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    Fair Trade: What's Behind the Label?


    International Trade Forum - Issue 1-2/2008 

    © Giles Kershaw 

    We put 10 questions to Rob Cameron, Chief Executive of Fairtrade Labelling Organizations International (FLO).

    Rob Cameron
    Chief Executive
    Organization: Fairtrade Labelling
    Organizations (FLO) International

    F: What is the difference between Fairtrade and fair trade? 

    RC: 'Fairtrade' specifically describes the certification and labelling system governed by Fairtrade Labelling Organizations International (FLO). The broader term 'fair trade' refers to the movement as a whole and encompasses other fair trade organizations.

    F: What is the scope of the market for ethical products? 

    RC: The evidence suggests that the public appetite for ethical products is extremely strong. Sales of Fairtrade products have grown at an average of 40% over the past five years, with an estimated retail value of 2.4 billion euros (US$3.2 billion) in 2007. As a result, consumers are helping to support over 1.5 million farmers and workers in over 60 countries in the developing world. And when you include families and dependents this is over 7.5 million people.

    We expect this growth to continue as Fairtrade reaches new markets, develops new labelled products and matures in relatively young markets such as the United States and Japan. We also expect the market to broaden in terms of the product range, the countries in which Fairtrade operates and the countries in which Fairtrade products are sold. South to south trade will also be a further driver of growth.

    F: How do you expect the global economic crisis to impact on Fairtrade? 

    RC: Recent events have put us into uncharted waters but so far indications are strong that Fairtrade sales will be maintained. While the prospect of recession and increasing prices of staple foods has attracted extensive media coverage over the last nine months, Fairtrade sales have continued to grow in our biggest markets. For example, in the United Kingdom sales grew by 55% in the period April to June 2008, as compared to the same time last year.

    If recession sets in, the priorities for some consumers will change, and of course this could slow growth. However, one of our major strengths is the way the market has been built up over the years and there is a core of hundreds of thousands of individuals who have taken action to promote sales of Fairtrade products over the last couple of decades. Recent research suggests that consu-mers' commitment to ethically traded products remains strong. For example, the Henley Centre's research 'Feeling the Pinch' shows that consumers place 'stop buying fair trade and environmentally sound products' at the bottom of a list of actions that they might take in tightening economic environment.

    Recessions hurt everyone, but one thing is for sure: in a global slowdown, producers in the south will almost certainly be proportionately disadvantaged further and will need all the help that Fairtrade offers them.

    F: To what extent does the Fairtrade Certification Mark cover environmental sustainability? 

    RC: FLO strengthened its environmental standards in 2006 so that Fairtrade-certified products would be produced with better environmental performance. For example, certified producers make environmental protection part of farm management and are encouraged to minimize the use of nonrenewable energy. In fact, we believe that Fairtrade environmental standards are in a large part as strong as other schemes that are more specifically environmentally focused. However, while we are committed to promoting, encouraging and rewarding good environmental practice, Fairtrade's aim is to support producers that are most disadvantaged. We must avoid imposing overly onerous environmental constraints that impede producers' access to the Fairtrade market.

    F: Elsewhere in this edition we've heard how the number of 'competing' labels confuses consumers [see page 44]. What is the relationship between the Fairtrade label and other environmental and ethical labels? 

    RC: The growth in consumer interest has stimulated the launch of several new certification schemes in recent years, and also supported the growth of some existing organizations. We welcome any positive effort to promote sustainable agriculture that benefits farmers, workers and the environment.

    However, while we know that Fairtrade is not the only answer, we see it as one of the stronger schemes. For example, to sell coffee with the Fairtrade label, 100% of its contents must have been sourced on Fairtrade terms; other schemes are less demanding. Moreover, only Fairtrade ensures that producers are protected through a price floor (Fairtrade Minimum Price) that covers the cost of sustainable production and receive an extra Fairtrade Premium.

    A unique feature of Fairtrade is its focus on development; the certification system is specifically designed to facilitate capacity building and empowerment of smallholder producers and disadvantaged workers in developing countries.

    Consumer confusion continues to be a concern to us, which is why we work so closely with other groups such as consumer representatives and other NGOs and we support the work of bodies such as ISEAL that are working to bring greater clarity into the field.

    F: Even within a Fairtrade label, consumers do not feel assured that all of their ethical concerns are being addressed. Is this a problem? 

    RC: Not so much a problem as an opportunity to have even greater positive impact. In October, for example, we published a new standard for flowers, which strengthens the trading conditions within supply chains.

    Flowers are one of FLO's most dynamic products and the industry is an important export earner for certified producers in Colombia, Ecuador, Egypt, Ethiopia, India, Kenya, Sri Lanka, Tanzania and Zimbabwe. In response to campaigns and reports highlighting extremely poor working conditions on some labour farms, we introduced this new standard which, among other improvements, only certifies farms that ensure safe and acceptable working conditions. It's vital to us, and to the growth of the market, that consumers can buy Fairtrade flowers knowing that workers are treated fairly.

    F: Are there plans for partnerships between FLO and other labels? 

    RC: Yes, for example we are assessing the feasibility of developing a common label for timber with the Forestry Stewardship Council (FSC) and we are in regular discussions with other complementary labels and schemes. We are also exploring the possibility of working with other certifiers, which could lower the inspection fees, logistics and administrative workload for producer organizations.

    F: African organic producers report prohibitive costs of certification. How is FLO addressing this concern? 

    RC: We are confident that the FLO producer fee system is affordable and enables producers to participate. To underpin this, we changed the original volume-based fee system to a real cost-related fee system, which means the cost is based on the number of working days required for inspection.

    However, recognizing that some groups do face severe hardship, FLO has a Producer Certification Fund for producers' organizations that need help to pay certification fees. Applicants that comply with Fairtrade standards, pass an initial scope-check, and where there is a market for their products, can receive up to 75% of the certification fee. During 2007, 74,000 euros (US$99,000) was granted from the fund.

    F:How can developing-country exporters and their national leaders capitalize on developed ethical trade markets? 

    RC: FLO works mostly with agricultural producers looking to export. These agricultural commodities are often their only source of revenue. By selling their produce on the Fairtrade market, producers benefit from Fairtrade prices, which provide them with financial security and cover their cost of sustainable production.

    By supporting producers to access Fairtrade certification, not only do the local rural communities benefit, but they have the opportunity to access new markets. Some governments, for instance the Windward Islands in the Caribbean, formally support producers to access certification. And many traders pay the certification fees of the producer organizations they are buying from. This represents a win-win as producers reap the financial and social benefits and traders have access to a new growing market.

    F: What do you see as the future for Fairtrade? 

    RC: The growth of Fairtrade in recent years means that we can now make a step change in the impact of our work, and create and sustain enduring change in the way trade is conducted.

    We will broaden, deepen and strengthen our operations so that more producers can benefit: We will broaden Fairtrade to enable more producers and communities in more countries; we will deepen Fairtrade to increase the value that each producer and producer organization sees from their engagement with Fairtrade; we will provide more support and business services. We will also strengthen our organization so that we are more streamlined and cost effective and that producers are better represented.

    Fairtrade Labelling Organizations International (FLO) is a non-profit, multistakeholder association involving 23 member organizations worldwide. It develops and reviews Fairtrade standards and provides support to Fairtrade Certified Producers by assisting them in gaining and maintaining Fairtrade certification and capitalizing on market opportunities.www.fairtrade.net