Appendix A
Table of Contents
The Basics
How Fair Trade Works
How Fair Trade Started
Who Benefits?
What is the Impact of Fair Trade on Children and Young People?
Which Products Are Fair Trade Certified?
Fair Trade by Numbers
The Logo
Certification System: How it Works
Standards
Licensees
Glossary of Fair Trade Terms
Resources and Bibliography
The Basics
Fair Trade is an international system of doing business based on dialogue, transparency and respect. It contributes to sustainable development by offering better trading conditions for producers and workers in developing countries. Behind the principles and goals of Fair Trade is a rigorous international system of monitoring, auditing and certification.
The international Fair Trade system is structured to produce the following outcomes for farmers and workers in developing countries:
- Fair compensation for their products and labour
- Sustainable environmental practices
- Improved social services
- Investment in local economic infrastructure
Top
How Fair Trade Works
Fair Trade is similar to a normal supply chain model of business, with fewer intermediaries. There are producers, importers, processors, retailers and consumers but the difference is the monitoring and certification at the core of the system which guarantees that the supply chain is built on and functions according to standards of fairness, transparency and accountability.
Producers and their organizations are monitored and certified by Fair Trade Labelling Organizations International (FLO). In Canada, the “Licensees” (processors) are licensed and audited by TransFair Canada to ensure that they are doing business with certified producers and that they are adhering to the standards set out by FLO. TransFair also works to promote Fair Trade Certified products at the retail and consumer level.
FLO and TransFair Canada support the needs of producers, consumers and licensees, and guarantee the integrity of the process while promoting the principles of Fair Trade Certification. The two organizations also work in tandem to verify and audit the sales from importers to the licensees.
Top
How Fair Trade Started
Fair Trade began 50 years ago in Africa and Europe. It started with small-scale farmers working in conjunction with international aid organizations from industrialized countries. The farmers and workers in Africa were struggling with a combination of low market prices for their produce and a high dependency on unscrupulous intermediaries. It entrenched their families and local economies in a cycle of poverty. Together with aid organizations the producers laid the foundation for a trading system that ensured a fair price for their produce and a direct road to European markets.
From the aid organizations evolved a new type of non-profit business structure known as alternative trade organizations or ATOs. Most were run by volunteers. They set up what were known as World Shops in Europe and North America. Parallel to the ATOs, a new group of entrepreneurs also arose and created for-profit companies that were driven by the principles of Fair Trade. This latter type of company was and is particularly common in Canada.
In the late 1980s an international system of Fair Trade certification and labelling was introduced. It was an opportune time to establish a set of standards and labelling as there was a growing consumer demand for Fair Trade products. There was also growing commercial interest. Consumers needed a guarantee that their purchases were truly benefiting the producers and workers. The Fair Trade Certified logo is managed by TransFair Canada, an independent, non-profit organization that provides third-party certification of the products.
Companies or organizations wanting to trade, import, produce or sell Fair Trade Certified products sign a contract with TransFair Canada and must follow stringent business rules and terms for use of the logo.
The certification and labelling system has helped increase the scale and scope of products available, bringing Fair Trade Certified products beyond the World Shops into the mainstream grocery stores. There are now 17 national Fair Trade Labelling Initiatives that work under the international umbrella of the Fairtrade Labelling Organizations International (FLO). Today, there are close to a million farmers in 45 developing countries working within and benefiting from the sale of Fair Trade Certified products.
The first 50 years of Fair Trade have been filled with many successes. Hundreds of thousands of farmers and workers have gained a greater economic stability as a result and their communities have benefited from important infrastructures paid for by the Fair Trade Certified premiums.
Globally, there are dozens of Fair Trade Certified products, such as coffee, tea, rice, bananas, mangoes, cocoa, sugar, honey, fruit juices and sports balls. They can be found in stores, small and large, across Europe, Japan and North America. Other fresh fruit, wines, nuts, oils and non-food products will soon be added to the list of Fair Trade Certified products.
While much progress has been made in recent years, many of the same conditions of trade found 50 years ago still exist. Many producers and workers from developing countries still don’t have access to the Fair Trade market, because there isn’t enough demand in countries like Canada. There is a momentous push coming from the consumer level to move Fair Trade into the mainstream. Churches, communities, schools, unions, businesses and consumer groups are taking up the cause with energy. The topic of Fair Trade is having an impact on political and business organizations. Large grocery stores chains are getting involved and some multinational companies are beginning to offer Fair Trade Certified products. Fair Trade is being promoted by consumer groups not just as an alternative, but THE way to do business for the future of global trade.
Top
Who Benefits and How?
Small-scale farmers and workers
Fair Trade has helped build economic independence and empowerment for certified farmer cooperatives and their workers, bringing them economic stability and a higherstandard of living. Beyond being paid a fair price for their produce, the Fair Trade Certified premium helps build necessary social infrastructure of which the followingare several examples:
- Improved access to low or no-interest loans
- Technical assistance for building infrastructure to increase production
- Communications systems, and collectively-owned transport and processing equipment
- New health and dental care centres
- Technical training and skill diversification for cooperative members and their families
Consumers
Fair Trade benefits consumers in the following ways:
- Gives them the option of purchasing according to their principles and values
- Empowers them to be a player in the solution to global trade inequities
- Provides them with products of superior quality
- Assures them of the ethical source of their food and non-food purchases
Environment
Fair Trade rewards and encourages farming and production practices that areenvironmentally sustainable, such as:
- Organic farming methods which avoid pollutants, pesticides and herbicides
- Encouraging farmers to diversify their crops
Top
What is the Impact of Fair Trade on Children and Young People?
Fair Trade has a very positive impact on the lives of children and young people. In rural regions there is often a higher percentage of children that are required by their families to leave their studies early to contribute to the family income. Fair Trade standards do not allow child or forced labour. By getting a better price for their products through Fair Trade, parents are instead able to send their children to school rather than require the children work to bring in money.
Fair Trade also brings economic stability to farming families and their communities. Farmers working within the Fair Trade market mention how Fair Trade has had a positive impact on their children's lives. In addition to children being able to go to school, the social premiums paid through Fair Trade can be invested in school buildings and materials. Premiums can also be invested in health services, ensuring a better living standard for children.
Top
Which Products Are Fair Trade Certified?
As of early 2004, TransFair Canada certifies the following products for sale in
Canada under the Fair Trade Certified logo:
- Bananas
- Cocoa
- Coffee
- Sports Balls
- Sugar
- Tea
Composite Products
- Hot Chocolate Mix
- Hemp Frozen Dessert
- Chocolate
- Chocolate Milk
- Soap & Cosmetics
- Ice cream
Globally, there are dozens of Fair Trade Certified products, such as coffee, tea, rice, mangoes, cocoa, sugar, honey, and fruit juices. They can be found in stores, small and large, across Europe, Japan and North America. Other fresh fruit, wines, nuts, oils and non-food products such as flowers and textiles will soon be added to the list of Fair Trade Certified products.
Top
Fair Trade by Numbers
The following statistics will give you a general idea of the scope of the Fair Trade market and its growth.
Global Fair Trade Certified Sales (in millions of metric tons)
1998: 28.9
1999: 33.5
2000: 39.8
2001: 48.5
2002: 58.8
Source: Fairtrade Labelling Organizations International (Statistics: June 2003)
Canadian Fair Trade Certified Sales (in metric tons)
1998: 22
1999: 76
2000: 159
2001: 280
2002: 477
2003: 719
Source: TransFair Canada (Statistics: June 2003)
Fair Trade by Numbers
315 certified producer organizations
500 first level producer structures
900,000 families of farmers and workers in 45 countries
249 registered traders (importers and manufacturers)
443 licensees in 20 countries
Awareness and Purchase Trends
Source: Coffee Association of Canada, May 2003
Top
The Logo
In the 1980s an international system of Fair Trade Certification and labelling became necessary. There was a growing consumer demand for Fair Trade Certified products and there was also growing commercial interest. Some organizations and companies were claiming that their products were "fairly traded", but there was no way of verifying their claims. The standards and principles were loosely defined and sometimes misleading. Producers saw the need for an official certification system and consumers were demanding to know which products were the result of guaranteed Fair Trade practices.
The Fairtrade Labelling Organizations International (FLO) was established in 1997 by amalgamating two existing labels (TransFair International and Max Havelaar) and a new system of certification and labelling was developed. The system has been constantly been improved upon and has helped increase the scale and scope of products available, bringing Fair Trade Certified products into the public conscience and little by little into mainstream commercial channels.
The logo you see here is used in Canada and the United States. Below it is the corresponding logo used in the European countries, and Japan. Only these logos are recognized by the international Fair Trade Certified governing body, FLO International. The terms of usage are strictly enforced. The licensee has signed a legally binding agreement with TransFair Canada and must make this logo visible on the front of product packaging and on promotional material. Only products that have been certified by TransFair Canada can use this logo. Companies using the logo without certification or license are subject to legal action.
Top
Certification System: How it Works
The Fair Trade certification system begins at the production level in countries where the source products and ingredients originate. All Fair Trade Certified products come from certified producer organizations. Beyond the source, the entire supply chain is monitored to ensure the integrity of labelled products. This chain of certification, monitoring and licensing ensures that the integrity of the supply chain cannot be compromised. It ensures that only a product or ingredient certified at the source can be labelled as Fair Trade Certified, and not just by anyone. Only licensees can use the Fair Trade Certified label.
Certification of Producers
FLO Certification is run by an autonomous unit within FLO International. This unit coordinates all the inspections of producers, trade auditing and certification. It operates independently from any other Fair Trade Certified interests and follows strict guidelines to ensure the integrity of certification decisions.
The points of reference for FLO Certification of producers are the international Fair Trade Standards. These Standards are developed and regularly reviewed by FLO, in close cooperation with all relevant stakeholders, including the producers and licensees, who are represented on the FLO Board and other decision-making bodies within FLO.
In contrast to Codes of Conduct and other social labels, FLO's Fair Trade Certified standards are not only a set of minimum standards for socially responsible production and trade. Fair Trade Certified standards go further: In addition to the minimum requirements that producers must meet, FLO standards guarantee a fair price, and, through process requirements, sees that the producer-run organizations invest part of the Fair Trade premiums in economic, environmental and social development. The producers and their organizations must operate both transparently and democratically and are required to make quarterly reports to FLO. Certification for producers hinges on meeting all the FLO standards for which they are audited
Supply Chain Monitoring
Supply chain monitoring provides checks, balances and full accountability for all goods purchased at Fair Trade Certified prices.
In Canada, companies apply to TransFair Canada to deal in Fair Trade Certified products. They must sign an agreement with TransFair Canada obliging them to report their purchases, processing and sales of Fair Trade Certified products. This brings them into the monitoring system. In addition, the agreement states the terms of usage of the Fair Trade Certified logo on licensees’ products. They are also required to open their books to TransFair for periodic audits, and pay a quarterly license fee on the labelled products sold.
Top
Standards
Standards for Producer Organizations
There are two sets of producer standards, one for small farmers and one for workers on plantations and in factories.
- Small landholders must be organized in cooperatives or other organizations with a democratic structure.
- Workers must be paid decent wages, have the right to join trade unions and have access to good housing where relevant.
- On plantations and in factories, minimum health and safety as well as environmental standards must be maintained
- No child or forced labour can occur.
- Producer organizations must also prove that they are investing the Fair Trade Certified premiums to improve working conditions, product quality, and increase the environmental sustainability of their activities.
Trading Standards
Trading standards state that traders must:
- Pay a price to producers that covers the costs of sustainable production and living which is determined by FLO
- Pay a Fair Trade Premium that producers can invest in development
- Partially pay in advance, when producers ask for an advance
- Sign contracts that allow for long-term planning and sustainable production practices
Top
Licensees
Licensees are entities that have signed a contract with TransFair Canada (or another FLO affiliated national initiative) to purchase Fair Trade Certified products and ingredients from FLO registered producers. There are two types of Licensee: Licensee Labellers and Licensee Processors.
Licensees must follow the following procedures in order to qualify and maintain their license to sell Fair Trade Certified products:
- Quarterly reporting of transactions with traders/producer organizations
- Regular auditing of supply chain
- Use Fair Trade Certified logo according to the terms set out in Trade-mark licensee agreement that is signed by the licensee with TransFair Canada
Top
Glossary of Fair Trade Terms
Certified Producer - Any farmer, farmer organization or manufacturer that is registered as a Fair Trade producer with FLO International. Sometimes referred to as a Registered Producer.
Composite Products - Finished goods containing one or more commodities for which FLO Criteria exist, in addition to other ingredients not covered by FLO Criteria, such as hot chocolate mix which may contain Fair Trade Certified cocoa and sugar, but conventional milk powder. Composite Products must have aminimum of 20% Fair Trade Certified ingredients to be labelled Fair Trade Certified.
Conventional Products - Products that are not sold in association with the Fair Trade Certified system of certification.
Fair Trade Certified - This means that a product has been certified by FLO International and TransFair Canada as being fully or in part (must contain at least 20% fair trade ingredients by dry weight) Fair Trade.
"Fairly traded" - This statement is often used by companies and organizations that do not have official certification or licenses. They may indeed be operating according to principles of Fair Trade Certified and dealing with farmers or workers in a fair manner, but their products and source ingredients are not or not yet recognized by FLO International and TransFair Canada. If the product does not carry the TransFair Canada logo there is no guarantee that the product is grown, sold, imported, monitored or processed according to FLO criteria
FLO International - FLO stands for the Fairtrade Labelling Organizations International. It's the international governing body that certifies and monitors Fair Trade at the production end of the international Fair Trade Certified system. FLO also establishes the Fair Trade Certified Standards in collaboration with all stakeholders.. It works in coordination with National Initiatives such as TransFair Canada, to certify and monitor the production chain, from farm to market.
FLO Criteria - These are the standards and terms of trade that are determined by FLO International, representatives of the National Initiatives (such as TransFair Canada and TransFair USA), as well as stakeholders in the Fair Trade Certified system such as producer organizations. There are general business criteria as well as criteria specific to each certified product category. For a detailed understanding of the FLO Criteria, visit the FLO website listed on the Resources and Bibliography at the end of this primer.
Licensee Labeller - A licensee which sells products to consumers in association with the Fair Trade Certified logo, but is not a Licensee Processor.
Licensee Processor - A licensee which processes one or more products or manufactures composite products. This includes such licensees as tea processors, coffee roasters, and chocolate manufacturers.
National Initiative - TransFair Canada is considered a National Initiative and is a non-profit organization and one of the member countries of FLO International. National Initiatives play an important role of monitoring, certifying and promoting Fair Trade Certified products in the consumer or importing countries.
Registered Importer - Any person or entity authorized by an agreement with FLO or TransFair Canada to import products from registered producers (under FLO Criteria) for resale to licensees.
Top
Resources and Bibliography
Websites
TransFair Canada - www.transfair.ca
FLO International - www.fairtrade.net
General Books
- Ransom, David. The No-Nonsense Guide to Fair Trade. New Internationalist/ Between the Lines 2001.
- Waridel, Laure. Coffee With Pleasure: Just Java and World Trade. Institute of Policy Alternatives of Montreal, Black Rose Books. 2002.
- Annotated Bibliography (Université du Québec à Montréal) - In French Only http://www.ceh.uqam.ca/pdf/cahier14.pdf
Fair Trade Cookbooks
- Kabelitz, Ralf. Just Desserts; 50 sweet surprises with Fair Trade ingredients. New Internationalist Fair Trade Cookbooks. 2003
- Lucas Rosenblatt, Judith Meyer, Edith Beckmann. Cooking with Coffee 60 recipes using Fair Trade Coffee. New Internationalist Fair Trade Cookbooks. 2003
Other Fair Trade Links
Oxfam Canada
http://www.oxfam.ca/campaigns/downloads/Coffeekit.pdf (Fair Trade coffee workshop)
http://www.oxfam.qc.ca/html/publications/5outils1.html has all the teaching tools for different grades…
Top
|
