29 June, 2016

6 things people get wrong about Fairtrade

Fairtrade bananas 6 things blog
by Patrick Say, Fairtrade Foundation

Most people are familiar with Fairtrade, so why do the same misconceptions about what it is and how it actually works keep cropping up?

We’ve all heard them. The mate in the pub who sagely informs you that Fairtrade doesn’t really help farmers, that it’s a marketing scam designed to get people to pay more for basic products or to ‘make middle class people feel better about themselves’.

Anyone following the claims made by both sides during the EU Referendum would agree that sweeping unqualified statements are not exactly in short supply at the moment. But it would be unfair and inaccurate to dismiss all those questioning the way Fairtrade works as tin-foil hat wearing types. With a lot of seemingly contradictory information out there about Fairtrade online and falling consumer trust in brands and traditional advertising, it can be difficult to discern fact from fiction.

I work in the Fairtrade Foundation’s Digital Team and over the last five years I’ve often seen the same misconceptions and inaccurate generalisations about Fairtrade crop up online. Here’s a rundown of some of the most common we encounter:

Myth 1: "Fairtrade products are more expensive"


A range of Sainsburys Fairtrade products

Are they though? The range of Fairtrade products is now huge, with over 5,000 Fairtrade certified products for sale in the UK, many of them supermarket own-label or inexpensive mainstream brands. Long gone are the days of Fairtrade products being the obscure and expensive preserve of 'yogurt eating vicars'.

All major supermarkets now have Fairtrade own-label tea and coffee ranges - Taste the Difference, Essential, Co-op 99 tea, Finest and Sainsbury’s iconic Red Label tea - just 90p for a box of 80 teabags. Three of the UK's top five favourite chocolates - Cadbury Dairy Milk, Mars, and Maltesers are Fairtrade, along with 100% of bananas in Sainsbury’s, Co-op and Waitrose.

All the tea and coffee at high street giants Greggs is Fairtrade and they are currently trialling Fairtrade bananas in 350 outlets. Those looking for a bargain will also note that discounters Lidl are selling Fairtrade roses. With more supermarkets and mainstream brands than ever selling Fairtrade, can you really afford to keep saying it's more expensive?  

Myth 2: "Anyone can stick the Fairtrade badge on their product and claim it’s ethical"

The idea that companies just slap the FAIRTRADE Mark on their products willy-nilly when they want to claim ethical credentials just doesn’t hold up. The Mark is a registered certification label for products sourced from producers in developing countries. Products that display it must meet Fairtrade Standards, set by Fairtrade International.

These Standards apply to both producers (the farmers and workers) and traders (suppliers to the shop you buy from) and are agreed through research and consultation with Fairtrade stakeholders, including farmers' and workers' organisations, traders, independent experts and national Fairtrade organisations such as the Fairtrade Foundation in the UK.

If a company wants to get one of their products certified (and hence have the FAIRTRADE Mark displayed on their packaging) they have to first ensure that it meets all of the above Standards. Any company ‘just slapping the Fairtrade badge on their product’ without meeting the above standards for that product would be investigated and could even open themselves up to legal action.

 

Myth 3: "Only a small percentage of the price you pay for a Fairtrade product goes back to farmer"


Fairtrade price

This one comes up all the time and is based on the misunderstanding that Fairtrade farmers are paid a percentage of the retail price you pay for a product in a shop – this is not the case.

The retail price you pay as a consumer is determined entirely by the retailer.

While paying farmers and workers a percentage of the retail price might appear a good way to demonstrate the impact of Fairtrade from the consumer’s perspective, it doesn’t actually address the real inequities in conventional market arrangements.

The way Fairtrade works is that the producer organisation (such as a coffee co-operative) receives the Fairtrade price at the point where they sell to the next person in the supply chain (usually an exporter or importer). This is intended to ensure farmers can cover their costs no matter how low the world price for their commodity falls. You can find a more detailed explanation over on our FAQs page.

 

Myth 4: "Fairtrade locks farmers into a fixed price"


You may have read about the ‘Fairtrade Minimum Price’, this is indeed a real thing. But it’s a safety net, calculated to cover farmers costs of production, and only coming into play in a worst case scenario. It is not something that locks farmers into a fixed price.

Let’s use the example of Maria — a farmer from a Fairtrade coffee cooperative in Colombia – to explain.

In simple terms, if the market price of coffee falls below the Minimum Price set in the Fairtrade Standards, then under Fairtrade, Maria’s cooperative would receive this guaranteed Fairtrade Minimum Price.

This safety net means Maria and other farmers in her coop can cover their production costs which helps them to predict their income and budget for the future. However — and this is really important — if the market price of coffee is above the Minimum Price, then the buyer must pay the higher price. And of course they can also negotiate higher prices on the basis of quality and other factors.

This is something that people often don’t pick up on, assuming that under Fairtrade farmers receive a fixed, flat rate that can never change, even if the market price of the crop they’re growing is high.

It’s also worth remembering that in addition to the receiving Minimum Price or market price, Fairtrade producers receive a bonus-type payment called the ‘Fairtrade Premium’. This is an extra sum of money that they decide democratically how best to spend. Some might spend it on improved training and farming techniques, others on building schools and medical clinics. Fairtrade doesn’t dictate what it’s spent on, it’s entirely up to the producers, but in the interests of transparency Premium spending is audited.

 

Myth 5: "Our company ALWAYS pays farmers more than Fairtrade"


Occasionally we see companies making claims like ‘we always pay our farmers more than Fairtrade’. But in light of the Minimum Price/market price explanation above, what do statements like this really mean?

Do they mean they pay more than the Fairtrade Minimum Price? What if the market price of the commodity is high and Fairtrade farmers are receiving the market price?

It’s also worth remembering that when companies make claims like this without independent third party verification, we as consumers are essentially having to take them at their word. PACT coffee who claim on their website to “always pay our farmers 25% more than the Fairtrade rate” admit themselves that they currently have no independent third party verification to ensure this happens or for the monitoring of conditions on the ground for the farmers they source from.

The FAIRTRADE Mark on a product means that the Fairtrade ingredients in that product have been independently verified by FLOCERT an independent certifier accredited by the International Organization for Standardization (ISO). FLOCERT can and do suspend or, in some cases, even decertify Fairtrade producer organisations if their audit shows that Fairtrade Standards are not being complied with.

So when it comes to Fairtrade products, when we say that buying is supporting farmers to get a better deal, you don’t just have to take our word for it.

 

Myth 6: "Fairtrade doesn’t encourage farmers to improve quality"


Award winning Grumpy Mule coffee

This myth is occasionally levelled at Fairtrade coffee farmers. The argument goes that the safety net of the Fairtrade Minimum Price means there is little or no incentive for farmers to improve the quality of their crop.

But as mentioned above, producer groups are not tied in to receiving the Minimum Price — higher quality produce can and does attract higher prices — so there is genuine incentive for Fairtrade farmers to innovate and improve quality.

In addition to the price they receive for their coffee, Fairtrade farmers also earn a Fairtrade Premium to invest in projects that will benefit their business or community. Coffee farmers must invest 25 per cent of this back into initiatives to improve quality and productivity, which are fundamental ways of increasing farmers’ incomes.

Over the years, many Fairtrade coffee producers have won Cup of Excellence awards and several Fairtrade retail products, including coffees from Bewley’s UK Grumpy Mule brand, Cafédirect, Wicked Coffee, Bailies Coffee Company, Percol, Tesco Finest and Asda Extra Special, have also won various taste awards — which is testament to the quality achieved. In total Fairtrade coffees have won over 28 Great Taste Awards in the last 3 years.

We’d like to claim them, but it’s the farmers and the coffee manufacturers who deserve the accolades!



 

Comments

  • Mike Buckland said:
    14/07/2016 14:27

    An excellent article, helpful to Fairtrade ambassadors, thank you.

  • Mark Parris said:
    14/07/2016 14:31

    I believe it is time to go one step further. Make prices paid to farmers widely availalable. You need to be brave to be believed! I know what I am talking about as I trade organic fruit and vegetable in Europe. People generally need to know facts even though this is not always popular. If you show your cards you cannot be thought of as a liar. Good luck!

  • Jeffrey Hughes said:
    14/07/2016 14:35

    Machu Picchu coffee holds its own with any brand available at any price - an absolute standard bearer for Fairtrade. unajx

  • Jeffrey Hughes said:
    14/07/2016 14:36

    Machu Picchu coffee holds its own with any brand available at any price - an absolute standard bearer for Fairtrade.

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