Volume 16 Number 3
Fair Trade Makes Good
01 June 2003
As you reach out for a jar of coffee in the supermarket, you can give a hand to the people who grew the beans, discovers Mary Lean.
You'd be amazed how much difference your decisions in the supermarket can make to small farmers in the developing world.
The choices of western shoppers have made it possible for Mario Hernandez, a coffee grower in Nicaragua, to buy clothes for his family, and for Ugandan tea grower Aloysius Tibyabako to send his children to school. Grandmother Dolora Castillo now has an outside toilet, something previously unheard of in her small banana-growing community in the Dominican Republic. And Miguel Molina Barrantes, who belongs to a cooperative of coffee farmers in Costa Rica, has simply been able to stay in business.
These small farmers owe the upturn in their fortunes to one of the areas of the European economy which is booming-fair trade. They sell their produce to Western importers who guarantee them a fair price-liberating them from the vagaries of world market prices and the stranglehold of middlemen, who often take up to 70 per cent of the export value of a crop.
World sales of products sporting a fairtrade label rose by 21 per cent in 2001. In the UK, their annual retail value hit £63 million in 2002, nearly twice its level in 2000. Over 100 fairtrade products are available in the UK, ranging from coffee and tea, through bananas and mangos, to honey, orange juice and chocolate. In Switzerland, every fourth banana bought has been traded fairly.
The fairtrade movement dates back to the 1940s, when the Mennonite Central Committee in the US started importing products from poor communities. In the 1960s and 1970s 'world shops' opened in many developed countries, selling crafts from the developing world. Parallel with this a 'solidarity market' developed, which gave the politically conscious consumer the chance to support the Sandinistas, for instance, by buying Nicaraguan coffee.
The idea of using trade to promote community development came of age in the late 1980s. In 1986, coffee farmers in the Chiapas region of Southern Mexico asked the Dutch development NGO, Solidaridad, to help them sell their coffee. The world coffee price was so low, and the local middlemen (known as 'coyotes') so rapacious, that the farmers were desperate to find a direct market. Two years later, the world's first fairtrade labelling scheme, Max Havelaar, was launched in the Netherlands. The Belgians and Swiss followed suit in 1990 and 1992, and the UK Fairtrade mark was launched in 1994. Seventeen western countries now have fairtrade labels, supporting some 350 groups of cooperatives in 36 developing
ECONOMY BASED ON TRUST
Robin Murray, the Chair of the 'alternative multinational' Twin Trading, is passionate about fair trade. The non-profit company imports the coffee, cocoa and tea which go into Cafédirect, Teadirect and Day Chocolate, Britain's ground-breaking fairtrade brands. It has been at the cutting edge of alternative trade for nearly 20 years.
Twin Trading was set up by the Greater London Council (GLC) in 1985, in response to requests for help with trade and industry from developing countries. Initially these were requests from governments, but before long the company found itself dealing with the grassroots. When the GLC was abolished by Margaret Thatcher's government the next year, Murray, who had been its Director of Industry, joined Twin Trading's Board.
An academic economist by training, Murray sees fair trade as a model of how the world economy should be run. 'It's a much healthier relationship,' he says. 'We depend on the producers for coffee, they depend on us for the market-it's not just us with the money. And an economy based on trust is so cheap.'
Over the years, Twin Trading has learnt a lot about trust. In 1989, one of its staff, Pauline Tiffin, returned from Mexico with the preposterous suggestion that the company should send £30,000 to a group of beleaguered coffee farmers, who would then send them a container-load of green coffee to sell.
'Pauline told us she thought they could be trusted,' remembers Murray. 'Everyone on the Board said of course we should do it. So we sent the money, backing the view that economics should be more like that. Two months later the container turned up.' They enlisted a coffee trader, and made a decent profit, most of which they returned to the growers.
The cooperative asked them to repeat the process and, as word got around, other cooperatives approached Twin Trading. 'We never turned anyone down,' says Murray, 'but we never took anyone on without Pauline going out there and getting to know them.'
Some 600 containers later, they have only been let down once, when a Peruvian cooperative went bust. Murray and his wife were in Peru at the time, and discovered the problem. 'We travelled with them for three days and in the end they trusted us enough to tell us what had happened. Then we had to assess what was going on. We felt that the two main people involved were entirely trustworthy and committed.' Rather than demanding their money back, and pushing the cooperative further into bankruptcy, Twin Trading decided to help them restructure, and the cooperative-now back in business-are gradually repaying the money.
BRANCHING INTO BRANDS
In 1991, Twin Trading pushed the process one step further-by setting up the fairtrade brand, Cafédirect, in partnership with Oxfam, Traidcraft and Equal Exchange, who all ran shops selling crafts and products from the developing world. In 1993 Cafédirect became the first fairtrade product to break into national supermarket chains. The company has since branched out into tea and cocoa as well, and Twin Trading has helped to set up a fairtrade chocolate company, with its own brands.
Twin Trading handles all the purchasing and importing for these companies. 'About half a million farmers supply us with coffee and tea,' says Murray, 'That's more people than General Motors employs. Once we have adopted a cooperative we continue with them whatever happens.'
The company brings people from the cooperatives over to London, to learn such skills as quality control and tasting. 'One of the things that interests me as an economist is that very small marginal farmers can pick the best coffee because they hand sort it rather than machine sort it,' he says.
Whereas the fairtrade labels, inevitably, set minimum standards for fair trade, a dedicated brand can set its hurdles high. In recent years, when coffee prices have hit a 40-year low, Cafédirect has sometimes paid three times the world price. In 2002, Murray estimates, 46 per cent of Cafédirect's turnover went back to the farmers.
Cafédirect also runs a Producer Support and Development Programme, with a regional office in Mexico. Mexico and Peru are now setting up their own local brands for sale at home, and, it is hoped, in the US. Three producers attend every Cafédirect board meeting, and every two years the company holds a producers' conference with representatives from all the cooperatives involved.
Cafédirect achieved a turnover of £ 10 million last year, and expects to grow by 50 per cent this year. 'It's just motoring, zooming,' says Murray. 'There's a real lift-off in fair trade generally. People see this as one tiny way of doing something about world issues.'
BEST OF THE BEST The Coop chain of supermarkets claims to be the UK's 'leading fairtrade retailer'. It pioneered the import of fairtrade bananas and mangos into the UK and launched the first fairly traded supermarket wine. In March 2000 it was the first supermarket to launch a fairtrade 'own brand'-a milk chocolate bar which ran alongside its regular own-brand range-and has now gone the whole hog, by converting all its own-brand bars of chocolate to fair trade. In so doing, it expects to double UK supermarket sales of fairtrade chocolate in the next four years.
Fair trade has really captured shoppers' attention, says Terry Hudghton, who as head of corporate marketing for the Coop is responsible for the chain's 'responsible retailing'. 'People phone in, write in, email in about it-both existing customers and those who say they will shop at the Coop because of this. We even have Coop members coming into our stores on a voluntary basis to promote our fairtrade products.'
The Coop's own-brand chocolate is manaufactured by Day Chocolate, another of Twin Trading's babies. The company is the first fairtrade company to be partially owned by the producers, a Ghanaian cooperative called Kuapa Kokoo (Twi for 'good cocoa farmers').
In the 1970s and 1980s, Ghana fell from producing a third of the world's cocoa to just 12 per cent. The collapse of cocoa prices, coupled with drought, drove many farmers out of business. In 1992, a group of cocoa farmers approached Twin Trading and with the help of Pauline Tiffin and another of its staff, Dick Day, set up Kuapa Kokoo. 'In its first year 1,000 farmers joined,' says Murray. 'It now had 40,000 members, and has had to set up a new organization to cope with the overflow.'
Day Chocolate was launched in 1998, with Kuapa Kokoo owning a third of the shares, and named after Day, who had died suddenly at the age of 46. When Tiffin and Day first visited the cocoa farmers in 1992-93, one of them told them, 'No one comes to visit us. We are just tree minders.' Now they have a major stake in their own brand, with one Board meeting a year held in Ghana. As well as the Coop chocolate, the company makes Divine and Dubble chocolate, and will soon be launching its brand in the US.
Kuapa Kokoo's motto is Pa pa paa ('the best of the best'). It is made up of village societies, which are run on principles of democracy and transparency. Each society employs its own 'recorder' who weighs and bags the coffee, using accurate scales which can be understood by people who are illiterate. 'Before, we farmers were cheated,' says Comfort Kumeah, who farms in the Ashanti region. 'People adjusted the scales. I joined Kuapa because I saw it was the only organization which could solve some of our problems.' Whereas farmers used to struggle through the lean season, now they can borrow money through Kuapa Kokoo's Credit Union.
The website of the Fairtrade Foundation, Britain's labelling organization, is full of such testimonials. For many, fair trade has been the key to survival. Adolfo and Isabel, a young Costa Rican couple with three children, depend on coffee for 70 per cent of their income. 'If it wasn't for Fairtrade, we would get deeper and deeper into debt,' says Adolfo. 'Some abandon coffee altogether, and then the father goes and seeks work in the city or in a hotel, or in the United States. When that happens, the family is split up.' In spite of its growth, the fairtrade market is not large enough to absorb all the produce which people like Adolfo and Isabel would like to sell. The cooperative they belong to, Coopeldos, still has to sell some of its coffee on the traditional market-at much lower prices.
For the fairtrade movement is, of course, just a drop in the ocean. Ninety nine per cent of the world's 20 million coffee farmers still live at the mercy of the world market and of the 'coyotes'. When you order a cappuccino, only one per cent of its price gets back to the farmer-unless, of course, you patronize a coffee bar which offers you a fairtrade alternative.
And while fair trade undoubtedly benefits the farmers involved, true international justice will require the dismantling of a world economic system which is stacked in favour of the industrialized nations. Cafédirect is now the UK's sixth biggest coffee brand-though its 1.9 per cent of the market is tiny opposed to Nescafé's 59.5 per cent. 'But it's astonishing how the big ones are now having to address the issues,' says Robin Murray. 'Nestle are now emphasizing how ethical they are! What we want to show is that this way of doing things is entirely possible, utterly feasible-and that Nescafé and Maxwell House and the others should do what we do.'
Fair trade has transformed the life of Alfredo Martinez, a banana farmer in the west of the Dominican Republic. As a small farmer, he was unable to sell his bananas for export and had to contend with the uncertainties of the domestic market. Sometimes he couldn't sell his crop at all and his family had to go without.
In 2000, the UK's Fairtrade Foundation made a link between farmers in the two villages of Juliana and Jaramillo and a British importer, Mack Multiples. Martinez's bananas now sell in Sainsbury's supermarkets and he is guaranteed a minimum price throughout the year. 'I'm earning double what I was,' he says. 'Now food at least is secure.'
The 70 members of the Juliana-Jaramillo farners' group, to which Martinez belongs, sell their entire crop to the fairtrade market. This has brought them the benefits of a steady income and a guaranteed minimum price. It has also brought far-ranging changes to the two villages.
As well as the price for their bananas, the farmers also receive a 'fairtrade premium' to spend on community projects. They have used it to bring water to their villages, where families used to have to buy drinking water in bottles or tanks at an estimated 40 pesos a day. Now they only have to contribute 40 pesos a month towards the running and maintenance of the generator and pump.
The premium is also paying for toilets, a clinic and a community canteen, where 200 people can get a midday meal at a low price. The farmers have upgraded the roads, drains and irrigation schemes and have funded uniforms for local schoolchildren and for six children's and adult baseball teams in the area.
The farmers employ 60 workers to harvest, wash and pack the bananas. They are paid above the minimum wage and are enrolled in the local social security system. Martina Valdez, who has worked with bananas for 23 years, says, 'We earn more money and if we have problems, they solve them.' When one of her young fellow workers fell ill, the Juliana-Jaramillo farmers helped to pay for her treatment and kept her on half-pay for the months she was off work.
The export market demands higher standards than the domestic market, and the farmers employ four agronomists to help them meet these. Their fairtrade commitment includes environmental issues, such as clearing up the plastic bags used to protect the bananas on the trees. The agronomists are also promoting the use of organic fertilizers.
'Every day we are working hard to do things better,' says one of the farmers, Angel Regalado. 'The fight is to show that we can organize ourselves as well as the big companies can.'
Did you know that...?
You can buy products with the internationally-certified fairtrade label in Belgium, Canada, France, Denmark, Germany, Finland, Italy, Ireland, Japan, Luxembourg, the Netherlands, Norway, Sweden, Switzerland, the UK and the USA. Swiss shoppers spent the most per person on fairtrade products in 2001, followed by the Dutch. Coffee is the southern hemisphere's most important export after crude oil. Mexico produces the most fairtrade coffee: Germany drinks the most.
70 per cent of the world's coffee and 80 per cent of its cocoa is grown on small farms. Over 150 brands of fairtrade coffee are available in Europe. In 2001, fair trade earned coffee producers $30 million more than ordinary trade would have done. The figure for cocoa farmers was $1 million. Footballs are the first manufactured, non-food products to carry the fairtrade label-assuring purchasers that no child labour has been used and that adult stitchers have been paid a fair wage. To win a fairtrade label, products must be produced in accordance with specific environmental, health and safety requirements. Farmers' cooperatives must have a democratic structure, and plantations and factories must pay decent wages and provide good living and working conditions. The price must cover the cost of production, with an additional social premium, and must be paid partly in advance. Contracts should allow for long term planning.
Sources and useful sites:
www.fairtrade.net (Fairtrade Labelling Organizations International); www.fairtrade.org.uk (Fairtrade Foundation); www.fair-mark.org (Fairtrade Mark Ireland);