Fairtrade: Social Responsibility Lessons for the Corporate

Case Study Reference No. CSR0058C

This case was written by Anita M under the direction of Doris Rajakumari John, Icfai Business School Research Centre, Chennai. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. This case was compiled from published sources. 2008, Icfai Business School Case Development Centre No part of this publication may be copied, reproduced or distributed, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or medium electronic, mechanical, photocopying, recording, or otherwise without the permission of Icfai Business School Case Development Centre.

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Fairtrade: Social Responsibility Lessons for the Corporate

Fair Trade works. It works for poor people; it works for consumers. It works as a business model; it works as sustainable development; it works to protect the environment; it works as an idea!1 - Carol Wills, Former Executive Director of the IFAT2, UK In 2006, consumer spending on fairtrade products was 1.6 billion that benefited 1.4 million producers and workers across the globe.3 This fairtrade policy aims at the economic and social development of the underprivileged through trade. It is an alternative trade model that caters to a niche market segment. Fairtrade has evolved over the years from the involvement of non-profit organisations to cooperatives and for-profit organisations. Besides, mainstream businesses embrace corporate social responsibility to showcase their mutual relationship with the society. These corporate are utilising fairtrade as an armament in their CSR initiatives. Yet, fairtrade as a business model has scores of lessons for the corporate to be socially responsible.

Fairtrade Movement Evolution and Growth

The emergence of fairtrade dates back to the 1940s, when the church groups in the US like the Mennonites4 helped the underprivileged craftsmen in selling their goods through their organisation called SELFHELP Crafts (now the trade organisation functions under the banner Ten Thousand Villages). However, fairtrade became popular in Europe during the 1950s when the cooperative movements were rapidly evolving. These cooperatives had the intention to develop an integrated cooperative economy which facilitates activities right from production to distribution and sales at the retail outlets. They began to trade mostly with the excolonies of the European countries in continents such as Africa and Asia. The main purpose was to offer employment thereby generating a source of income to the poor. In course of time, various groups such as church groups and fairtrade cooperatives joined together to form national organisations which fostered independence and democracy in its operations through memberships. Of these organisations, some were publicly traded and shareholding in these organisations became a socially responsible investment. For example, Oxfam UK5 began to sell arts and crafts made by the Chinese refugees. In 1964, the first fairtrade organisation was formed by Oxfam. Similar initiatives in the Netherlands followed with the establishment of an import organisation, Fair Trade Original in 1967. Around the same time, in 1969, Third World Shops were opened by the Dutch to sell products manufactured from poor countries. During the 1960s and 1970s, society-conscious people in the countries of Asia, Africa and Latin America formed Southern Fair Trade Organisations. These organisations developed links with the organisations in the developed countries with the aim to provide assistance to the poor producers. During the 1970s, two systems of fairtrade evolved Alternate Trade Organisation (ATO) that solely promotes fairtrade and companies considering producers as partners.

Highlights of the PES Fair Trade Conference, www.ifat.org/index.php?option=com_docman&task=doc_download&gid=68, June 2005 2 International Federation of Alternative Trade (IFAT) is a federation of producers and alternative trading organisations (ATOs) that encourage models of international trade that are direct and fair to the producers. 3 Global Fairtrade sales increase by 40% benefiting 1.4 million farmers worldwide, http://www.fairtrade.net/single_view.html?cHash=b3703de592&tx_ttnews%5BbackPid%5D=168&tx_ttnews%5Btt_news%5D =26, July 25th 2007 4 Mennonites are considered as one of the historic Christian peace churches that are committed to non-violence. 5 Oxfam is a development, relief, and campaigning organisation that works with others to help people overcome poverty and suffering around the world.
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In the 1980s, fairtrade entered mainstream business resulting in the development of the commercial profile of ATOs. Fairtrade products became available in supermarket/ shop shelves. Soon, duplicates of fairtrade products emerged and were priced low which gave the impression that fairtrade products were expensive. Fairtrade products came under scrutiny and the need for setting standards arose considering the needs of the people in the developing countries. For instance, small-scale farmers require fair prices whereas the workers in the plantations require fair wages and good working conditions. In the case of fair-trade, it brings unanimity between the producer and the importer (Exhibit I). With the advent of globalisation and the development of world trade, buyers in the developed countries and producers in the developing countries joined together. In fairtrade, the developed and developing countries are called North and South respectively. Exhibit I Fairtrade Standards for Producers and Importers Producer Groups in developing countries Marginalised but organised and able to export Democratic and transparent management Decent working conditions and a living wage Equal opportunities for all, particularly the most disadvantaged Long-term co-operative relationships. Importers in developed countries Raison detre is to put people before profits Fairtrade price Buy from disadvantaged producers (including registered producers where Fair Trade Label exists) Provide business, design or credit support (including advance payment where necessary) Long-term co-operative and transparent trading relationships.

Source: Gooch Fiona and Chrobok Stefan, Fair Trade provides models for Corporate Social Responsibility, http://www.traidcraft.co.uk/OneStopCMS/Core/CrawlerResourceServer.aspx?resource=58BAD23B-9DF7-4289-98D5D0C715E56105&mode=link&guid=7dc0e31d514f474bb45dceb2bf01667e

In fairtrade, the consumers are from the North and producers are from the South. Fairtrade depends on the trust of the consumers in the North that the products are developed by the destitutes from the South, as there is no direct link between them. Therefore, to popularise the fairtrade concept, ATOs in the North are trying to create awareness among consumers. Another aspect that augments the fairtrade concept is the regulatory role played by the ATOs in the North. ATOs act as labellers that provide labels to the fair products from the South. The basic principle behind fairtrade is transparency and accountability. During the 1980s, the idea of stamping fairtrade label to distinguish fairtrade products from ordinary products was conceived. In 1988, a fairtrade standard called Max Havelaar was developed in the Netherlands. In 1997, the fairtrade organisations created an international body called Fairtrade Labelling Organisation6 (FLO) to give assurance to the consumer that the product is from someone who is not exploited. These labelled products are sold in commercial outlets. The certification of FLO is complex and costly. The new products are added slowly to the fairtrade category as high standards are set. Some originators of fairtrade have not labelled their products as they believe that their brands are a sign of fairtrade itself. For instance, outlets of World Shop sell unlabelled products. FLO has not yet developed standards for certain products. For instance, only the primary food products come under fairtrade certification by FLO. The International Federation for Alternative Trade (IFAT) launched Fair Trade Organisation (FTO) mark in 2004, as a monitoring system to regulate IFAT members and to increase the credibility of its products among consumers. During the initial days, handicraft items were traded by Fair Trade organisations. Later food products were also included (In 1973, Fair Trade Original of Netherlands imported fairtrade coffee from Guatemala for the
It is a non-profit multi-stakeholder association that includes 23-member organisations, traders and experts. It develops and reviews fairtrade standards and provides support to fairtrade certified producers to capitalise on the existing market opportunities.
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first time). As of 2008, fairtrade products are segmented as food and non-food products (Annexure I and Annexure II). The food products include tea, coffee, cocoa, sugar, wine, fruit juices, nuts, spices and rice. Trading in food products has opened up new market channels such as institutional market, supermarkets and bio shops. Though there is no difference between the fairtrade and conventional products, fairtrade products stay distinct and innovative. Fairtrade products have their own market price determined by the equilibrium between supply and demand. The ATOs source fairtrade products directly from the producers thereby eliminating middlemen. Most of the fairtrade pricing schemes (Exhibit II) includes a minimum price which is paid even if the market price across the globe falls below this point7 (Annexure III). A price premium is awarded when the market price across the globe rises above the minimum price.8 The price premium appears to be countercyclical as it is intended to help the poor in the developing countries. The price premium from the trade activities are redirected to the farmers or the trusts created by them for self-help projects. Fairtrade offers a sustainable livelihood to producers involved (Annexure IV). It is opined that that the premium distorts the market mechanism. In fairtrade, risk is managed among the various stakeholders and the consumers are the major financers. Exhibit II Calculation of Prices at Fairtrade Companies (i) Talon Sports, Pakistan a fairtrade sports good manufacturer. Fairtrade prices for sports balls are established with the following price formula: Contract Price + Fairtrade Premium + Fairtrade Compliance Costs Compensation Where, The Contract Price shall be an FOB (free on board) price negotiated between buyer and seller. The Contract Price at a minimum matches the average price for the relevant quality, and covers the cost of production at least The Fairtrade Premium is set at 10% of the Contract Price. The fairtrade premium is redirected into social development and empowerment programmes. According to the Atlanta Agreement, children below the age of 14 years are not employed. At Talon Sports, one in three employees is women. (ii) Bangladesh Shilpo Ekota (BaSE), United Artisans of Bangladesh a fairtrade handicraft producer association. Khulna fob or Fairtrade price= a + b + c (Cost of the raw material used for the preparation of the item) + (Cost of the labour) + (Overhead for the group expenses on quality control, administration, packing and transportation up to the BaSE store) + (office and export expenses) where, a- Cost of the raw material used for the preparation of the item b- Cost of the labour is the average number of hours needed to prepare the item multiplied into a rate decided by the group. This rate varies from $ 0.04 to $ 0.10 per hour, depending on the skill required on the particular item, on the risk of spoiling the
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Hockerts Kai, The Fair Trade Story, http://www.oikos-foundation.unisg.ch/homepage/fairtrade.pdf, 2005 Ibid.

item during the preparation, on the cost of living of the village or town area. c- Overhead for the group expenses on quality control, administration, packing and transportation up to the BaSE store. This varies too from the 5% to the 10% of a+b cost. Groups working with leather or embroidery have the a. or b. cost high, so the groups overhead can be at a low percentage. d- Office and export expenses. BaSE adds an average of 4% on the a+ b+ c price to cover its office and export expenses.
Compiled by the authors from (a) Fairtrade Standards For Premium on Sports Balls, http://talonfairtrade.org/funds.asp (b) Calculation of Price, http://www.basebangladesh.com/target/activities.html

The stakeholders involved in the fairtrade are the producers, workers, fairtrade intermediaries and the consumers. The fairtrade intermediaries include non-profit organisations (NPOs), cooperatives and for-profit organisations. NPOs and cooperatives are collectively called ATOs. There are key networking organisations that group the national ATOs and producers namely International Federation for Alternative Trade, Fairtrade Labelling Organisation (FLO), Network of World Shops, European Fair Trade Association and FINE9. These networking organisations aim to create awareness among the public and safeguard the interests of producers in the developing countries. NPOs involved in fairtrade depend on subsidies or donors. NPOs are present in the North and the South such as Oxfam Wereldwinkels Vzw10 and Building Resources Across Communities11 respectively. They intend to help the poor and have to guarantee the stakeholders that they work for a social mission. They are answerable to the questions of the consumers whether the products follow fairtrade principles or not. NPOs have to ensure that there is no opportunistic usage of the additional price paid by the consumers. NPOs include donors and volunteers into the board to monitor the usage of funds. Fairtrade cooperatives are general interest organisations that have their presence both in the South and in the North. In the North, importers and consumers who are willing to pay high prices for the welfare of the producers have formed cooperatives. For instance, Cooperazione Terzo Mondo (CTM)12 works on a nonprofit basis to import and distribute food products and handicrafts by trading relationships with communities or cooperatives from the South. As on 2007, there are 569 fairtrade producer organisations across the globe in 57 countries13 (Annexure V). The fairtrade approach created empowerment in the South and enabled the formation of private run businesses and producer organisations or cooperatives. For instance, Teddy Exports14, Bio Foods (Pvt) Ltd15 are private businesses whereas BaSE16 and SOFA17 are producer associations in the South. There are

The four key fair trade networking organisations FLO, IFAT, NEWS and EFTA unite to build relationships and common approaches. 10 It is a charitable organisation that believes producers in the South should receive a fair and reasonable price for their products. Its activities include importing fairly traded products, political action, educational activities concerning fair trade and supporting producers in the South. 11 Building Resources Across Communities (BRAC) is one of worlds largest non-government organisation. BRAC runs a marketing arm named Aarong for craftsmen from various trades to sell their traditional handicraft. Its mission is to help the rural craftsmen and to market the products both nationally and internationally. The product offerings include pottery, crafts, natural fibers, wood, leather, woven cloth and silk products, jewelry and candles. 12 CTM is Italys largest alternative trading organisation. It was founded in 1988 as a cooperative. It operates world shops through various association and cooperatives. 13 Shaping Global Partnerships, http://www.fairtrade.net/fileadmin/user_upload/content/FLO_AR_2007.pdf, March 2007 14 Teddy Exports, a fair trade company in India that produces wooden carvings and textile furnishings. It has setup Teddy Trust through which more than 50% of the companys profits is redirected to the societal activities. 15 Bio Foods (Pvt) Ltd. is the worlds first fairtrade registered processor and exporter of organic spices. It helped in the setting up of a producer organisation called Small Organic Farmers Association.
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two types of cooperatives worker cooperatives and service cooperatives. Worker cooperatives have the membership of workers who are also their own employers. Get Paper Industries Cooperative of Nepal is a cooperative with all the employees as members of the cooperative that supplies paper products to Body Shop International18. Get Paper Industries Cooperative carries out social activities through General Welfare Prathisthan (GWP)19. Service cooperatives have small and medium enterprises and organisations that provide pre- and post- production services. As fairtrade evolved from the production of small-scale low quality goods to well organised sectors by labelling schemes, for-profit organisations entered the trading activities. The evolution of Corporate Social Responsibility (CSR) also catered to the involvement of these organisations. For instance, Body Shop International is the major importer of fairtrade products from Indias Teddy Exports and Nepals Get Paper Industries Cooperative. While fairtrade helps companies to be socially responsible, it also empowers the producers by inculcating them with skills, self-respect and confidence and encourages women. It offers improved techniques and environmentally sustainable business. It enables the producers to understand the market and produce or design products and sell them to other conventional buyers/consumers. Despite various advantages, the threats for fairtrade remain. Fairtrade is mainly considered as a niche market. Sale of fairtrade products mostly occur in international markets rather than at the national level. Also, when the number of producers registered under fairtrade increase without any increase in the consumer base, in certain cases the supply may outstrip demand. There is also a disparity in the sales of agricultural products, which are high when compared to handicrafts items. Handicraft items are fragile and need faster and safe delivery. Hence, fairtrade requires drastic improvement in the logistics. Vertical integration of the supply chain remains a cause of concern for the ATOs. The economies of scale is affected as the number of products increase and also multiple channels such as retail outlets, online shopping, which are owned by the ATOs are utilised. Another major issue faced by fairtrade is consumer awareness. Consumers have to be made aware of various fairtrade products available in the market and that their consumption helps a remote producer to earn a livelihood. The producers have become dependent on the buyers. The fairtrade relationship will suffer if the buyer gives large-scale order with stringent product and packaging specifications and shorter delivery time. The presence of different kinds of players has increased the competition in the market. Partnerships are difficult to achieve as the ideological differences between non-profit and for-profit organisations intensify. As fairtrade emerges into mainstream business, it faces barriers in the form of WTO and quota agreements. The conventional businesses have begun to label their products with symbols denoting the use of green techniques. This may confuse the consumers with fairtrade labels. It creates difficulty to fairtrade producers when they have to compete for shelf space. However, fairtrade labelling may make consumers question why other products are not fairtraded. The fairtrade companies require special attention to the quality and diversity of products and profit maximisation. On the other hand, the primary objective of fairtrade movement

United Artisans of Bangladesh is an organisation of the handicrafts producer groups in Bangladesh that supports the producers and empower them. 17 Small Organic Farmers Association (SOFA) supports the producers in developing organic farming, enhancing the economic standards and social status of members and offering environmental protection. 18 The Body Shop International is a global manufacturer and retailer of naturally inspired, ethically produced beauty and cosmetics products. It was founded in the UK in 1976 by Dame Anita Roddick. It has 2,100 stores in 55 countries, with a range of over 1,200 products, all animal cruelty free, and many with fairly traded natural ingredients. 19 General Welfare Prathisthan (GWP) is an associate company of Get Paper Industries Cooperative of Nepal. It was set up to carry out social activities.
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of socially responsible business has captured the interests of conventional businesses known for profit and wealth maximisation.

Fairtrade A Curriculum for CSR

Corporate Social Responsibility (CSR) is an evolving business concept among companies across the globe. CSR gained momentum due to the United Nations Global Compact20 developed in 1999 (Exhibit III). The various issues that requires CSR initiatives include eradication of poverty and hunger; workplace ethics; universal primary education; promotion of equality and empowerment of women; reduction of child mortality; improvement of maternal health; combating HIV/AIDS/Malaria and other critical diseases; environmental sustainability; preventing ozone depletion; and building a global partnership for development. Exhibit III Ten Principles of UN Global Compact Human Rights Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2: make sure that they are not complicit in human rights abuses. Labour Standards Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition of child labour; and Principle 6: the elimination of discrimination with respect to employment and occupation. Environment Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies Anti-Corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.
Source : The Ten Principles, http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html

As of 2007, businesses not only need to be financially responsible but also socially and environmentally responsible popularly known as the triple bottom line (TBL) of good governance. TBL has been identified as a factor that contributes directly or indirectly to the companys bottom line and also ensures its long-term sustainability. The emerging CSR model has metamorphosed into goals like image makeover, building relationships, accountability, maximising gains, maximising profits and ensuring long-term sustainability.21 To encourage corporates who indulge in CSR activities, Fortune, the leading financial magazine, has been ranking the worlds proactive companies based on how well they conform to socially responsible business practices. The survey conducted by AccountAbility, a London think-tank on corporate accountability and

United Nations Global Compact is the world's largest, global corporate citizenship initiative, framework for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, the environment and anti-corruption. 21 Sengupta Debashish, Responsibility for sustainability-The changing face of CSR, Corporate Social Responsibility, Icfai University Press, July 2007, page 21
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CSR Network, a British profit consultancy, has identified six domains22 for measuring CSR performance of corporates.23 As corporate social responsibility is becoming popular, corporates vied with one another to prove themselves as good corporate citizens. Businesses are dependent on the society for survival. It is the responsibility of the corporates to sustain, protect, develop and nurture the environment in which the business operates. It is also felt that corporates should respond positively to societal expectations and should balance shareholders interest against the wider community. On the other side, CSR is also viewed as the key factor responsible for the long-term prosperity of the company and its survival. By the turn of the 21st century, CSR encountered criticism from various quarters. It was alleged that many CSR initiatives amounted to green washing an attempt to camouflage what was essentially business-asusual. Though CSR was a genuine attempt by companies to improve social and environmental conditions, their CSR agenda was not successfully implemented. These criticisms in fact began to highlight the crucial role of civil society and consumer activism in encouraging businesses along the CSR path.24 Business groups have a history of foiling attempts to introduce international regulation. In spite of business failed attempts to adhere CSR principles, international organisations have refrained from making CSR mandatory. This was obvious when the International Chamber of Commerce (ICC)25, a key organisation in the UN Global Compact, vigorously defended its position that the UN should not measure or regulate the way companies live up to the principles they have promised to follow. The Confederation of British Industry (CBI)26 and Institute of Directors27 have opposed all attempts to make CSR mandatory in the UK and have lobbied against the Corporate Responsibility Bill.28 They are also against any suggestion of moving away from voluntarism in the European Union White Paper on CSR. Corporate have their own distinctive CSR practices. Some believe donating to charities as a simple PR activity in CSR which also enhances the reputation of a company or corporate. Corporate code of conduct in CSR varies in content and quality from company to company but covers issues like the treatment of workers, consumer reliability, supply chain management, community impact, environmental impact, human rights commitments, health and safety, transparency dealing with suppliers and other such issues. CSR reporting and auditing is one form of corporate code of conduct that organisations follow. Another dimension of CSR is stakeholder involvement. Companies decide whom to include under the term of stakeholders. Sometimes, community investment and investing in socially focused companies have also become part of CSR activities. Through such initiatives, the companys reputation improves as it inherits the CSR image of the partnering company.

Six domains for measuring CSR performance are corporate governance-extent of stakeholder perspective, core business strategy- to align social and environmental targets or objectives, stakeholders interests, performance- to be linked to social and environmental goals, disclosure- reporting on social and environmental activities and reality check. 23 Methodology, the Account Ability rating, http://www.accountabilityrating.com/about_methodology.asp, 2006 24 Utting Peter, Promoting Development through Corporate Social ResponsibilityDoes it work?, http://www.unrisd.org/unrisd/website/newsview.nsf/0/B163470112831808C1256DA90041ECC5?OpenDocument, 2003 25 ICC (International Chamber of Commerce) is a global business organisation which aims at championing the global economy as a force for economic growth, job creation and prosperity. 26 The Confederation of British Industry (CBI) is a non-profit organisation incorporated by royal charter to promote the interests of its members, some 200,000 British businesses, by lobbying and advising governments, workers and trade unions, networking with other businesses and creating intelligence through analysis of government policies and compilation of statistics. 27 The Institute of Directors (IoD) is a UK-based organisation, incorporated by royal charter in 1903 to support, represent and set standards for company directors. 28 The Corporate Responsibility Bill was passed by the UK government as its recognition of the corporates bringing about an impact on social and environmental issues. It included mandatory reporting, stakeholder consultation and director duties.
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Eco-efficiency is also popular among the corporate CSR agenda but critics view it as a tactic used by companies whose products damage the environment. Many analysts opine that CSR stresses solving only those social problems that indirectly satisfy their own interests. According to Milton Friedman (Friedman), Noble prize winning economist, The difficulty of exercising social responsibility illustrates, of course, the great virtue of private competitive enterprise it forces people to be responsible for their own actions and makes it difficult for them to exploit other people for either selfish or unselfish purposes. They can do good but only at their own expense.29 Here analysts have noted an incongruity. On one hand, CSR investments by successful corporate are seen to deepen public suspicion and on the other hand, CSR though strategically meant to give the company a competitive edge, is propagated as a cure for social ills. Each company can identify a particular set of societal problems that it is best equipped to help resolve and from which it can gain the greatest competitive benefit. Addressing social issues by creating shared value will lead to self sustaining solutions that do not depend on private or government subsidies. Fairtrade has set an example for international companies that trading activities are able to create sustainable development. Fairtrade has been adopted by certain corporate in the North and South as a tool in CSR rather than a business model. There are chances that fairtrade can be used as a marketing activity by the corporate to differentiate their products. Brandix Textiles of Sri Lanka, a yarn manufacturer has obtained the Social and Fair Trade Certificate that guarantees a better deal and a premium to be invested in social, economic or environmental improvement projects. Similarly ITC, a business conglomerate in India has obtained the IFAT membership certification for one of its major vendors. ITCs vendor, the cottage industries across India produces incense sticks under the name Mangaldeep agarbattis (incense sticks). The fairtrade certification is expected to create export markets in the US and Europe as consumers in those countries have preference towards fairtrade products than mass-produced ones. In April 2006, Marks & Spencer, a UK retailer, converted its entire tea and coffee range to fairtrade in response to its customers desire for ethical products. Dunkin Donuts, a global retailer and franchiser adopted a policy of 100% fairtrade espresso coffee in Northern America and Europe.30 In September 2006, Insomnia Coffee Company in Ireland announced that all coffee served from outlets across the country would be 100% fairtrade certified and Scandic and Hilton, one of major hotel chains in Sweden, announced in October 2006 that it would switch all its coffee to fairtrade.31 In December 2006, Sainsbury, the UK supermarket chain announced the conversion of its entire banana range to 100% fairtrade certified.32 The corporate have formulated sophisticated processes in all their management and operational practices. Yet, their social and environmental initiatives are often criticised as window dressing activities. Fairtrade engages stakeholders in management practices, maintaining long-term relationships with suppliers, assessing social impacts and retaining equilibrium of social and commercial activities to improve the society. It has to be seen whether fairtrade will teach the corporate that, Business is not just about making money but should also be used to empower people at the bottom rung of the business chain.33

Friedman Milton, The Social Responsibility of Business is to Increase its Profits, http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html, September 13th 1970 30 Global Fairtrade sales increase by 40% benefiting 1.4 million farmers worldwide, op.cit. 31 Ibid. 32 Ibid. 33 Murali Nandini, The legend lives on, http://www.newindpress.com/sunday/sundayItems.asp?id=SED20070922051607&eTitle=Issues&rLink=0, September 22nd 2007
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Annexure I Types of Fairtrade Products Products Labels/ Standards No Labelling/ Standards Coffee Tea Cocoa Wine Honey Sugar Cashew nuts and Peanuts Bananas and other fruits Food products* Dried Fruits Muesli Fruit Juices Rice Chocolate Snack bars Household textiles Sport Balls Essential oils Interiors Jewellery Non- Food Products* Clothing Accessories Christmas Decorations Handmade paper products *The lists are extendable.
Compiled by the authors from Redfern Andy and Snedker Paul, Creating Market Opportunities for Small Enterprises: Experiences of the Fair Trade Movement, http://www.ilo.org/dyn/empent/docs/F1057768373/WP30-2002.pdf, 2002

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Annexure II Sale of Fairtrade Products as of 2006 in (Metric Tonnes) Country Banana (Metric Tonnes) Austria 5.810 Belgium 4.181 Canada Denmark 1.091 Finland 7.306 France 4.547 Germany 9.760 UK 60.276 Ireland 1.058 Italy 3.929 Japan 141 Luxemburg 281 Netherlands 3.381 Norway 780 Sweden 2.645 Switzerland 27.981 USA 2.594 Australia/New Zealand Spain 1 Total 135.763 Cocoa (Metric Tonnes) 185 296 311 64 17 1.088 967 2.947 30 365 15 37 224 5 45 415 3.864 38 39 10.952 Contd. Country Austria Belgium Canada Denmark Finland France Germany UK Ireland Italy Coffee (Metric Tonnes) 747 1.047 2.268 733 284 6.175 3.908 6.238 304 260 147 91 2.845 484 953 1.535 23.568 299 193 52.077 Flowers (Thousands of stems) 8.677 3.251 15.932 1.622 9.475 47.292 141 189 1.298 1.220 82.595 1.359 171.056 Honey (Metric Tonnes) 13 65 45 11 82 438 322 1 74 2 3 64 1 3 429 1.553 Juices (Metric Tonnes) 214 281 24 384 3230 372 1090 3 143 26 84 66 772 6689 Rice (Metric Tonnes) 109 112 14 31 2 778 170 385 1 163 6 53 3 3 978 177 1 2.985 Sports Balls (Items) 4.293 2.970 6.000 3.000 83.617 29.850 14.952 1.983 2.888 1.359 1.500 152.412

Sale of Fair Trade Products (2006) Sugar Tea Wine (Metric (Metric (litres) Tonnes) Tonnes) 423 14 5.39 319 20 40.91 229 20 124 6 26.76 92 11 62.00 967 279 4.10 93 163 237.00 2.172 2.839 2409.77 29 90 1.94 378 8 4.61

Compiled by the authors from Fairtrade Producers, http://www.fairtrade.net/producers.html

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Annexure III The Cocoa Market 1994-2007: Comparison of Fairtrade and New York Exchange Prices

Source: The Cocoa Market 1994 - 2007: Comparison of Fairtrade & New York Exchange Prices, http://www.fairtrade.net/fileadmin/user_upload/content/Cocoa_Price_Chart_94-07.pdf

Annexure IV Benefits of Fairtrade Better living conditions Fair trade has provided better social, working and living conditions of the producers, the workers and their families over a period of time. Fair trade premium has helped to improve health services, provide medical supplies, build community stores for low-priced staple foods, provide educational facilities and extend educational opportunities for children. Example: The Costa Rican coffee cooperative consortium COOCAFE uses fairtrade revenues to fund improvements in 70 local schools and has already provided 6,700 scholarships to students so they can attend high school and university. Environmental Sustainability Fairtrade farmers and workers respect the environment and are encouraged to engage in sustainable methods of production. Farmers implement integrated crop management and avoid the use of toxic agrochemicals for pest management. Example: Nearly 85% of fairtrade certified coffee is organic, which is better for the environment and for the health of the workers. Access to international markets

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For small and marginalised producers it is very difficult to access international markets. They lack access to information, infrastructure and influence on market price or tariff rates. Fairtrade helps producers to gain a better understanding of international markets. It provides the producers with contacts and mobilises resources to present the products at international fairs. Fairtrade helps to build capacity and confidence to sell Fairtrade products also on the conventional markets. Example: Thailand Surin rice Fund Cooperatives fairtrade certified rice is found in supermarkets in several countries in Western Europe and in the USA and growing sales figures are not only reflecting the success of the Fairtrade certification for the Rice Fund Surin, but also suggest a bright future for the cooperative and set the course for expansion The empowerment of women Important investments can be made in womens income generating activities that are not related to the farm, thereby strengthening their income, business experience and position in the family. Example: (a) The women workers of the Makaibari fairtrade tea plantation in India chose to construct cottages as an alternative to generate income from the tourist activities in the region. (b) In Las Hermanas, a womens cooperative founded by the Soppexcca coffee cooperative in Nicaragua, 184 women own their own plots of land and commercialize their produce internationally. Long-term investments Fair trade helps in the long-term investments in pension schemes, life insurance, loan schemes for business development, income diversification schemes etc. can be financed. Example: Heiveld tea cooperative in South Africa was successful enough to own tea plantations from the savings accrued through the fair trade premium. Overcoming racial discrimination One of the aims of Fairtrade is to promote equal rights amongst different ethnical groups and to overcome racial discrimination. Example: In South Africa the Joint Body is promoting entrepreneurship because it is linked to the governments program to make black workers co-owners of plantations owned by whites. Plantations must be at least 25% black-owned to enter fairtrade. Community solidarity The Fairtrade system has been criticised for singling out producer groups that enjoy fair trading conditions while their neighbours or colleagues need to continue working under poor conditions. But research has shown that benefits of the Fairtrade system often spill over and solidarity with other disadvantaged but nonFairtrade producers can increase. Example: In Indonesia, Fairtrade revenues made it possible for members of the Gayo Organic Coffee Farmers Association (PPKGO), in Aceh to provide humanitarian aid for victims of the devastating earthquake and tsunami that hit the region in December 2004. PPKGO supplied eight truckloads of food for disaster victims, and cooperative members led teams of volunteers in the relief effort.

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Ensuring labour rights Through Fairtrade, workers take on a more active role on the farm, plantation or factory where they are working. They are more involved in the business practices and more aware of their rights. It is often also the first time that they become part of a trade union in order to defend their rights. They also gain experience in dealing with the premiums, such as handling banks, making decisions on how to best spend the money and how to organise themselves. Example: Teresa Wanjiru Muki Ri, a grader in the pack house of Flower Panda, a Fairtrade flower farm in Kenya explains, I have been paid my pro-rata leave dues and I am benefiting from a provision of free basic medical cover. I have also learnt about freedom of association which I was not really aware of before. A stronger business approach Fairtrade enables stronger organisations to develop, which are more experienced in accountancy, business planning, literacy etc. It also improves the quality of the product and provides better access to international markets (also to non-Fairtrade markets for high quality products) through the establishment of long-term trading relationships.
Source: Impact Areas, http://www.fairtrade.net/impact_areas.html

Annexure V Fairtrade Certified Producers

Source: Shaping Global Partnerships, http://www.fairtrade.net/fileadmin/user_upload/content/FLO_AR_2007.pdf, March 2007

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