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FairTrade - Fair for Everyone?



I think most people subscribe to the fact that farmers in the Third World have traditionally had a rough deal, especially when the developed world have an insatiable demand for products like Cocoa and Coffee. So it was refreshing when movements such as Max Havelaar were formed in 1992 to take forward the fair trade concept from niche to mainstream. As they say on their website:-

Why is there a need for fair trade?

Small farmers and field workers in developing countries live with the constant pressures of world markets, fluctuating prices, and exploitation by local traders. The repercussions range from debt to unemployment and poverty. However, there are few alternatives to domestic production. Unfortunately, they often include the cultivation of narcotic substances, prostitution, child labor, migration to the slums of major cities or emigration. Fair trade offers more than a million people a way out of this downward spiral.

Given that since then there has been huge progress made in popularizing and developing food products ‘with a conscience' where through the supply chain, the farmer benefits from a higher price for their crops. There are now many organisations and systems which are recognised and between them do a great job to improve the lot of the farmer. The most well known system here in the UK is the Fairtrade Foundation, again formed in 1992, which is the independent non-profit organisation that licence's the use of the FAIRTRADE Mark on products in the UK in accordance with internationally agreed Fairtrade standards. The Foundation is the UK member of Fairtrade Labelling Organisations International (FLO), which unites labelling initiatives worldwide as well as networks of producer organisations FLO sets international fair-trade standards and supports producers to further develop market opportunities.

So this is all great stuff and over the years, more and more Fairtrade marked products have appeared in the market. For the manufacturer, they have to ensure that they source approved Fairtrade certified ingredients and comply with the regulations for the use of the Fairtrade mark on their packaging. This has been through application, registration and approval processes and subject to audit. This is almost parallel to the Organic Movement, where accreditation etc follows similar lines.

Critically over the years the consumer has built confidence that when they buy a product with the Fairtrade mark, they know that by making this choice, that they are consuming a product that is produced ethically and fairly. Again this applies to Organic products, where the consumer makes a conscious choice and often pays a premium for that choice. So far so good.

Recently it has come to light, that FLO have seen fit to bend their rules to suit the commercial popularisation of Fairtrade through the multinationals, which whilst admirably developing the market further for Fair trade raw materials, actually dupes the consumer into purchasing and consuming products that may well not contain any Fairtrade ingredients. The system where this has been allowed to happen is known as ‘Equivalence' or ‘Mass balance'. The explanation from FLO is as follows:-

Fairtrade-certified ingredients can be bought only from independently audited and certified Fairtrade farmers. They receive at least the Fairtrade minimum price and/or (as relevant in accordance with the standards), a premium, which is used to invest in community development.
Where possible, the Fairtrade system seeks to ensure full physical traceability on certified products. However, ingredients like cocoa, tea, juice and sugar can come from many different farms and countries and often have to be mixed together, Fairtrade with non-Fairtrade, for transport and production. Unless volumes are very small or extremely large, it is often impractical or too expensive to keep them completely separate.

To make sure that Fairtrade-certified farmers receive the correct price and premiums for all relevant ingredients, the amounts used in products carrying the Mark are carefully monitored by the Fairtrade system. This ensures that the volume of finished products that carry the Mark directly relates to the equivalent volume of Fairtrade-certified ingredients traders have bought. The farmers receive full Fairtrade benefits for every product sold carrying the FAIRTRADE Mark.

This came to light in a Press Release from Cadbury earlier this year when launching Fairtrade products in Australia

Despite the Fairtrade logo on the packet, Cadbury cannot guarantee that the confectionery is entirely made from fair trade-certified cocoa.

This is because the fair trade cocoa enters the confectioner's global supply chain so the products contain a mixture of fair trade and non-fair trade cocoa beans.

"The fair trade cocoa is hard to separate once it gets into supply chain because of the way production occurs in the factory," said a Cadbury spokesman. "Dairy Milk is our biggest seller and it was the best way to make the biggest impact at the one time."
The explanation that it is not possible to keep fair trade cocoa separate through the supply chain is really not the issue – this has over the years been eminently possible.  It seems strange that the Organic movement can do this – Organic Coffee, Cocoa, Sugar etc is all kept separate and the consumer can be absolutely certain that when they buy and consume the product that it ‘does what it says on the packet'.

There has been a huge amount of negativity about GM crops, and we are assured that none are sold in the UK, however if this equivalence system is allowed for Fairtrade, how are we the consumer, to know that we are not actually consuming products that contain GM ingredients. Labelling regulations are there for a reason, and consumers should not have to worry that they are not entirely accurate.

Cynically one would question that now the Fairtrade Mark has developed to be highly recognisable and trusted, what is the value for these large multinational brands to be able to put the mark on their mainstream products as a marketing ploy versus the cost of paying a premium for their cocoa? I would bet that the value far outweighs the cost, and that if this cost was spent on other forms of advertising it would not buy very much.

However, the key point behind this is that the rug has been pulled from under the committed companies that have spent years of hard graft building the Fairtrade market, just to see the multinationals basically make a charitable payment to get the right to use the mark and thereby undermining the consumer who naturally trusts the Mark to indicate that the product they are buying actually does contain what it purports to.

Fair for the farmers, but Fair for the consumer???

Tony Mycock

This article will be appearing in October's Kennedys Confection magazine



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