Photo: Pixabay
How did the Fairtrade movement start?
Fairtrade was launched in the late 1980s to give smallholder coffee farmers in Mexico access to more lucrative markets.
Dutch missionary Frans van der Hoff, who lived in Mexico for much of his life, saw how big companies were taking advantage of smallholder farmers and used his influence and networks to group smallholders together in co-operatives and sell their products directly to consumers.
The first Fairtrade coffee brand, Max Havelaar, was launched in 1988 for coffee produced in the southern Mexican state of Oaxac, as a collaboration between Van der Hoff, Nico Roozen, an economist who played a huge role in growing the market for Fairtrade products, and development agency Solidaridad.
How has Fairtrade grown since then?
The initial focus was on commodities that generate low prices – such as coffee, tea, cocoa, cotton, bananas and sugar – but this has been expanded to include higher-value products like fruit, fruit juice, wine, gold and textiles.
Support has also been expanded to include farmworkers. Today, more than 1,8 million farmers and farmworkers and over 1 800 producer organisations across 72 countries are involved in Fairtrade.
What makes Fairtrade different from other ethical trading certificates?
People have become more aware of the importance of ethical trade over the past few years, which has sparked the launch of numerous new ethical trade certifications. Fairtrade, however, was launched long before socially and ethically responsible buying became trendy.
The biggest difference between Fairtrade and most other certifications is that we prioritise producers over profit. So, to ensure Fairtrade fulfils this target and stays focused on the needs of producers, more than 50% of its board members are farmers and farmworkers.
Another key difference is that Fairtrade products are also sold at a minimum price, with a premium charged on top of this.
Tell us more about the minimum price and premium.
The Fairtrade Minimum Price is based on the average cost of sustainable production and is aimed at protecting farmers against market fluctuations.
The Fairtrade Premium is charged on top of the minimum price. It does not go towards the profits of the farmer but must be used for improvements in the community or training and resources to enhance businesses and operations.
What happens when the market price is above the minimum price?
The market price should then be paid.
How much money has been generated for these communities through premiums?
Bananas, cane sugar, cocoa, coffee, cotton, tea, flowers and plants represent 90% of Fairtrade-certified farmers and workers.
In 2020, banana producers earned €38,2 million (about R754 million) in premiums, cane sugar producers earned €10,3 million (R203 million), cocoa producers earned €52,8 million (R1 billion), coffee producers earned €95,6 million (R1,9 billion), cotton producers earned €1,77 million (R34,9 million), tea producers earned €4,1 million (R81 million), and flower and plant producers earned €7,6 million (R150 million).
We are still consolidating all 2023 Fairtrade Premium data, but producers in Africa earned €69,4 million (R1,4 billion) in 2022, which was 7% more than in 2021 and 39,29% more than 2020. The majority is earned by cocoa farmers in West Africa.
Wine grape producers earned €9,56 million (R189 million) in Fairtrade premiums in 2022 compared with €6,15 million (R121 million) over the five years from 2018 to 2022.
How are these premiums used?
They are used to provide health services, community infrastructure, education services, social and economic services, training in agricultural or business practices, for the provision of agricultural tools and inputs on smallholder farms, credit and financial services, training and capacity building, and human and resource administration.
In many instances the producers collaborate with government to unlock more value from the funding. In South Africa, for instance, this type of collaboration has allowed for the creation of several daycare and aftercare facilities to allow both parents to work without having to worry about their children’s well-being.
A school has been built at the Du Toitskloof Wines co-operative in Rawsonville, Western Cape, through this type of collaboration. Children, in effect, no longer need to commute long distances to receive education, resulting in better school attendance and fewer school dropouts.
Some of the funding is also used for bursaries for children in the community, and this is not restricted to agriculture-related studies.
It is wonderful to see how these Fairtrade premiums have changed communities and lives over the past 20 years on our wine farms. Children who were destined to stay in agriculture, like so many generations before them, are now free to pursue careers in other sectors.
Many of the children, however, decide to stay in agriculture and we see that they are often able to quickly climb to management positions thanks to their educational background, which started pre-school, tertiary qualifications, and the fact that they are there because they want to be.
What Fairtrade products does South Africa produce?
South Africa produces a variety of Fairtrade products, from wine to rooibos tea. South Africa is the biggest Fairtrade producer of wine in terms of volume, exporting more than 30 million litres of Fairtrade-certified wine in 2022, equating to 75% of the volume of Fairtrade wine sold globally.
Thirty-one wine-grape producers and close to eighty wine cellar and brand owners have been certified under the Fairtrade label in South Africa.
How much of these volumes are sold in bulk and how much per bottle?
Roughly 60% is sold in bulk and the rest is sold per bottle, in line with South Africa’s global export profile. Fairtrade and our producers work with Wines of South Africa towards the premiumisation of wines.
We want to add value at source as far as possible and with all our products, because we realise that value-added products have a higher income and job creation potential.
What are the costs involved in getting certified?
There are audit and compliance costs. Farmers not only have to comply with certain social standards, such as paying the regional minimum wage, complying with labour laws, and safeguarding worker health and safety, but also Fairtrade’s environmental criteria.
They need to employ ecologically and agriculturally sound practices, including responsible water and waste management, the preservation of biodiversity and soil fertility, and the minimal use of agrochemicals. Farmers might also have to switch to ‘softer’ products if they want to be certified.
Should production be organic?
No, but organic production is rewarded with a higher Fairtrade Minimum Price.
What are the biggest challenges currently facing Fairtrade?
Europe has always been our biggest market, with Germany, Switzerland, the Netherlands, France, Sweden, together with the UK, representing about 80% of global retail sales.
Fairtrade is still growing; however, high inflation and poor economic growth, combined with other market dynamics, have rendered consumers across the globe more price sensitive.
Where many Fairtrade consumers actively sought out healthier or ethically traded food in the past, they have been settling for cheaper alternatives.
What are ‘other market dynamics’?
Input costs for farmers have seen significant increases due to global conflicts, specifically the war in Ukraine.
Also, over the past 12 months, adverse climatic conditions in top producing countries led to Arabica and Robusta coffee prices increasing by 30% and 65%, respectively, while climate conditions in combination with swollen shoot disease and low investment in new trees have caused cocoa prices to soar by 231%.
What is Fairtrade doing to address these challenges?
We are diversifying our market and already have a strong presence in the US. We have identified Africa as one region with good growth potential. Along with this, we are trying to improve the climate resilience of our producers through training and education.
At the end of the day, a lot of risks at farm level, such as climate, human rights, child labour, deforestation, and low investment, are due to the low prices that farmers receive for their crops. Therefore, unsurprisingly, we continue to advocate for businesses to trade ethically and sustainably.
What are some of the challenges facing producers?
Various new EU regulations are bound to come into effect over the next year, which will make it more difficult for smallholder farmers to access European markets.
Can you give examples of these regulations?
From 2025, no cocoa or coffee products linked to deforestation may be sold on the European market.
Fairtrade strongly believes in the objectives of the EU Deforestation Regulation, but we are concerned that producer organisations will be cut off from trade with the EU market or pushed out of supply chains by larger producers, not because they are on deforested land but because they face challenges in collecting, managing and submitting the necessary data to show compliance.
Market incentives and funding would be required to assist smallholder farmers to comply with this new regulation, the farmers should not have to bear the costs linked to these laws.
Another important regulation coming in 2025 is the Corporate Sustainability Due Diligence Directive.
It is an EU regulation aimed at ensuring that large companies operating within the EU or trading with the EU adhere to sustainable and ethical practices throughout their supply chains. It requires companies to identify, prevent, and mitigate human rights abuses and environmental damage linked to their operations, including in their global supply chains.
For farmers in Africa, this means that they will proactively need to show they are identifying risks, validating and verifying those risks, and then have mitigating plans and actions in place to remain relevant and secure market access.
What is Fairtrade doing to assist farmers in these matters?
We have updated our cocoa and coffee standards, which means that certified producers need to strengthen their deforestation prevention, monitoring and mitigation efforts.
The updated standards align with the European requirements, including that farms larger than 4ha or in high-risk areas must use polygon mapping, while smaller farms and farms in low-risk areas can use single geolocation points to map their locations.
We have also partnered with Satelligence to verify geolocation data provided by producer organisations and to identify whether farms are in protected areas or near areas where deforestation is taking place.
The system generates reports that cooperatives can use for themselves and as evidence to their customers. Additionally, we continuously run awareness and training sessions across 27 countries in Africa.
What is being done to build trust in the market?
There is a lot we do around traceability and transparency, but our producers have also been proactive and innovative. One of the best ways to see the impact of Fairtrade is to visit a Fairtrade producer organisation.
Many of our farmer co-operatives now invite customers to their farms, so that they can see first-hand what the farmers are doing and the positive impact that Fairtrade is having on farming communities.
Email Paul Colditz at [email protected].
