A Success story for Producers and Consumers

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JassicaMadision,Switzerland,Researcher
Published Date:04-07-2017
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Prepared on behalf of the dutch association of Worldshops (daWs) Fair Trade Fac Ts & Figures A Success story for Producers and Consumers authors: Mark Boonman Wendela Huisman elmy sarrucco-Fedorovtsjev Terya sarruccoFOREWORD With pleasure i am offering you Fair Trade Facts and Figures The survey n fi ds that most Fair Trade activity takes place in the 2010 it became a sizeable document thanks to the cooperation informal economy with little support from governments The of many persons and organizations Herewith, i want to thank informal economy provides the most employment, outside agri- everyone, because this research would not have been as valuable culture, in all developing countries it is growing as formally as it is now with their contribution employed workers lose their jobs as a result of the global eco- Fair Trade is responsible production and consumption it is a nomic downturn, and have to look for informal alternatives to social and economical development model for companies and earn a living growing awareness of Fair Trade throughout the families that gives them the opportunity to fullfi their basic world and greater visibility and voice for informally employed needs and develop themselves For consumers Fair Trade is a women and men engaged in Fair Trade activities could provide way to consume in a corporate social responsible way that con- an opportunity for governments to cooperate with Fair Trade tributes to the wellbeing of themselves and the producers organizations, learn more about the conditions of informally employed workers and to respond to their needs The prevailing strategic intent of Fair Trade is to: • Deliberately work with marginalised producers and workers The survey shows that awareness of Fair Trade, the principles in order to help them move from a position of vulnerability that it works to and its impact is growing worldwide as pros- to security and economic self-sufc fi iency perity increases for some and middle classes grow, so does the • Empower producers and workers as stakeholders in their market for local Fair Trade Fair Trade shops (Worldshops) are own organizations opening everywhere to provide Fair Trade products to local • Actively play a more substantial role in the global arena consumers with a conscience, there are towns in Brazil, costa when it comes to achieving greater equity in international r ica and ghana participating in the Fairtrade Town campaign trade (FiNe 2001) and FLO initiatives appear in non-Western countries Moreover, consumers are open to even more change global research of Fair Trade used to be a concept of development aid consumers Timothy devinney shows that 54 percent of consumers are willing in the rich countries helped producers in the poor countries by to pay more for Fair Trade or sustainable products TNs NiPO, buying Fair Trade products These days, Fair Trade is a concept a dutch research centre, shows that 55 percent of consumers of sustainable development for producers and a concept of res- want to consume in a corporate social responsible way ponsible consumption given the development in Fair Trade the last years it is logical to add the issue of Fair Trade as intent Fair Trade importers linked to networks of Worldshops were at to create the way to responsible consumption to the list above the forefront of the growth in Fair Trade sales in europe The importers work in partnership with producer organizations to This 6th edition of Fair Trade Facts and Figures demonstrates build capacity, strengthen organizations, improve efc fi iency and that Fair Trade does indeed achieve what it sets out to do understand impact The Worldshops, which sell signic fi antly Working with some of the poorest people in the world, helping more gifts and Living than food products, take part in local them to organise in groups, associations and networks, sup- initiatives to create even more awareness of the need for Fair porting them to build their capacity to make good quality, gifts Trade and trade justice such as those described in this edition and Living products (or grow commodity crops more efc fi iently of Facts and Figures: the Fairtrade Towns Movement, Fairtrade in an eco-friendly way), providing market access, lobbying for Fortnight, World Fair Trade day and Fairtrade Week ofc fi ial recognition of Fair Trade and fairer international trade This research is the r fi st of its kind it should not stop here terms, Fair Trade continues to transform lives for the better i would like to see something less statistical and more ree fl c - Numbers are not huge but they are signic fi ant global Fair- tive in the future i would like to see fewer numbers and more trade certie fi d retail sales of mostly commodity food products, about the reality of producers’ lives impact is not just a matter reached euros 3 4 billion in 2010 The gifts and Living produ- of g fi ures it is about how Fair Trade affects the people, the cers in the south who responded to the survey reported sales organizations and the communities within which it works and in export and local markets of euros 43 8 million This means a what difference it made for the better i would also like to see n fi al retail value of euros 438 million something on the impact of the consumers does Fair Trade This is the r fi st time that the researchers have taken Fair Trade affect their lives? You can see how research raises new issues, producers as a starting point for research and focussed on the but this is helpful, since answering these questions creates a impact Fair Trade has on them Previous editions concentrated new perspective on the future and Fair Trade has the future on the import and sales of Fair Trade in the global North The result is a much richer and more complex piece of work Huub Jansen, director dutch association of World shops source: FLO website, The Other csr – devinney T el al (2006), TNs NiPO – Hoe MVc te bevorderen (2003) 4INTRODuCTION ‘Free’ trade does not necessarily imply ‘fair’ trade existing we discussed what is needed regulatory institutions are not particularly well equipped to in the Fairtrade market at the strike the balance between free and fair trade The World Trade moment We exchanged views Organization often operates as a sort of lobby group against on all elements of power in any infringement on its free trade mandate, governments of particular a new trend seems developed countries apply double standards and primarily to be encouraging for the Fair liberalize those areas of trade in which they have (or hope Trade movement, increased to have) a competitive advantages development aid, then, south-south Fair Trade, where becomes a sort of compensation for the continuation of very southern producers no longer unequal trade relationships Fair Trade however – with its sell solely to consumers in introduction of labels and requirements – can also function as a the North but also sell their barrier to entry for producers in developing countries Within products in local markets or this context it is understandable that developing countries in neighboring countries The timing of this report published plead for ‘trade instead of aid’ as a bargaining strategy this is by daWs, focusing as it does on the impact of Fair Trade on understandable, as a development strategy this reasoning has producers in the south, is excellent Fair Trade develops in a serious a fl ws – not least because no country has ever developed complex and often inimical world, which makes it all the more on the basis of free trade alone The challenge becomes not a important that its protagonists learn from their own experience choice between free or fair trade, but how to search for novel in order to increase the effectiveness of the movement This combinations and novel directions of trade report contributes to that Fair Trade is much more than just an alternative method of trade; it is an instrument for the Three developments are noteworthy: (1) the increasing wil- creation of a better outlook for all of us lingness of bigger developing countries such as Brazil, china, india or south africa to combine trade and development Prof dr rob van Tulder policies (to move beyond the old ‘Washington consensus’ model Academic Director, Partnerships Resource Centre RSM of development), (2) the increasing importance of partner- Erasmus University Rotterdam ships between r fi ms and N gOs to develop new business models that combine free and fair trade (to move beyond the old way of doing business), (3) the growing importance of south-south trade and investment The Wereldwinkels and the Fair Trade movement are part of this movement in some respects they have been actively shaping these developments That does not mean, however, that their position is undisputed Fair Trade is not mainstream yet Novel developments require novel answers to existing problems in the 2010 Max Havelaar lecture, it became clear that the Fair Trade movement has a considerable ethical appeal, but often lacks the power to pursue this This dilemma was framed as follows: Power without ethics is worthless; ethics without power is powerless The challenge we face at the moment is effectively to make use of all the sources of power available (the power of finance, retailers, scientists, NgOs, producers and politics) in order to move from a reactive – hard power – approach towards corporate responsibility to a more pro-active – soft power – approach soft power can be exerted by the power of imagination and ideas (framing) and by the power of working together (partnerships) in a broadcast conversation i had with rob cameron, chief executive of Fairtrade Labelling Organizations (FLO) interna- tional in October 2010 (see; www maxhavelaarlecture org), 5EXECuTIvE SummARY according to the united Nations, 1 4 billion people earn an even though other initiatives have the same intention as Fair income below the international poverty line of € 0,90 (1 25) Trade and claim to trade ’fairly’, they have not met the criteria as per day, while 27% of the population in developing countries defined by FiNe Therefore it is important to set out what Fair live in extreme poverty in the developing world 25% of child- Trade entails and what the qualification criteria are an inte- ren under the age of 5 years are underweight each day, about resting development is that awareness in southern countries 25 000 people die due to hunger related causes, of which is also rising sales do not only occur in Northern countries the majority are children Oxfam mentions that 97% of the anymore, but also locally, even though logos and/or certifica- income that international trade generates benefits the nati- tion are not necessarily used each in their own way, govern- ons that are rich or have a middle income consequently, 3% ments impact Fair Trade on each continent in africa poli- is left for poor countries The world is devastatingly out of tical instability affects trade, in asia producers are worried balance, rendering an individual’s state of well being a lottery about export regulations, although asian governments have ticket to where you are born also helped the industry in south america some governments seem to have certified corporations that have not fulfilled Fair Yet for over 50 years, the Fair Trade movement has been wor- Trade criteria, thus damaging the movement king hard to address the issue of poverty among marginalized producers in the south Paying a ‘fair price’, creating better internal issues, such as dealing with growth, quality con- trading conditions and promoting sustainability enables pro- trol and innovation, also limit the success of the producers ducers to enhance social and environmental standards, thus Northern countries indicate that sales have increased, despite working towards improvement of quality of life in the most the economic crisis coordination between all the Fair Trade disadvantaged villages in the world child labor and exploi- communities and movements is also a challenge Looking tation are tackled, children are able to get education, and back to the past shows some reason for excitement ; the Fair producers can invest in machines, new cultivation and envi- Trade movement began in quite a fragmented way with small, ronmentally friendly production techniques Farmers unite, so unconnected activities and has grown into an organised net- that they stand stronger in their negotiations with companies work with incredible gifts & Living retail sales of € 285 7 mil- and the government, and their knowledge increases in other lion in the Northern countries Obviously this means that the words, producers that participate in the Fair Trade movement Fair Trade exports of southern countries also increased, thus are able to take their future into their own hands But Fair benefiting more people This shows that in the North, Fair Trade is not only concerned about the people in the indus- Trade has become more established Next to the fact that Fair try, Fair Trade also addresses major global challenges, such Trade creates thousands of jobs in developing countries, in as accelerating climate change and worsening environmental africa and Latin america they also specifically target women conditions The WFTO is developing the sustainable Fair Trade for recruitment as producers as a consequence women are Management system (sFTMs), which is designed to transform provided with a paid job and are being empowered any business in its entirety, including all products and servi- ces, into a sustainable fair trading business even though Fair Trade on its own cannot eliminate poverty, it does provide a major contribution to the achievement of this Over the years, multiple success stories have been witnessed goal by providing access to fair working conditions, (export) in combination with research, they reveal the extraordinary markets, higher pay, equal treatment of women and men, and impact Fair Trade has had and still has on the lives of people jobs in disadvantaged positions in recent times awareness among Northern consumers has increased explosively, sales figures have boomed both in the North and in the south, and the number of producers that are member of the World Fair Trade Organisation has increased tremendously These known success stories are often local, aimed at a specific industry such as coffee or cacao beans, or limited statistics are available Therefore, this publication focuses on the impact of Fair Trade, with special emphasis on the impact Fair Trade has on the producers The findings are based on information produced by Fair Trade Organizations from a survey of producers, networks and associations, with a response rate of about 46% 6mETHODOlOGY Objective persons were contacted alongside the institutional contacts to The objective of this research is to provide a comprehensive help with identifying other potentially relevant organisations and up-to-date picture of Fair Trade activities in producing markets around the world Multiple Fair Trade regions exist The questionnaires were sent out in spring 2010 via e-mail worldwide, including the americas, asia, africa, Pacific and due to the way the questionnaires were distributed, we can- europe each of these Fair Trade regions has its own Fair Trade not say precisely how many were received but they should have organisations, such as certifiers, suppliers, membership or- reached around 400 organisations and people This survey ganisations, and associations While previous publications carries on where the five former editions left off, surveys primarily focused on the import and sales of Fair Trade, this which focused on the developments in europe only (except publication aims to take as a starting point the producing for the fifth edition, which included the caJuNz region) Not countries and the impact Fair Trade has on them The Fair all questionnaires were of exactly the same format every type Trade market will therefore be divided into four groups of of organisation received a questionnaire tailored to its specic fi players, being Producers, importers, associations and inter- areas of interest But among the producers, who make up the national Networks largest group of respondents, an important difference exists The questionnaires obtained in africa are different from those This survey was conducted by the Partnerships resource in asia and south-america This is because cOFTa had just center of the rotterdam school of Management on behalf of finalized some similar research, therefore they distributed a daWs, the dutch association of Worldshops, within the scope different questionnaire due to this difference, the informa- of a larger project financed by the dutch Ministry of Foreign tion on trends and developments in africa is derived from the affairs Fair Trade africa Forum 2010, a forum on the opportunities and threats in the african Fair Trade market, since all infor- Scope mation on trends and developments in the different regions is This report concentrates on three categories of products: derived from the questionnaire and these particular questions - goods produced by traditional Fair Trade organisations; were not included in the cOFTa questionnaire However, the - goods imported and sold by traditional Fair Trade organi- remainder of the questions are similar in annex 1 it can be sations (mainly importing organisations and Worldshops) seen which questionnaires were used for each subgroup according to Fair Trade criteria, sourced mainly from small- scale producers; all data obtained via these questionnaires was first evaluated - goods imported and sold commercially with a Fair Trade on both its relevance for the research and how many res- label, indicating that the conditions of trade for these pondents answered, and based on this some questions were products have been approved by an independent organisa- omitted from the research The remaining data was entered tion as meeting their criteria and standards The research in a large data form, ready for analysis The answers that does not include wholesalers and retailers whose claim to were given to the questions in the questionnaire were meti- trade fairly cannot be substantiated through a guarantee culously read and subdivided in categories, or areas of trends or independent monitoring and developments These categories of responses were then summarized for the research also, to provide an indication of method used the relative importance of each category, the percentages of a separate questionnaire was developed for each of the four responses that correspond to the categories were calculated different types of organisation: Three reasons for lack of data in the data form, were resolved • the producing organisations; by entering the reasons for its unavailability: • the importing organisations; N a : Not available (the question was not mentioned in the • the national Worldshop associations; questionnaire) • the international networks themselves N i : Not indicated (the respondent did not answer this question) given that this report has a main focus on the producers, the N r : Not relevant (this question was rendered irrelevant due survey was sent out to organisations identified via the mem- to a previous answer) bership lists of the WFTO regions and then contacted via the regional secretariats of WFTO asia, WFTO europe, WFTO Latino This survey covers 47 countries, 10 from europe plus the united america, WFTO Pacific and cOFTa (cooperation for Fair Trade states, australia and New Zealand This year producers were in africa) in countries with sparse contacts, some private also emailed, which could be found in africa, south america 7and asia The importing contacts could be found in the united formation by a very time-consuming internet-based research states, europe, australia and New Zealand in total there were although a wealth of information is available on the internet, 169 respondents from the producing countries in the south, it is often difficult to get hold of the details which are needed representing a total of 37 countries with a response of 10 for an exercise like the present report information from the from Bangladesh, 1 from Bolivia, 1 from Brazil, 1 from cambodia, questionnaires and the internet was used to write a first draft 3 from cameroon, 1 from central african republic, 1 from of the different chapters, which were then revised against chile, 1 from china, 2 from egypt, 3 from ethiopia, 5 from other available background information, like books and bro- ghana, 1 from Honduras, 2 from Hong Kong, 11 from india, chures, annual reports and product leaflets 5 from indonesia, 24 from Kenya, 1 from Korea, 1 from Laos, 1 from Madagascar, 1 from Malawi, 1 from Mauritius, 1 from Word of caution Namibia, 5 from Nepal, 1 from Nigeria, 2 from Peru, 6 from the as a result of the limited manpower available to many of the Philippines, 31 from rwanda, 1 from sri Lanka, 11 from south Fair Trade organisations which are the subject of this survey, it africa, 7 from swaziland, 8 from Tanzania, 4 from Thailand, is not always easy to acquire up-to-date, accurate, and com- 1 from Timor-Leste, 9 from uganda, 1 from uruguay, 2 from parative figures from the sector Therefore, this leaves room Vietnam and 2 from Zimbabwe From the importing countries for interpretation and estimates of numbers in the North a total of 10 countries were represented with a response of 9 from europe, 1 from the united states, 1 from another source of uncertainty is that den fi itions and catego - New Zealand and 2 from australia ries are not always used very consistently This is often due to the fact that the national situations are very different and that By the end of december 2010 a total of 182 questionnaires concepts easily applicable to mature markets such as switzer- were returned, while around 400 were sent This is a higher land or the united Kingdom may not or hardly be applicable to turnout compared to the year before, although a major dif- countries where Fair Trade is still a relatively young concept ference is that these questionnaires have mainly been sent Bearing these factors in mind, all caution was taken to ensure to producers, while in previous years the questionnaires were that the g fi ures are as accurate as possible in case of doubt, sent to importers The response in 2007 was a total of 80 ques- g fi ures have been double-checked, and when g fi ures from dif - tionnaires out of a total of 306 For the 2005 edition 75 ques- ferent sources varied considerably, the lower of the g fi ures was tionnaires were returned out of 126 sent out and in 2001 there used in order to obtain robust minimum estimates were 59 returned questionnaires out of 76 questionnaires sent a shortage of detailed data makes it difficult to compile pre- On top of the already familiar reasons for not responding (na- cise aggregate Fair Trade turnover g fi ures consequently, multiple mely the high workload of many people involved in Fair Trade counting of the same product cannot always be recognised and the ever-growing number of studies, research projects, etc and taken adequately into account Multiple accounting occurs, in which the organisations are asked to cooperate) another reason for example, when national figures for the turnover of a pro- seems to emerge: many organisations give very extensive and duct might include both wholesaler and retailer figures it detailed information on their websites, sometimes including also happens when sales figures of different importers are annual reports and n fi ancial reports with more than 100 pages added together, if they happen to sell to each other within They may thus feel that all interesting information is already their country or internationally additionally, the literacy rate available, and in many cases they are absolutely right in belie- and the educational level of especially the smaller producers ving so However in many other cases Fair Trade organisations affects the quality of the responses some answers gave the do not divulge much information on their websites impression that the person filling in the questionnaire did not entirely understand the question and occasionally calculation an overview of the organisations which returned the ques- errors were made a degree of caution is therefore necessary tionnaire is given in annex 2 The questionnaires received when it comes to evaluating aggregate turnover figures and back by december 2010 represent 169 producing organisati- interpreting the given figures ons from 37 countries in the south, 9 importing organisations from 6 countries, 6 Worldshop associations from 5 countries The credibility of the Fair Trade movement would be enhanced and 1 international network The information received from if common definitions could be found for the central cate- the questionnaires proved not to be complete and detailed gories (like Worldshop, or active action group) and if data enough to offer a comprehensive picture of the over-all situa- were collected in a systematic and consistent manner by all tion Therefore it has been necessary to complement this in- organisations involved 8Most of the figures presented refer to the year 2009/2010 as the financial year of many organisations does not match the calendar year, “2009” or “2010”, in this context mean the financial year between July 1, 2009 and June 30, 2010 it should be borne in mind that even after the closing of the financial year it will often take between 3 to 6 months before audited accounts are prepared and figures become publicly available data contained in this report reflect the situation in the different countries as per the end of 2010 in the years to come, it would be beneficial if more efforts were made towards improving the quality of data available in the sector Not doing so may very well lead to situations in which poor data becomes a point of serious doubt or criticism of Fair Trade in general 9sec Ti ON 1 The story behind fair trade “Competition is a desideratum in our economic system, but it ceases to serve as an economic good when it becomes unfair. The concept of fair play should not be shunted aside on the theory that competition in any form serves the general good. Only Fair competition does that. Unfair competition is not competition at all in the truest sense of the word.” Schulenburg and Signatrol, 1964 10CHAPTER 1: WHAT IS FAIR TRADE 1.1. WHAT IS FAIR TRADE Fair Trade is a way to help people work their way out of this AND HOW DOES IT WORk? type of poverty, by means of trading according to Fair Trade principles The Fair Trade Principle covering ‘Fairtrade Minimum What is Fair Trade? Price’ ensures that farmers get a fair price for the sustainable in order to present a good overview of Fair Trade, a clear and production of their traded goods (FLO: annual report, 2010), unambiguous definition of Fair Trade has to be given in de- which should increase their business profitability and in turn cember 2001 the main four Fair Trade networks their individual income ‘The Fairtrade Premium’ which is char- F air Trade Labelling Organisations international (FLO), the ged on top of this minimum price, is invested in community former development, such as education and health care Moreover, I nternational Fair Trade association (now World Fair Trade price stability and predictable demand is promoted in order Organisation or WFTO), the former to reduce the vulnerability of developing countries to the N etwork of european Worldshops (NeWs) and the previously mentioned price and demand fluctuations (Fair E uropean Fair Trade association (eFTa) Trade: Benefits, 2010) The elimination of middlemen, usually wholesalers, further increases the profit margins for farmers agreed on the following definition: “Fair Trade is a trading (TransFair usa: content, 2010) partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade it contributes The empowerment of employees working in Fair Trade can to sustainable development by offering better trading condi- mainly be seen in the improvement of working conditions tions to, and securing the rights of, marginalized producers countless employees in developing countries work under ini- and workers – especially in the south Fair Trade organisati- quitous working conditions that often even violate human ons, backed by consumers, are engaged actively in supporting rights Fair Trade aims to improve these conditions through producers, awareness raising and in campaigning for changes fairer labor standards, in terms of a safer work place and a fair in the rules and practice of conventional international trade” wage (TransFair usa: content, 2010) The use of child labor, (FiNe, October 2001) slavery and forced labor is forbidden (WFTO, 2010) “Fair” Intentions But Fair Trade is not only concerned about the people in the The strategic intent of Fair Trade as formulated together with industry, Fair Trade also addresses major global challenges, the definition of Fair Trade in 2001 is to: such as accelerating climate change and worsening environ- - deliberately work with marginalized producers and workers mental conditions (sachs, 2008) environmentally sustaina- in order to help them move from a position of vulnerability ble farming and production practices are actively encouraged to security and economic self-sufficiency; through the avoidance of agrochemicals and genetically Mo- - empower producers and workers as stakeholders in their dified Organisms (gMOs) and by promoting renewable energy, own organisations; terracing, rotation and reforestation challenges such as soil - actively play a more substantial role in the global arena erosion, water shortage and waste management are actively when it comes to achieving greater equity in international dealt with through the enhancement of the sustainability of trade (FiNe, October 2001) The urgency of Fair Trade tillage, irrigation and crop rotation methods (TransFair usa: content, 2010) The elimination of middlemen also plays a These strategic intentions of Fair Trade are proven to be es- role in this area of Fair Trade, since it, together with the aim pecially important when considering that almost half of the to buy locally whenever possible, reduces transportation dis- world’s population, or 2 8 billion people, is living on less than tances and therefore cO2-emissions 2,- (€1,45) a day, according to the World Bank (World deve- lopment report, 2001/2002) This poverty creates many other problems thereby making these people very vulnerable For example, people with a low standard of living are often not able to obtain a loan to start their own business, making it impossible for them to escape the poverty they are facing and even when these people are able to start a small coffee or banana holding it is hard for them to influence, or compete against, the erratic and wildly fluctuating prices on the global markets 11The Dutch Association of Worldshops and its way of 2. Sustainable Trade Relations stimulating Fair Trade importers of Fair Trade products show long term commitment The dutch association of Worldshops therefore tries to encourage to producers, in order to offer them security for a longer pe- the growth of Fair Trade worldwide by stimulating this type of riod of time Patience, support and time is needed to help trade in four ways: these producers to develop a profitable and secure business (daWs, 2010) 1. producing products in a respectful way, for people as well as the environment; 3. Support in product development and in ways of doing business 2. maintaining sustainable trade relationships; Next to the security that long term trade relations offer to the 3. offering support in both product development and in ways producers, support and advice is necessary as well daWs tries to conduct business; to encourage importers to help producers by advising them, 4. enhancing transparency of the Fair Trade market (daWs, 2010) providing them with extra credit, or mediation Furthermore producers are provided with information about consumers in 1. Respect for both people and for the environment the West, so that they are able to meet consumer demand and according to daWs, products have to be produced and traded are able to explore new markets By working with producer in a way that is respectful towards both humans and the envi- organisations the goal is to make producers independent to ronment daWs does this by aiming for honest supply chains, such a degree that they are able to sell outside of the Fair by means of the empowerment of women and the absence of Trade channels as well (daWs, 2010) discrimination due to race, sex or religion Producers have to provide decent working conditions Workers must be free 4. Transparency of the supply chain to join labor organizations such as Trade unions activities daWs cooperates with importers in the Netherlands, who act needed to produce fair products must not represent a heavy on behalf of the Worldshops These importers meet the re- burden on society and child labor is prohibited children can quirements of Fair Trade in order to make sure that all trade take part in the production process, but only in voluntary, happens in a fair manner, transparency of the supply chain minor roles, and only in addition to school and play Further- is very important all partners in the fair supply chain offer more, producers and their employees should get ‘fair’ wages transparency in their way of trading and conducting business and should get a ‘fair’ price for their products, which makes This transparency and openness characterizes the fair supply it possible for them to make a proper living, based on local chain (daWs, 2010) standards daWs researches and checks this by visiting produ- cers all over the world (daWs, 2010) 12Fair Trade according to the WFTO The World Fair Trade Organisation sets standards that are comparable to daWs’ Fair Trade requirements The ten WFTO Fair Trade principles that Fair Trade Organisations must follow in their day-to-day business and that are monitored by the WFTO are the following: 1 creating opportunities for economically disadvantaged producers by helping them to move from income insecurity and poverty to economic self-sufficiency and ownership by means of Fair Trade; 2 The organisation has to be transparent in both management and commercial relations and has to be accountable to all its stakeholders employees are involved in the decision-making processes and information is open to all partners in the supply chain; 3 relations with Fair Trade partners are based on solidarity, trust and mutual respect The organisation com- municates effectively with its producers and does not maximize profit at their expense instruments such as interest free pre-payments can be used; 4 The items are traded for a fair price, that has been agreed upon mutually by all partners a fair price also includes fair pay for the producers, and equal pay for equal work by men and women; 5 The organisation adheres to the uN convention on the rights of the child, and national/local law on the employment of children any involvement of children in the production of Fair Trade products (including learning a traditional art or craft) is always disclosed and monitored and does not adversely affect the children’s well- being, security, educational requirements and need for play; 6 The organisation does not discriminate in hiring, remuneration, access to training, promotion, termination or retirement based on race, caste, national origin, religion, disability, gender, sexual orientation, union member- ship, political affiliation, HiV-status or age, and provides opportunities for women and men Furthermore, special health and safety needs of pregnant and breastfeeding women are recognised and taken into account; 7 Working hours and conditions are safe and healthy and comply with national and local laws and iLO conventions; 8 The organisation helps its employees and its members to develop their skills and capabilities, such as manage- ment skills, production capabilities and access to markets; 9 The organisation raises awareness of the aim of Fair Trade and of the need for greater justice in world trade through Fair Trade, by means of honest advertising and marketing techniques; 10 The organisation tries to maximize the use of raw materials from sustainably managed sources in its ranges, buying locally when possible, and tries to minimize its impact on the environment (WFTO, 2009) in chapter 1 4 the requirements products have to fulfill before using the Fair Trade logo will be discussed 131.2. NORTH vERSuS SOuTH dutch citizens who started to realize that their luxury came at the cost of human suffering elsewhere (aram, 1985) in the The common division of North versus south is often used in 1950s, an alternative approach to the opposing ideas of a free the Fair Trade industry North represents the developed markets, or regulated market arose The concept was called alternative whereas south represents the developing markets in Fair Trade and was sustained by the argument that international Trade the south is furthermore the producing side of the Fair trade can be beneficial to developing countries as long as it is Trade supply chain; this is where most Fair Trade products performed in an honest way if successful, improved trading originate in this report, the south is seen as consisting of conditions for farmers and workers in the developing world three continents, africa, asia and south-america each of would accelerate economic growth and subsequently be a so- these continents will be discussed separately in each chapter lution to poverty Many Fair Trade initiatives originate from The North on the other hand, represents the consumer side this period, such as Ten Thousand Villages (formerly self Help of the supply chain and forms the main market for Fair Trade crafts) in the united states, which started buying needlework products However, as will be discussed in chapter 4 2, a new from Puerto rico in 1946, and serrV international who be- trend is slowly arising: it is no longer only the Northern coun- gan to trade with poor communities in the south in the late tries who buy Fair Trade products, local Fair Trade sales in the 1940s in europe Oxfam uK started to sell crafts made by chi- south are increasing as well nese refugees in Oxfam shops, in the late 1950s Oxfam also set up the first alternative trading company, Oxfam Trading, in 1964 1.3. FAIR TRADE: WHERE IT All STARTED The Netherlands played a significant role in the development Where free trade has been the most common form of trade for of alternative Trade in 1959 the importing organisation sOs centuries, along with protectionism and planned economies, Wereldhandel (now known as Fair Trade Original) was founded Fair Trade is a relatively new concept Free trade characterizes Other dutch third world groups began to sell cane sugar with most of the developed markets and is seen by many people the message: “if you buy cane sugar you give people in poor as being beneficial for all unfortunately free trade is sub- countries a place in the sun of prosperity” The same group ject to market failures as well, such as price discrimination opened the first Worldshop in 1969 (eFT a, 2006) according Free trade is not necessarily beneficial for all and might even to the european Fair Trade association (2006), these shops lead to unfair trade at times examples of this are people have played a crucial role in the development of alternative who cannot afford to pay market prices and people for whom and then Fair Trade in 1988 the Max Havelaar Foundation the entry barriers are too high and remain too high Protecti- for fair coffee was founded, named after the key character in onist methods such as trade tariffs, trade quota and subsidies Multatuli’s ‘Max Havelaar’ (Max Havelaar, 2011) enhance this effect Free trade supporters argue against Fair Trade by claiming that Fair Trade will in fact hinder fair com- during the same period, many Non-governmental Organisations petition by offering the incentive of overpriced products to and motivated individuals in the south started Fair marke- enter the Fair Trade market The high price will attract a larger ting organisations which would provide advice, assistance number of producers to the market, leading to an oversupply and support to disadvantaged producers These organisations of goods, which will eventually lead to lower prices in the established partnerships with the new organisations in the non-Fair Trade market But where free trade places its faith in North, in order to fight for greater equity in international the self-correcting abilities of the market for the good of all, trade (eFTa, 2006) Fair Trade points to the marginalized producers who are left behind, and advocates an active policy to improve their lives Fair Trade also managed to attract attention at international political fora debates between the North and the south on Tracing Fair Trade back to its origins, one of the first well- the “New international economic Order” were already taking documented expressions of dissatisfaction with the free tra- place (uNcTad, 2002) in 1968 uNcTad (u nited Nations con- de system came from an assistant resident employed by the ference on Trade and development) adopted the ‘Trade Not dutch east indies, eduard douwes dekker under the pen name aid’ approach, which was considered to be more efficient of Multatuli he wrote a book in which he criticized colonial and fair than providing development aid to the south (eFTa, politics, titled ‘Max Havelaar: Or The coffee Houses Of The 2006) Other agreements of uNcTad in the same period en- dutch Trading society’ (Zook, 2006; douwes dekker, 1860) compassed the stabilization of international prices of export With this book, Multatuli managed to create awareness among products crucial for developing countries (uNcTad, 2002) 14From that period onwards Fair Trade has primarily been as- 4 Logos: a logo is a purely graphic image or emblem that re- sociated with development trade and grew as a response to presents a certain certificate and/or a certain brand When poverty and disaster in the south at that time Fair Trade a Fair Trade organisation belongs to the WFTO brand for mainly consisted of the marketing of craft products european example, this organisation can make use of the WFTO logo; NgOs assisted in establishing southern Fair Trade Organisati- 5 Labels: a label is attached to a product and serves the aim ons that organized producers and production, provided social of product identification in Fair Trade this means that services to producers and exported to the North Part of this when a product carries the Fairtrade label, it has been able activity was actually solidarity trade (eFTa, 2006) to meet all the Fairtrade standards and has been certified as a Fairtrade Product 1.4. CERTIFICATION AND lOGOS WFTO members use the WFTO logo on printed items and on their websites, whereas there are only a few producers of Why make use of certification and logos? food, members of WFTO and license holders, who can use the Fair Trade can have many different meanings: cOFTa in africa FLO label for example, is really trying to make the entire supply chain fair, whereas others only look at the final production steps True Fair Trade products from True Fair Trade Organisations cOFTa makes sure that all the raw materials have been traded Many different Fairtrade certification and labelling organisati- in a fair manner and come from producers in developing coun- ons exist worldwide, but only some are recognised by daWs as tries in addition, there is also a difference in the focus of the actual Fair Trade The Worldshops in the Netherlands therefore initiatives The WFTO regions, including cOFTa, focus on non- only work with FLO labeled products or with products supplied food products, collectively referred to as ‘gifts & Living’ Very by dutch importers that have been certified by daWs There few producer members of the WFTO produce food products are two ways in which daWs can ascertain that all its products FLO on the other hand, focuses on food products; most of are a hundred percent Fair Trade: its certified producers are farmers who grow commodity crops 1. By using the Max Havelaar certificate such as coffee and tea a few are cotton growers This well-known Fairtrade quality mark (with the FLO-lo- go) only trades products that meet the international Fair- in the Fair Trade industry it is therefore essential that Fair Trade trade criteria at the moment, Max Havelaar is expanding which has actually been produced in a fair manner and meets from mainly food products such as bananas and coffee, to all the requirements, can be distinguished from products that products such as cotton and rubber The criteria for each claim to be fairly traded The customer needs to be sure that product group are different, because production and trade the products they buy are 100% Fair Trade products certic fi a - are different for each daWs trusts the quality mark of Max tion is a way of ensuring this authenticity and credibility Havelaar; this also prevents unnecessary double checking of products Certificates, brands, marks, logos and labels 2. DAWS’s system of recognition and control Before explaining the way Fairtrade certification works, it is Because many products in the Worldshops, such as scarves important to provide the different definitions that one might and jewellery, do not belong to the Max Havelaar quality come across in the Fair Trade industry in this industry, as in mark, daWs developed its own system of recognition and most industries, one can distinguish between: control The production of many of these non-food pro- 2 Certificates: an organisation has received a certificate, ducts is so different, that it is impossible to develop a after having been able to meet the requirements and separate standard for each product dutch importers of standards set by the Fair Trade organisations, This has Fair Trade therefore have to go through a recognition pro- been tested in a formal procedure during which an ac- cedure, in which the importer has to prove that it imports credited or authorized person or agency assessed and ve- by means of Fair Trade rified the attributes, characteristics, quality, qualification, or status of the organisation and its goods or services, The labelling and certification standards of two of Fair Trade processes and procedures; organisations, FLO and the WFTO, will be discussed in order to 3 Brands/Trademarks: a brand represents the identity of a provide an idea of the meaning of Fair Trade Labels Numerical business or organisation and can take many forms, such as a information on the use of logos, the ease of compliance and slogan, words, a specic fi color combination, symbol or sign the reasons why producers in the south do not to use the When a brand is legally protected, it is called a trademark; logos also can be found in this section 15The WFTO mark and logo explain their adherence to the ten WFTO Fair Trade principles The WFTO mark and logo is not a product label; it is only me- in these reports, the organisations have to answer numerous ant for organisations that demonstrate a 100% commitment questions and have to provide supporting evidence, such as to Fair Trade in all their business activities it can only be used annual reports, records of payments to producers and em- by monitored WFTO Members and shows that an organisation ployees and strategy and action plans The reports are subse- follows the ten WFTO principles as mentioned in chapter 1 1 quently checked by WFTO’s monitoring department, who provi- Organisations carrying the logo distinguish themselves from de the organisations with feedback Both the self-a ssessment conventional commercial as well as other Fair Trade busines- report and WFTO’s feedback are then checked by an external ses, and provide a clear signal to retailers, partners, govern- Fair Trade expert and receive a score if the organisation sco- ments and donors that the organisations’ core activities are res high enough, it will be admitted to Fair Trade status and conducted in line with Fair Trade principles (WFTO, 2011) The may use the WFTO logo to brand their organization as a Fair producers who are awarded this logo make products that are Trade organisation of the gifts & Living type, i e non-food at the moment, the WFTO is developing the sustainable Fair FLO Trade Management system (sFTMs), which is designed to in order to become certified as a Fairtrade producer orga- transform any business into a sustainable fair trading busi- nisation of FLO, producer organisations need to go through ness The difference between this and previous initiatives is an elaborate inspection and several audits These inspections that the sFTMs applies to an entire business and to all its and audits are done by FLO-cerT, a separate company, that products and services This makes it possible to overcome the belongs to FLO FLO-cerT checks compliance with the Fair- barriers created by FLO’s system, which is actually meant for trade standards, in order to ensure that relevant social and commodity products, and helps producers in local markets environmental standards are met and that producers receive where no national labelling initiatives licensed to issue the the Fairtrade Minimum Price and Premium Fair Trade label exist (WFTO, 2010) FLO-cerT’s qualified auditors are usually based in the coun- The FLO Mark and Label tries and regions where they work and are familiar with local The Fairtrade certification Mark of FLO is a product label pri- cultures, languages, and legal systems Because it is impos- marily intended for use on product packaging This label can sible for these auditors to visit every single farm, especially mainly be found on commodity products, such as bananas, when it comes to large producer organisations encompassing cacao, coffee, cotton, sugar, wine, fresh fruit, honey, juices, hundreds of farmers, FLO-cerT uses a ‘group certification’ mo- rice, spices and herbs, flowers and gold commodity products del This model includes the audit of the producer organisa- need to be a hundred percent Fairtrade, in order to be able to tion itself as well as a random check of representative samples carry the Fairtrade label For composite products consisting of of individual farmers These audits can take from a period of multiple ingredients, such as a bar of chocolate, at least 50% four days up to a period of six or seven weeks for the largest of the volume of liquid composite products must be Fairtrade cooperatives after the audit, a report is sent to FLO-cerT certified For all other composite products the significant in- for evaluation, where the decision to certify is taken by an gredient (for example cocoa in chocolate, sugar in conserves) independent certification committee When an organisation must be Fairtrade certified, and must be at least 20% of the meets all standards, it will receive its initial Fairtrade certi- products’ dry weight (Fairtrade international, 2011) fication annual inspections are held however, to ensure that companies continue to trade in a fair manner Only when an The Certification Process organisation has shown exceptionally good behaviour over a The WFTO and FLO use different certification processes becau- number of years, will these inspections only be held once se they focus on different types of products, WFTO certifying every three years (FLO-cerT, 2011) gifts & Living while FLO certifies food also, whereas WFTO mainly uses self-assessment, FLO uses external audits and in- Actual usage of certifications and logos by producers spections Both certification processes will be discussed be- Based on the returned surveys, we can see that from the 111 low respondents in africa only 30 make use of the WFTO logo, which is 27% (see Figure 1 1) The question concerning the WFTO usage of the fair trade label was not incorporated into their Organisations that wish to obtain membership of the WFTO, survey in total 11 producers chose to use another logo (see are required to write a self-a ssessment report, in which they Figure 1 2) The producers were allowed to give more than 16one answer to the question why they did not use the WFTO arena’s, the european union and some member states and in logo The main reason why they do not use it is because they the international Organisation for standardisation (isO) are not Fair Trade certified secondly, they do not know how (see Figure 1 3) Those that make use of another logo, mainly European Union: in 2006 the european Parliament issued a make use of their own logo (see Figure 1 4) r esolution on Fair Trade and development in which it explicitly recognized Fair Trade, its definition, principles and systems Of the 51 respondents in asia, 34 producers make use of the The Parliament also noted that there is no legal protection of WFTO logo, which accounts for 67% (see Figure 1 5) 9 pro- Fair Trade and that there is a risk therefore that the concept ducers make use of the Fairtrade label and 17 producers make may be abused by companies entering the Fair Trade market use of another logo (see Figure 1 2) The main reason why they in the same resolution the european Parliament also noted do not use the logo is ‘other’, indicating that they have dif- that some member states had started legislative processes to ferent reasons than the ones mentioned unfortunately ‘other’ regulate the use of Fair Trade and the criteria for Fair Trade was often not filled in The second evident reason is once organizations in view of all this the european Parliament again because they are not Fair Trade certified However, in urged the european commission to issue a recommendation asia the number of producers that do not know how, that find on Fair Trade as a light form of non-binding legislation The it too expensive and those that do not find it necessary for member states concerned were France, Belgium and italy in their business, are equal (see Figure 1 3) The producers that all three countries the Fair Trade movement was involved in make use of another logo, either make use of their own logo the legislative process and hoped for some form of protection or of the FLO label (see Figure 1 5) of the Fair Trade concept at the european level the Fair Trade movement via the Fair Trade advocacy Office in Brussels sup- in south america all 7 respondents make use of the WFTO ported the idea of a recommendation while at the same time logo in addition, one of them also uses the Fairtrade label declining stronger binding european legislation, because of and 2 of them make use of another logo (see Figure 1 2) The the risk of over-regulation and no longer having a proper say other two logos they use are Minka Fair Trade logo and Fsc in the further development of Fair Trade When the producers were asked whether they thought it was Outcome: in 2009 The european commission issued a commu- easy to comply with the Fair Trade standards, between 14% nic ation on Fair Trade (cOM(2009)215 n fi al) and other assurance and 18% of the asian and south american producers answe- schemes, recognizing the work done by the Fair Trade move- red ‘yes’ For african producers that answer doubled to 31% ment in setting up robust and credible certification and ac- (Please do take into account the difference in the number of creditation Fair Trade systems and recognizing the definition responses, which might partially explain this difference ) in of Fair Trade as defined by the Fair Trade movement The com- asia 76% of the producers thought it was not easy to comply mission did not go as far as issuing a recommendation on with the Fair Trade standards, compared to 14% in africa and Fair Trade, one of the reasons being that it did not want to 29% in south america Both in africa and in south america give Fair Trade such a separate position in respect of other slightly above 50% of the producers decided not to answer assurance schemes/ethical initiatives Political developments this question (see Figure 1 7) halted the Fair Trade legislative processes in italy and Belgium, but in France a law on small and medium enterprises was The future of Fair Trade and Fairtrade certification adopted and published in 2005 containing a section on Fair as a voluntary and private system Trade (art 60) under this law Fair Trade Organisations and Fair Trade has been developed by civil society organizations Fair Trade systems can be officially recognised a commission as a different trading model in which trade is used as a tool on Fair Trade was established in 2010 for this purpose Outside for development The voluntary and private character of Fair europe, Brazil adopted a law on Fair Trade and solidarity trade Trade has also made possible a real ownership of the Fair Tra- in 2010 The Brazil law a o provides for an accreditation system de concept by the Fair Trade movement and its constituents, for Fair Trade certification especially producers The rapid growth of Fair Trade since the 1990s and the simultaneous appearance on the market of a International Organization for Standardization(ISO): isO was growing number of other initiatives that call themselves ethi- established in 1947 to facilitate the international co-ordination cal or fair however has raised the question in public fora if and harmonization of standards it is a non-governmental some form of regulation or protection of Fair Trade would private body with 163 national standard bodies as members be necessary The debate has mainly been pursued in two isO’s raison d’être at its inception was creating technical pro- 17duct standards, but with the advance of globalization and baseline for (corporate) social responsibility Because of its economic liberalization in the 1980s isO first moved into qua- non-certifiability isO 26000 however also carries a real risk lity standards, then into environmental management systems of non-verifiable claims and thereby of market confusion de- in the 1990s and in 2001 the isO committee on consumer pending upon market uptake and quality of implementation Policy (cOPOLcO) started preparatory work on social respon- either way isO 26000 will impact Fair Trade and Fair Trade sibility The development of a guidance standard on social markets responsibility (isO 26000) was officially started in 2004 and completed in 2010, in 2007 also a proposal for developing an ISO Fair Trade initiative: The cOPOLcO-meeting in 2007 isO standard for Fair Trade was tabled in cOPOLcO in both adopted a resolution establishing a fact-finding process to instances (isO 26000 and isO Fair Trade) consumers interna- better understand the potential for problems associated with tional (ci) was a driving force behind the initiative against inaccurate and unreliable claims before taking decisions on the background of the consumer right to be informed and the possible development of an isO standard as a follow- preventing the risk of consumer confusion up an ethical Trade Fact Finding Process (eTFFP) was set up with the aim of finding solutions to reduce the potential for Outcome: isO 26000 was published in November 2010 as consumer confusion created by inaccurate and unreliable the new isO-standard on social responsibility for use by all ethical claims and thus building up consumer confidence in types of organizations, regardless of their location or size isO purchasing ethically traded products and services The Fair 26000 is not meant for certification, but provides guidance Trade movement took an active part in the eTFFP The Final on identifying social responsibility issues relevant to an or- report ‘assuring consumer confidence in ethical Trade’ was ganization and implementing social responsibility isO 26000 issued in september 2010 Main recommendation was the de- gives an almost encyclopedic overview of the different as- velopment of a minimum requirements document for ethical pects of social responsibility even though it is non-certifiable trade (instead of Fair Trade) such a document could be deve- isO 26000 has the potential not only of introducing more loped either by iseaL , the umbrella organization for global companies to social responsibility and thereby improving environmental and social standards of which both FLO and overall performance in this respect but also of providing a WFTO are members, or by isO 18CHAPTER 2: TRENDS AND DEvElOPmENT This chapter discusses trends and developments in the Fair 3. Climate change Trade sector This also includes the challenges and opportu- The issue of climate change greatly affects the production nities ahead for players in the market The findings in this capacity of Fair Trade producers, especially the ones that are chapter are mostly based on information obtained via the active in the food businesses some Fair Trade producers have questionnaires (see annex 3) and complemented with addi- initiated actions to respond to this external threat, but ef- tional data found in official reports Firstly, the trends and forts need to be scaled up This might involve changing pro- developments in producing countries are discussed, and sub- ducts offered, but also cooperation among producers to do sequently, those in consuming countries their bit in mitigating the effects of climate change 4. Market access 2.1. SOuTHERN COuNTRIES compared to the high growth of asian and south-american countries, the expansion of Fair Trade in african countries Producing countries are subdivided into three continents: af- is slow This can be explained by the absence of producer rica, asia and south-america On all continents awareness was organisations that are effectively organized Many african identified as an area of trends and developments This will be producers now rely on private exporters as a result, profits discussed separately in chapter 4 2 The remaining trends and on exports are lost ( and these are usually higher than profits developments are discussed per continent on domestic production) some initiatives are taken to im- prove this For example, in Tanzania, the Tanzanian Network Africa for Fair Trade was established to link local producers to global Next to awareness, four main areas of trends and developments markets were identified in the african countries: 1 internal issues; Asia 2 Labelling; Next to awareness, eleven areas of trends and developments 3 climate change and were identified in the a sian countries: 4 Market access 1 government policies; 2 Macro-economic variables; 1. Internal issues 3 Labelling; internal issues currently at play involve the necessity for bet- 4 Markets served; ter financing, greater empowerment of producers, and more 5 Marketing; capacity building small scale producers often run into pro- 6 Products; blems as lenders require proof of stability and because access 7 external relations / value chain; to continued financing is paramount in building a competitive 8 cause; business, both producers and other players in the Fair Trade 9 Original ideas; network will have to improve this also, producers should be 10 internal issues and empowered more to increase their competitiveness This has 11 other to do with improving their access to information and helping them develop their business skills which are so important in 1. Government policies remaining competitive different support systems and strate- some respondents indicated that they were worried with the gies are currently available for increasing producer capacity, growth of neo-liberalism in politics and the resulting lack of but more needs to be done to align these concern for poor people Others worried about the effects of political instability on their operations government policies 2. Labelling were seen to both contribute to and deteriorate their busines- companies in south africa and Kenya have started using labels ses’ profitability Tax breaks, loose regulation and government on their products, but in general, africa is underdeveloped help in cluster development were positive developments, but in this area The year 2009 saw a great increase in Fairtrade some export regulations are considered to inhibit trade Over- certie fi d producers This provides an immense opportunity to all, government is seen to increase its presence in the sector, Fair Trade players in the region Producers indicate a need for which they consider a good thing streamlined and simplie fi d certic fi ation standards This, com- bined with the creation of a Fair Trade movement in africa could 2. Macro-economic variables greatly enhance the competitiveness of Fair Trade producers several macro-economic variables such as currency rates and 19the global economic crisis are seen as strong challenges to takes place is among producers who organize themselves in business profitability No particular sales growth is indicated, networks or other forms of cooperation sometimes these net- but the respondents do identify an enormous opportunity in works are said to be very effective, but many respondents market growth an increase in competition with mainstream indicate that these cooperative efforts need to be improved producers is identified The effects of this are magnified by the fact that high resource prices force up prices, while cus- 8. Cause tomers demand low prices some Fair Trade organisations indicate that they have plans to increase the amount of effort they put in to the cause they 3. Labelling are working for These causes differ considerably among the With the exception of chinese companies that are not allowed respondents, but to give some examples: some want to create to carry Fair Trade certification respondents in all countries more opportunities for rural women, others want to engage identify an increase in the use of labelling some countries in community development activities and, again, others just develop their own label, and others join existing label initi- want to make their businesses more accountable atives Notable is the high number of respondents indicating that they wish to work with the sustainable Fair Trade Ma- 9. Original ideas nagement system (sFTMs) a plethora of original ideas have sprung up in the sector several examples are the establishment of bazaars, Fair Trade 4. Markets served networks, forums, conferences and business associations, but even though the majority of customers is Western, a big also an increase in advocacy efforts or the creation of a fran- change in markets served is witnessed by the respondents chise plan Because of the global economic crisis and the relative growth of asian countries, a local middle class has come into being, 10. Internal issues which provides the Fair Trade sector with new opportunities almost all Fair Trade organization respondents mention the More and more sales are local, which is reflected in the gro- effect of internal issues of all kinds, now and in the future wing number of Fair Trade shops that are established Ho- some internal issues are related to organizational growth, wever, these local customers’ wishes are different from Wes- when they start having to deal with managerial and admi- tern customers’, which poses challenges to the sector some nistrative issues that they haven’t faced before, such as qua- respondents also indicate that they are expanding into new lity control Others are about getting the right resources for markets internationally the right price This has proven more difficult over the years seasonality of demand raises difficulties in providing year 5. Marketing round work to artisans relatively little attention has been paid to promotional acti- vities in the sector, but it seems this is changing slowly some 11. Other respondents indicate that they have scaled up marketing ef- some respondents provided this research with other insights forts and use Fair Trade as a promotional tool However, this These include the customers seeming to want to know more is still a challenge for many respondents about the products they buy; improving communication wit- hin the sector and, owing to urbanization and industrializa- 6. Products tion, a declining number of people in villages have handicraft Many respondents indicate that demand has grown considera- skills bly for sustainable, natural, green and eco-friendly products The quality of the products has become better over the years Figure 2 1 in section 2 depicts the percentage of responses as well The WFTO is now developing a label and control sys- for each area of trends and developments, to see their relative tem for gifts & Living (non-food) This might enhance market importance to each other access for non-food products another trend in products is the increased use of recycled materials 7. External relations / Value chain some respondents indicate that they are trying to improve relations with customers abroad to increase their presence in those markets But the main area in which development 20South-America 3. Labelling Next to awareness, eight areas of trends and developments also on this continent there is growth in the use of labelling were identified in south-american countries: some respondents indicate that they are using FLO or sFTMs 1 cause; certification and a Bolivian organisation states that the coun- 2 external relations; try has started its own Fair Trade label 3 Labelling; 4 Markets served; 4. Markets served 5 government policies, The respondents indicate that several initiatives exist that 6 Products; further increase sales in local markets They also say that they 7 Original ideas and continue to search for new markets, even though no potential 8 internal issues new markets are mentioned 1. Cause 5. Government policies several respondents indicate that there are problems within On the one hand, governments are said to be increasingly in- the sector when it comes to the cause Fair Trade competes terested in Fair Trade practices which the respondents consi- with the seal of social responsibility and some people claim der to be a good thing On the other hand, one government is that the principles of Fair Trade are applied corruptly which is accused by one of the respondents to be certifying enterprises distorting the image of Fair Trade More honesty, transparency that do not fulfill Fair Trade criteria which damages the move- and justice is needed ment another example of interference is the us government’s requirement for safety certification for toys 2. External relations Producer organisations are organizing themselves more and 6. Products more in partnerships with related organisations and each One respondent indicates that they are researching the pos- other The WFTO is gaining ground in this continent sibility of entering the Fair Trade food market 7. Original ideas all indicated ideas that were outside the normal area of ope- rations and had to do with participation in international fairs or exhibitions, or the creation of partnerships with other pro- ducer organisations also, in the region, there is a focus on the issue of cultural identity a few years ago a proposal was made to the WFTO for a cultural identity standard and an in- ternational photography contest was held on the issue 8. Internal issues Many internal issues were mentioned by the respondents some examples are: plain survival after years of deficits, the construction of a new headquarters, the creation of a distribu- tion centre in the united states and one organization wants to re-organize itself in a more economic way Figure 2.2 in section 2 depicts the percentage of responses for each area of trends and developments, to see their relative importance to each other. 212.2. NORTHERN COuNTRIES additionally, Ten Thousand Villages indicated location to be a major opportunity due to the limited number of responses, this section of our re- port on consuming countries is not subdivided per continent 3. Labelling This section comprises information on europe, North-america a large growth in FLO labelling is noted by the respondents and Oceania combined One respondent states that FLO labelling is a legacy of the colonial system and a major challenge is to replace it with Next to awareness, (discussed in chapter 4 2), five areas of something more equitable trends and developments were identified: 1 Macro-economic variables; 4. External relations / Value chain 2 internal issues; a growth in the number of Fair Trade communities and the 3 Labelling; Fair Trade movement in general is noted by the respondents 4 external relations / value chain and a main challenge, however, is how to organize these organisa- 5 Other tions so that they work together efficiently There is also said to be a high number of importers, which makes cooperation 1. Macro-economic variables difficult The number of outlets is growing, but the challenge sales growth differs widely among the respondents Where some is to get more products into the wholesale market in the consider it to be strong, and see an increase in their outlets, area of external relations, respondents indicated the need to others feel the economic crisis has hurt their sales growth The get involved in international movements such as the global economic crisis, the high price of raw materials and increasing environmental education movement involvement of private r fi ms in the market are considered to be posing a challenge to the prot fi ability of Fair Trade shops 5. Other One respondent indicated that FLO and WFTO should consi- 2. Internal issues der the possible implications of climate change on Fair Trade The respondents indicate it is difficult to meet the wishes of practices a consumer Their preferences are not always in line with what is produced and they demand low prices One respondent Figure 2.3 in section 2 depicts the percentage of responses for indicated a decline in demand for handicrafts; another poin- each area of trends and developments, to see their relative ted to the need for more product design and development importance to each other. 22