How has fair trade changed and been re-shaped in the last few years?

Over the past few years, more and more companies have started their own in-house sustainability schemes. This has raised issues from other verified certification organisations, such as Fairtrade, around the appropriateness of such change.

The evolution of fair trade

The concept of ‘fair trade’ is based on the idea that ingredients and products should be sourced from farmers who are paid a decent wage and experience a good quality of life. The not-for-profit organisation Fairtrade was established in 1992 and helps workers and suppliers in less developed countries achieve a better standard of living, by guaranteeing a fair minimum price. At this time, consumers had little knowledge of where their products came from, the conditions they were sourced under, and the impact the production had on the supply chain workers’ lives. Fairtrade helps to educate society on the impacts of international commodity markets on these people and is integral in the initial growth of a more sustainable way of life.

What has changed?

Fast-forward to today, and it’s evident that whilst the mindset of enhancing responsible business is stronger than ever, the process towards achieving it is constantly changing. The result is the expansion of in-house sustainability schemes. Sainsbury’s, a leading British supermarket, was one of the first major companies to pull away from Fairtrade in favour of their own scheme. However, this did not mean that Sainsbury’s were turning their backs on Fairtrade but more taking a firmer ownership of their own involvement with their farmers and suppliers around the world.

To begin with, Sainsbury’s started their pilot for tea – Fairly Traded, and in doing so, began working with a defined group of tea suppliers. Previously, they had “limited transparency and relationships with the growers”. Whereas now they’ve “started to build relationships right with our producers on the ground, in a way that the system wouldn’t have allowed us to in the past”, says David Nieberg, Head of Media Relations at Sainsbury’s.

Part of the stigma surrounding in-house systems is down to the lack of trust for commercial businesses. David explains that if “you’ve got a universal scepticism or mistrust, and then you’ve got something very new, it gets portrayed as if it’s a competition”.

Mondelēz International, one of the world’s largest snack companies, launched their own cocoa sustainability scheme in 2012 – Cocoa Life. Margreet Groot, Communications & Budget Manager for Cocoa Life believes part of the issue is that people often look at it as “third party schemes versus company schemes, rather than think about it from the actual challenge itself that we are trying to address”. Given the relatively recent introduction of such schemes, it seems fitting for us to cease fire and first evaluate the outcomes of these programmes, before passing judgement.

What are the different types of schemes?

Mondelēz’s Cocoa Life is a verification based program, which is different from the usual certification schemes. Certification involves farmers complying with certain standards and being subject to an audit, and buyers paying a premium, which is used to support cocoa farmers, either through wages or community investments. Whilst Mondelēz’s verification scheme still includes the aspect of community investments, it mostly focuses on the impacts and changes the programme actually makes. This includes a set of 10 global Key Performance Indicators (KPIs) which focus on 5 key areas, that are achieved with the help of NGOs, the government, and private companies. Mondelēz understands that they are not experts in implementing social change. Therefore, partnership is key to the program and they work with many implementing partners from private and public sector in the various origin countries, in order to grow together and come up with the best solution for each unique environment.

Developing and achieving KPIs across a number of areas helps to ensure that issues in such places are not looked at in isolation. Margreet Groot explained that all of these problems are closely linked and therefore the solutions need to be integrated as well, for example, you can’t attempt to improve livelihoods without addressing access to training for women, or improve farmers’ yields without better farmer training and access to inputs. Through the programme, Mondelēz has directly invested in helping farmers improve their yields, creating more produce from the same area of land. This is an important change, as often, farmers can’t afford to buy more agricultural space.

Impact results for Cocoa Life farmers showed yield increases of 37% in Ghana and 10% in Indonesia – which has helped improve incomes in Ghana by 49% more than farmers outside of the programme and in Indonesia by 37%. Cocoa Life continues to bring positive change to farmers in Ghana, Cote d’Ivoire, Indonesia, the Dominican Republic, India and Brazil. To read more about these achievements from Mondelēz’s Cocoa Life program, please click here.

Challenges to in-house schemes

An argument against in-house schemes is that decision-making may be taken away from suppliers when it comes to how social premiums are spent. A valid concern is that companies expanding their own systems may use this power for their own gain. However, just because the risk is there, it shouldn’t mean that all schemes are accused of such behaviour. If companies remain transparent and provide information on how they’ve come to the decision, with tangible evidence, there is no reason why they should not co-exist with other verification or certification systems. For example, Mondelēz’s Cocoa Life scheme includes the development of Community Action Plans. These allow the community themselves to identify the major things they need, and then Mondelēz, along with NGOs and other groups, help the community achieve this. This may go beyond building facilities or improving infrastructure and instead provide a community with the necessary skills to ensure a long-term sustainable future.

Similarly, with Sainsbury’s Fairly Traded, when asked what would happen if the farmers and the Sainsbury’s Foundation Advisory board disagreed on where the social premiums were spent, the answer was simple – “the farmers are the only people who can make an investment plan. The money will not be spent on things the farmers don’t want to spend it on. It’s their money, and nobody else can write the plan – we will support people to build and create their plans and it’s total misinformation to think otherwise”.

The future

It is understandable that there is concern over this change. Issues may arise if other businesses try to follow the actions of leading brands and drop the use of Fairtrade, but in turn, fail to replace it with a substantial and effective substitute. Furthermore, problems may surface if companies begin to shape programmes which fulfil their own targets (and not ones that actually benefit their suppliers). These actions will risk tarnishing the reputations of other businesses who are genuinely trying to improve their supply chains and suppliers’ lives. Fairtrade is still a very important part of the global sustainability industry and they should continue to be praised for their past and current work. As long as companies remain transparent, and allow their suppliers’ beliefs and needs to shape decisions and outcomes, then there is a real benefit to such schemes. There is no reason why Fairtrade and in-house systems cannot co-exist, as long as the goal of improving farmers well-being remains their driving force.

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