common commercial policy. The Lisbon service contracts (OJ L 134, 30.4.2004, p. 114) http://server-e9-11.hosting.imerja.com/press_office/ Treaty provides for the Union to contribute http://eur-lex.europa.eu/legal-content/EN/TXT/ facts_figures.aspx to the progressive abolition of restrictions on PDF/?uri=CELEX:02004L0018-20090821&from=EN

90 Does Fair Trade contribute to sustainable development?

141 European Commission (2014) “Public Procurement 150 CDE Initiatives in Southern Africa Enhancing http://www.fairtrade.org.uk/~/media/fairtradeuk/ reform fact sheet no 8: Social Aspects of the productivity for access to markets Private Sector what%20is%20fairtrade/documents/policy%20 New Rules”, Directorate General for the Internal Development in Southern Africa 2013 and%20research%20documents/policy%20reports/ Market http://ec.europa.eu/internal_market/ http://www.cde.int/sites/default/files/documents/ britains%20bruising%20banana%20wars.ashx publicprocurement/docs/modernising_rules/ brochure_cde_intiatives_in_southern_africa_2013. reform/fact-sheets/fact-sheet-08-social_en.pdf pdf 158 Windward Islands: Grenada, Saint Lucia, Saint Vincent and the Grenadines, Dominica. 142 D’Hollander, D. and Marx, A. (2012) “Pulse report 151 The Fairtrade Foundation Annual Report And private certification systems and government Financial Statements For the year ended 31 159 By 2007 all of Dominica’s bananas and about policy: An overview and assessment” Leuven December 2013 85 per cent of bananas in the Windward Islands Centre for Global Governance Studies University http://www.fairtrade.org.uk/~/media/fairtradeuk/ were Fairtrade bananas. ECLAC (2008) “Impact of Leuven what%20is%20fairtrade/documents/policy%20 of changes in the European Union Import regimes http://www.acodev.be/system/files/ressources/ and%20research%20documents/general%20 for sugar, banana and rice on Selected CARICOM governments_and_private_standards_finalv.pdf briefing%20papers/annual%20reports/2013%20 countries” Economic Commission for Latin America annual%20report%20and%20financial%20 and the Caribbean (ECLAC) 143 Directive 2014/23/EU of the European Parliament statements%202013.ashx http://www.ilocarib.org.tt/trade/documents/ and of the Council of 26 February 2014 on the understanding_epa/overview/L.168.pdf award of concession contracts http://eur-lex. 152 Monitoring the Scope and Benefits of Fairtrade - europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX: fifth edition – 2013,cit. 160 ibid. 32014L0023&from=EN 153 Fairtrade and Sugar Commodity Briefing, January 161 ECLAC (2008), cit. 144 Monitoring the Scope and Benefits of Fairtrade - 2013, Fairtrade International http://www.fairtrade. fifth edition – 2013,cit. net/fileadmin/user_upload/content/2009/ 162 UK House of Lords (2008), European Union resources/2013_Fairtrade_and_Sugar_Briefing.pdf -Developments in EU Trade Policy Report, House of 145 Fairtrade International Annual Report 2013-2014, cit. Lords Select Committee on the European Union, Ch. 154 ‘The EU has committed to providing ACP producers 5: Trade and Development (accessed October 2014) 146 South Africa: an emerging market for fair trade with financial compensation, known as ‘sugar http://www.publications.parliament.uk/pa/ agriculture, Fresh Fruit Portal 14/06/2013 (accessed protocol accompanying measures’, to help them ld200708/ldselect/ldeucom/200/20008.htm October 2014) http://www.freshfruitportal. invest in restructuring their sugar industries.’ com/2013/06/14/south-africa-an-emerging-market- Fairtrade and Sugar Commodity Briefing, January 163 Composite products, Fairtrade International, http:// for-fair-trade-agriculture/?country=belgium 2013, cit. www.fairtrade.net/composite-products.html

147 BTC (2010) ‘South South Fair Trade’ , BTC Belgian 155 European Commission (2011) ‘Evaluation Report: 164 “…as producers develop and fair trade products development agency, Brussels http://www.befair. Impact and Effectiveness of EU Public Procurement grow, more sophisticated problems similar to be/sites/default/files/South-South_Fair_Trade.PDF Legislation’ European Commission, Internal Market those arising over diversity of rule of origin will and Services http://ec.europa.eu/internal_market/ emerge; some form of cumulation rule might be 148 11th EDF National Indicative Programme (2014 – publicprocurement/docs/modernising_rules/ needed.” P.176 Cremona, M. and Durán M. G. ‘The 2020) for co-operation between the Kingdom of executive-summary_en.pdf international fair trade movement: actors and Swaziland and the European Union regulatory approaches’ in Granville, B. and Dine, http://eeas.europa.eu/development- 156 Fairtrade consultation to align Standard for Gold J The Processes and Practices of Fair Trade: Trust, cooperation/docs/national-indicative- with international regulations on conflict-minerals, Ethics and Governance (Routledge, 2013) programme_2014-2020/2014-2020_national- 15/09/2014 , Fairtrade International (accessed indicative-programme_swaziland_en.pdf October 2014), Fairtrade International http://www. fairtrade.net/single-view+M5f883191e7a.html 149 Uganda-EU Small Agribusiness Development Fund http://www.eeas.europa.eu/delegations/uganda/ 157 Fairtrade Foundation (2014) “Britain’s Bruising projects/overview/faq/index_en.htm Banana Wars”, Fairtrade Foundation(UK) Report

91 Brussels Rural Development Briefings A series of meetings on ACP-EU development issues