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Insights from a Producer and Brandholders on “Fair for Life Social & Fairtrade Certified” and “Fair Trade Certified”

On December 16, FTRN produced the fourth of a 4-part webinar series on “Clarifying Fair Trade Certifications.” Webinar 104, about comparing “Fair for Life Social & Fairtrade Certified” (FFL) and “Fair Trade Certified” (FTC), featured Director of Canaan Fair Trade & Founder of Palestinian Fair Trade Association, Nasser Abufarha; CEO of Theo Chocolate, Joe Whinney; and Fair Trade Organic Coffee Buyer of Green Mountain Coffee Roasters, Ed Canty . You can download the 1.5-hr Webinar 104 recording, or register for upcoming webinars, at FTRN Webinars.

Below are some key points about the FFL and FTC systems according to the attributed person, from the webinar:

Nasser:

FFL strengths:

Highly credible as organic certifier, so allows more emphasis on environmental sustainability.

Producers interact with 1 control body for both organic and Fair Trade, so cost to producers is less.

Flexible and adaptable to local context, as system emphasizes Fair Trade values over international systems. As an example, FFL certifies 15 products, while FLO cert only certifies 2 products (because standards don’t exist within FLO for other products).

No label fee at marketing end in consumer countries, just an audit fee, so more affordable.

IMO seeks full social accountability by brandholder, so brandholder becomes part of movement, not just a company that does a little Fair Trade with mostly unexamined practices.

FFL weaknesses:

Not as widely recognized in Fair Trade markets.

FTC strengths:

Well-recognized label.

Union of 21 international labeling initiatives, so enhances broad marketing.

FTC weaknesses:

Obsessed with standardized system, not with the goals of Fair Trade.

More attention is given to bigger buyers, so small organizations get lost.

Licensing fee based on volume leads the labeling initiatives to prefer big organizations over small.

System is only concerned with FTC products, not with the social accountability of other practices of the brandholder. Seems like a double-standard, as producers get a lot more scrutiny than brandholders.

Joe:

FTC strengths:

Established the concept of Fair Trade within a small consumer niche.

Requires that the premium paid above the conventional price to cocoa farmer coops be used for the social benefits of its farmer-members.

FTC weaknesses:

Farmers are not guaranteed that they will earn more money for their crop.

Transfair markets and promotes its label as a trade association might do while also being the exclusive label for the certifier, FLO. This presents a conflict of interest.

Only coops are allowed to be certified by FLO which excludes a majority of farmers.

Only a small portion of a supply chain is certified (the farmer coops, not the finished product manufacturer)

Operates as though there is one global, applicable, sustainable price for a product.

Licensing fee paid to Transfair by Theo would range between $500 – $1,400 per ton of cocoa while farmer coops are only guaranteed $200 per ton of cocoa. Transfair licensing fee is not paid to farmer groups.

FFL strengths:

Recognizes the complex nature of trade by reviewing each trading relationship and contract on a case by case basis.

Recognizes that there is not one global, applicable sustainable price for a product.

Certifies suppliers as well as manufacturers.

Recognizes a diversity of supplier organization schemes.

Provides a progressive certification which requires improvement each year to maintain certification.

Charges a flat annual certification fee plus inspection costs. (Similar to organics)

Is collaborative and engaged with stakeholders in improving standards.

Conducts on-site inspections annually for buyers, brand holders and producers.

Allows Theo to invest real $’s directly back into origin projects for more meaningful impact on farmers.

FFL weaknesses:

Reviews trading contracts retroactively.

Not yet a widely recognized seal.

Improvements for Fair Trade movement:

Achieve reciprocity and respect between various Fair Trade certification programs.

Establish industry recognized trade association separate from certification agencies.

Tie certification to living wages for all farmers and employees of Fair Trade certified companies.

Ed:

FTC Strengths:

Single Focus, that money gets back to producer level.

Set Minimum Price

Aids Business Transparency

Producer Organization’s Involvement – producers vote substantially on issues, like setting standards.

Access to Market

Scalable – systems builds producer organizations to grow effectively.

Producers vote on their Fair Trade premium

FTC weaknesses:

Division among stakeholders.

Market Conditions and Competition at Origin

Financial Literacy – producers need more capacity.

More uniform Trade Standards

It is not enough! – system must do more to improve livelihood and food security

Ed:

GMCR looks to grow Fair Trade stepwise, not too rapidly, to get quality and step with producers to sustainable, manageable levels.

Fair Trade most impactful over the long term, as sudden growth can affect qualify, supply chain relationships, and financing.

FTC producers are quite involved, especially in starting the process for increasing prices.

Joe:

Wants to see stronger producer/farmer voice, and greater assurances for producers benefitting more.

Nasser:

Standards reviews bring in some views of producers, as FLO has responded more in recent years, like with the Quick Entry Price Review.

Joe:

Reciprocity is fair, even when FFL recognizes FLO but doesn’t pay FLO, just like in organics. Reciprocity allows greater access for producers.

Nasser:

Multiple labels and certifications become confusing, so the more unification the better, for brandholders and producers.

Joe:

In organics of the early 1990s, different certifiers developed harmonized standards to allow the industry to grow. I like to think industry (rather than government) could do such harmonization in Fair Trade.

Ed:

It is refreshing to see IMO piggy backing, not recreating same wheel, in accepting FLO certification.

Joe, Nasser:

FLO and FTUSA more focused on marketing than certifying, while IMO is similar to FLO CERT as mainly doing certifying.

Nasser:

FFL and organic certifications cost 12,000 euros in past year for producers and exporters.

FTC certification only cost 8000 euros for producers and exporters – that doesn’t include licensing fee paid by brandholder, equal to 1-2.5% of wholesale sales.

Cost has become prohibitive for small producer groups, unless they are partnered with a brandholder that pays a lot of the expenses.

Ed:

I’m glad that some of the licensing fee goes to producer development.

Joe:

Licensing fee should be optional, above a required audit fee.

Nasser:

Label use for multi-ingredient products does present a problem in cosmetics, where as little as 2-4% of a product can be Fair Trade to use the FTC label. FFL system is OK, as it requires 50% of ingredients to be Fair Trade to use FFL label. Both systems are OK with respect to food products, requiring 50% of ingredients to be Fair Trade to use label.

Ed:

Finance is the biggest issue this year for producers. How do we figure out fair prices in a volatile coffee market moving prices by 10% per day.

Joe:

If the cost of production is not covered by the Fair Trade or conventional price, this must be recognized by all participants and consumers. I’d like to see more effort to establish minimum Fair Trade prices based on cost of production.

Nasser:

Price is important, but terms of trade need more emphasis to clarify, and to set fairly. Advance payment to producer groups is important, like when olive oil is delivered 10 months after the harvest.

FFL requires a premium price above the local market price. This is important to farmers as part of the value of Fair Trade.

Joe:

All of FFL purchases from a certified producer group must be at Fair Trade prices and terms. FTC allows some purchases as Fair Trade, others at conventional prices and terms.

Ed:

GMCR consumers are willing to pay more for Fair Trade, but also because they appreciate the higher quality.

Joe:

Theo doesn’t think our society has a choice to pay lower prices, as the investments to producers and to employees are necessary.

Nasser:
Fair Trade offers a connection from consumers to the human story of producers, but quality needs to stand on its own to justify the consumer price.

I’d like to see unified standards between certification schemes.

Joe:

I call for a collaborative effort to ensure Fair Trade’s integrity, and a unified effort on behalf of producers.

Ed:

I welcome people to send me questions to forward to GMCR’s producers about Fair Trade.

More at Webinar 104 recording.

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