What next for fair trade after confidence crisis?

Jeroen Douglas, executive director of Solidaridad, says organisations like Fairtrade and Rainforest Alliance should push for regulation and price transparency in commodity markets, but shouldn’t be the reference for sustainability.

A new economic layer?​

Speaking to Lumina Intelligence’s​ Sustainable Food & Drink Podcast​, he argued fair trade standards have evolved to create a new “economic layer”.​

“Voluntary sustainability standards and the entire auditing industry is invoicing between $3bn to $4bn a year,”​ said Douglas.

“Despite all the efforts the business case for smallholder certified farmers from the tropics is very thin,” ​he added.

Fairtrade Intentional said its minimum price provides a safety net for farmers, but also said it cannot solve farmer poverty alone and invited collaboration.

Rainforest Alliance told us it is “reimagining certification”​ and sees potential for it to act as a watchdog. Full statements from both major standards in fact boxes.

Shift from certification to company programmes​

Major industry players in chocolate have recently reviewed their commitments to certification.

Mars was the leading mover to mainstream cocoa certification when, in 2009, it committed to buying 100% certified cocoa by 2020, prompting Ferrero, Hershey and others to follow.

But in September 2018, Mars said it would pause its certification pledge (50% third-party certified in 2016) to move to what it called a “new and stronger” approach: sourcing all cocoa volumes through its own Cocoa for Generations programme by 2025.

Mondelēz International​ has also renegotiated its relationship with certification.

Country standards​

But certification remains a reference for ‘sustainability’ in country and international standards in cocoa.

Fairtrade and Rainforest Alliance count as ‘sustainable’ volumes under the Belgian, Dutch, German and Swiss national platforms​ targets to attain 100% sustainable cocoa in their respective markets.

Certification is also likely to be considered ‘sustainable’ under the International Organization for Standardization’s (ISO)​ first voluntary standard for sustainable & traceable cocoa, published in May 2019, Jack Steijn, chair of the committee to develop the ISO cocoa standard, previously told this podcast.​

Farmer impact questioned​

NGO Solidaridad was instrumental in developing Fairtrade International and UTZ, now merged with Rainforest Alliance.

Douglas said despite farmers efforts, they still only get 3-6% of the retail price even with certification.

“Certification has laid the basis for a sustainability pathway and it's created awareness amongst supply chain members, but it’s not necessarily created the desire to make changes on the ground,” ​he said.

Douglas replaced Nico Roozen​ as the head of Solidaridad in May this year.

Roozen was a founding father of Fairtrade (Max Havelaar) and UTZ, but was also critical of certification​ before he left the NGO.

Douglas said Solidaridad had backed certification with good intentions, but he said certification was “not at all delivering on significant let alone systemic change anymore. ​

“They are really there to message a feel-good factor that’s not linked to reality.”​

‘Smell of sustainability’​

Lumina Sustainability​ research​ shows 49% of the bestselling teas in Western Europe (Belgium, France, Germany, Italy, Spain Sweden, Switzerland and the UK) carry a certification claim.

Douglas said while tea in Europe “echoes the smell of sustainability”​ that tea was in a deeper crisis than it has been over the last 20 years. 

“Even if it is so-called ‘sustainable’, it’s not bringing farmers out of the poverty trap,” ​he said.

He said certification standards should become watchdogs and leverage the awareness they’ve created to drive regulation for improved pricing, transparency and industry financing.

Solidaridad is developing a transformation strategy, calling on regulation to create speed and scale of impact and for farmers to move data intelligence on farms.

EU to start regulating labour abuses​

Regulation is already on the cards in Europe.

Ursula von der Leyen will become president of the European Commission from 1 December and has called for​ implementation of climate, environmental and labour protections enshrined in EU trade agreements, with zero-tolerance to child labour.

On 26 November, European Parliament voted for zero tolerance on child labour, which will include measures obliging industry to eradicate child labour and for member states to ensure that goods in their territory have not been produced using forced or child labour.

Some companies back such regulation. Major cocoa companies (Mondelez International, Barry Callebaut and Mars Wrigley), as well as Fairtrade International and Rainforest Alliance and the VOICE Network association of NGOs, on Monday (2 December) called for​ EU-wide human rights and environmental due diligence requirements.

Rainforest Alliance (full statement)

"The Rainforest Alliance sees a lot of potential for certification standards to become watchdogs, and leverage awareness they’ve created to drive regulation for improved transparency, pricing, and industry financing. Certification must evolve in order to create greater impact for people and nature, provide more value to producers, company partners and adopt new and innovative approaches.

At the Rainforest Alliance we are reimagining certification, and this is a journey which includes the following:

• Harnessing the power of data by focusing on gathering and sharing data as the core of certification that will lead to valuable insights that can drive improvement and investment.
• Recognizing improvement for example, by moving from eliminating the most harmful pesticides, to fully integrated pest management.
• Adapting to different contexts, enabling farmers to focus on the important issues for them.
• Strengthening assurance by using the power of new technology, such as geospatial analysis to dramatically increase accuracy and efficiency of assurance. Introducing risk-based approaches, for instance, using an ‘Assess and Address’ approach for child labour: not only prohibiting it but also addressing it.
• Continuously evolving and innovating by feeding successful approaches back into the certification system.
• Driving systems change at a sector and landscape-level by providing a platform for learning, knowledge-sharing, and targeting investment

The Rainforest Alliance believes that partnership and collaboration are key in addressing the major sustainability challenges faced by farmers and producers. Certification alone cannot solve these challenges; to drive change we need to work together with producers as well as companies, governments and NGOs. We take our role in this context very seriously.

We are committed to working with both governments and companies to advance stronger policies and implementation in support of producers who invest substantial time, labour, and financial resources in sustainability improvements."

Fairtrade International (full statement)

The Fairtrade Minimum Price has long been known as a safety net for farmers when market prices for commodities such as tea, coffee and cocoa have gone into steep decline. In fact, the Fairtrade Minimum Price is currently active in Côte d’Ivoire, due to low prices in cocoa. In addition, the farmer cooperatives receive an additional Fairtrade Premium, which is non-negotiable, to use on projects of their choosing to improve their communities and businesses. Fairtrade International regularly evaluates our standards and practices to provide the maximum benefit to producers and workers and continuously collaborates with our producer networks to understand how we can provide innovative solutions to address the gap toward farmers and workers earning a decent living.

However, we can agree that certification labels alone are not sufficient to bring farmers out of poverty. But let’s be clear: Fairtrade is much more than a certification label. Our on-the-ground programmes, such as Climate Change Academies, the West Africa Cocoa Programme, and the Women’s School of Leadership, are providing farmers with the tools they need to address the long-term sustainability of their businesses.

We are co-founders of the Global Living Wage Coalition that sets living wage benchmarks so that governments, NGOs and companies can work together to steadily close the gap to living wages for workers. In addition, Fairtrade and its partners actively advocate for more robust legislation to work toward a living income for small farmers. For instance, Fairtrade supports the recent announcement by the Ivorian and Ghanaian governments to increase prices for all cocoa farmers, and have already updated our standards to recognise their new pricing structure that will take effect in October 2020. We know that we cannot achieve our mission of improving the lives of producers and workers alone, so we act in close collaboration with producers, trade unions, governments, businesses and consumers to change the terms of trade and increase market demand.

Critical evaluation of the success of certification labels is important for us all, but so is active participation in developing solutions. Fairtrade welcomes collaboration from those who are dedicated to enabling farmers and workers to have more control over their lives and deciding how to invest in their future.

[Podcast music credit: Blue Dot Sessions]​