It just doesn’t seem fair
At the end of 2009 I was lucky enough to visit Central America to visit a variety of fair trade producers and Shared Interest customers.
I’ve worked at Shared Interest for just over a year now and it’s always a delight to hear good news from producers, but the purpose of my trip abroad was to learn about the impact of our finance first hand. It was so motivating to speak to the producers and see how enthusiastic they were about Shared Interest. The producers highlighted some of the important features of our lending; we lend to those who can’t access finance from local banks, we don’t take security and we charge a fair rate of interest. Over and above this, our partners overseas spoke about the care and support they have experienced when working with us. All of this means that we are a unique organisation and our finance is in very high demand. I have become more motivated in my role, to find individuals, groups and corporate businesses in the UK that are able to provide financial support to, and share risk with fair trade producers.
The other thing I was keen to learn from producers was how fair trade had impacted their lives. There were many positive comments; for one co-operative, the minimum price had been very important, where they had previously felt at risk from pricing speculation and at another, we were shown a community medical centre that had been developed with the fair trade premium.
Despite this, some producers were only too eager to voice their concerns about the cost of FLO-cert (the Fairtrade Labelling Organisation’s certification process) and what they get for their money. One of the coffee farmers we met showed us around his processing plant just before the harvest and explained to us that he generally sells about 4% of his coffee into the fairtrade market and the remaining 96% into local and commercial markets. Even though a very small portion of his coffee sales are fairtrade, the full FLO certification has to be paid for, which we were told was around $2000. He turned to my colleague and I and said, “That just doesn’t seem very fair, does it?”
Perhaps one way of solving this dilemma is to continue raising the profile of fairtrade so that farmers can increase the amount of produce to be sold into the fairtrade market. But how long will that take? And what should be done about it in the meantime?
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Comments
Thank you Ruth. It is refreshing to learn of Shared Interest’s open approach to discussion. You aren’t limited by the green-and-blue-wash which often affects opinions of the Fairtrade label. Careful, constructive criticism can only be good.
“Perhaps one way of solving this dilemma is to continue raising the profile of fairtrade so that farmers can increase the amount of produce to be sold into the fairtrade market” – You beg the crucial question of the long-term sustainability of fair trade: how do we move from niche market ethical shopping to global justice in trade?
While I think many of the prominent criticisms of FLO’s certification costs (and subsequently the way that they are spent) have largely been poorly informed and little substantiated, there certainly seems to be a genuine problem of access and returns under this governance arrangement. A producer in Malawi recently commented to me that ‘it is like we are subsidising the work of the FLO’.
Now to some degree this issue is recognised and responded to in the Contract Standards available from FLO and also the producer certification funds which provides support for funding initial certification.
However, given that one of the primary tenants of FLO certification is that producer should be supported in meeting production costs, would it make sense for initial certification to be available on a credit arrangement from FLO? Certify now, pay half in a year and half later?