Joe Turner

Excellent post! You have done a great piece of research to discover what underpins FLO's thinking about the future!

As some suggested last year, there now seems little doubt that FLO want to control and own the future concepts of fair trade.

It is also clear that the FLO version of fair trade does little to challenge or address the 'unfairness' of current trading policies or practices. And their continuing support for 'mainstreaming' fairtrade is destined to perpetuating the current 'unfairness'.

I agree that just giving the producers the Euros would be a much more straightforward approach.

Scott

Of course, the only other thing I did was to ask my government (almost!) the right questions - but one would think that those who have so much invested in this process we call 'fairtrade' would at least want to know what they're giving their name to. But apparently not.

I hereby relinquish my 'trade is better than aid' card. I think there is little evidence from the practice of fairtrade for the accuracy of that statement. According to their own figures, fairtrade is 99% inefficient - if we're simply talking about money that the producers would not otherwise have.

I am still unsure about picking up the 'it is all just a giant scam' card, but this has pushed my close.

I'm Barbara and I've read your blog with interest, as I work for the Fairtrade Foundation. I think some of the FLO document may be being misrepresented here. I've posted some comments below but I would be really happy to discuss more in person with you at your own convenience too!

You raise a question about whether FLO is moving away from working with cooperatives and the document talks about exploring 'other forms of producer organisation'. Let me explain a little more...Supporting small scale farmers remains very much at the heart of FLO's vision, and cooperatives are incredibly important in strengthening the position of smallholders. In fact part of the big Fairtrade strategy is to progressively devolve more ownership to the producer networks - we've invested quite heavily in supporting the establishment of these in Africa, Asia, Latin America and the Caribbean in recent years, and now we're looking to strengthen this further. The mention of 'other forms of producer organisation' refers to the fact that lots of small farmers are not currently organised into formal cooperatives. In some places establishing a legal cooperative is incredibly difficult - in Latin America they are pretty widely recognised, but much less so in some parts of Africa. Or take Afghanistan at the moment - it's almost impossible to get a coop legally registered, but we know there are organisations of small farmers who would love to be able to sell their dried raisins into something like a Fairtrade market, and who are arguing that a lack of legal registration as a coop should not be a barrier. So the question is whether there are other forms of farmer organisation that could be accepted or not, either as a step towards formal farmer cooperatives being established, or even in their own right. There are also lots of small farmers who are 'contracted' to sell in to other farms. Fresh produce is a good example - where it is very difficult and costly for small farmers to provide all the processing/packaging facilities to ensure a consistent supply of fruit on their own - and where smallholders instead find it easier to sell via a larger farm operation. The question is, can we offer a certification of these bigger farms with rules to ensure that they are sourcing an agreed % from small farmers and sharing premiums with them. Could these small farmers then move up the value chain in the longer term? These are exploratory questions for FLO and will obviously be discussed with the producer networks.

You are raising questions about the 'social premium'. The term 'social' is only being used less now because producers want to invest premiums in business, environmental and economic projects as well as social ones, and it appeared that this was getting confused. Please be in no doubt that the broad principle of the premium being money that producers invest democratically in their own future and their wider community remains absolutely intact. Last year FLO increased level of premiums for coffee.

On the issue of minimum prices. Prices and premium levels for each product category are agreed following stakeholder consultation (involving both producers and traders) and research into costs of sustainable production. In some cases (eg sugar in Paraguay), producers themselves have argued against the setting of a minimum price but have said they prefer to negotiate using market price as the starting point. However in most cases, there is a minimum Fairtrade price. The Fairtrade minimum was set as a safety net mechanism to give farmers assurance that the price will never fall below an agreed and transparent level. When the market price is above the Fairtrade minimum, then as you say the market price applies. However the premium always ensures the farmers should get that little bit extra above the market price. In most cases the premium is set at around 10% of crop price. The relation of what the producer is paid compared to final retail price varies enormously depending on the product, the amount of processing involved, the inclusion of other ingredients and the way the market itself works. A banana is therefore very different from the cotton used in a T-shirt. Then you have to take into account how much of its whole crop the producer organisation has been able to sell on Fairtrade terms - for example, there are lots of producers certified to sell Fairtrade tea, but not enough buyers at present willing to engage with a Fairtrade model. So lots of producers are only selling 2-5% of their crop on Fairtrade terms. The challenge for us is how to change this. There is therefore a valid debate going on within the movement - is it better to sell 10kg of Fairtrade tea with a 0.50c premium per kg, or to sell 100kg with a 0.35c premium per kg? FLO is not unilaterally making decisions on these issues, but the strategy allows us to ask these difficult questions and consult with people on them, to see what we can do to evolve and grow the opportunities for producers who are saying they need us to increase the size of the Fairtrade market.

You have also emailed me a question about wage levels for workers. In the case of tea estates and other larger plantations, then obviously there are wage provisions in Fairtrade standards and we audit on these. It is widely recognised that in many countries the national minimum wages have fallen behind what is needed for a decent livelihood, and it is often a difficult balancing act for farmers who themselves might be struggling to obtain a decent price on the world market for their crop. In the Fairtrade system, farmers are encouraged to make progressive improvements where they can on these issues. Fairtrade premiums on large plantations are dedicated to investment in projects for, with and by the workers themselves (with managers encouraged to play a support and facilitative role). In South Africa, we have adapted the Fairtrade model on hired labour to complement the Broad Based Black Economic Empowerment process in that country, with specific goals around providing genuine worker empowerment opportunities (eg. there are some inspiring examples of how workers are now taking on management and share ownership of the farms through this process).

These type of benefits and others, such as the progress made on issues such as gender empowerment, or the additional recognition or other support farmer organisations are able to access through certification, or the benefits of adhering to environmental standards, don't show up in simple financial analyses of Fairtrade sales or premiums, but are often cited by producers as being just as, if not more, important than just the level of premiums per se.

Thanks for stimulating the debate Joe. I do hope my contribution helps!
Barbara

Whether producers would 'love to sell their dried raisins into the market' is irrelevant. You can't just go around changing the rules which have affected the entrance of others into the fairtrade system - and in some cases have actually removed producers altogether because of their perceived lack of democracy.

Minimum prices should always be above the market price. And however much you value empowerment, we have to bear in mind that this has cost 3 billion euros a year.

Reading the documents again, it seems to me that there is a glaring omission. Yes, there is talk of the millennium development goals. Yes, there is talk of increasing the total sales of fairtrade products and increasing the number of producers.

What there isn't is any kind of assessment of exactly what kind of development we're aiming to see for individual producers. What do the producers actually want the system to do and is it capable of achieving their aspirations?

Just bouncing around words like 'empowerment' sounds clever but actually doesn't mean very much. Yes, we all know the case studies that the Fairtrade Foundation put about.

It is one thing having a standard which states things about healthcare and worker's hours, for example, but do we actually know that the system can deliver those things?

And if we don't know, how is anyone supposed to hold the Fairtrade system to account? When I buy a product with a fairtrade mark on it, I know that the supermarket and brand are doing OK, but do I actually know that the producer is any better off than they were before? And if they are, is the level of improvement actually worth all the effort and inefficiency of the fairtrade system?

If the producers were shareholders, they'd want to see a pretty big profit margin on a turnover of 3 billion euro. Or if they didn't actually see much additional money, they'd want to see dramatic changes in their lives.

Market prices change by the day, sometimes by the hour. The point of the minimum price is to protect farmers from catastrophic falls in the market price that would destroy their livelihood. It's meant to provide that bit more stability. If the market price is delivering a decent price back to farmers, then there is no need for a minimum price. That's why our system says minimum price or market price, whichever is the higher. The premium then delivers that bit over and above, in effect the rules already say that producers should always get a bit more than the market price.

You are right about the need to deliver development outcomes. Producer organisations and networks must have the freedom to define these for themselves, not have them imposed by people like me in London thinking I know what's best. When we talk about empowerment, we mean ensuring that producer organisations are able to set their own development goals for what they want to achieve through better terms of trade - whether that is improved crop productivity, environmental protection, better health outcomes, clean water access, alternative income generation, more kids going to secondary school, more diversification, or whatever... . and then we should be working with them to assess how far they have been able to make progress against their goals, and if not, what the barriers have been. And we are also working with more researchers on independent impact assessment, to improve the transparency on what progress is being made, as well as to ensure we are continuously learning and improving the way we work.

You might also like to look at today's announcement by FLO on the start of a year long project to take a fresh look at Fairtrade standards with the specfic aim of delivering more bang for our buck. There's a link from www.fairtrade.net