Most people have seen Fairtrade products and have some familiarity, so why do the same misconceptions about what it is and how it actually works keep cropping up? Our friends at the Fairtrade Foundation recently delved into the issue.
From the friend in the pub who informs you that Fairtrade ‘doesn’t really help farmers’, that it’s a marketing scam designed to get people to pay more for basic products or to ‘make middle class people feel better about themselves’ – with a lot of seemingly contradictory information out there about Fairtrade online and falling consumer trust in brands and traditional advertising, it can be hard to separate fact from fiction.
Here’s a rundown of some of the most common the Fairtrade Foundation encounter:
Myth 1: “Fairtrade products are more expensive”
The range of Fairtrade products is now huge, with over 5,000 Fairtrade certified products in the UK, many of them supermarket own-label or inexpensive brands. Long gone are the days of Fairtrade products being the sole preserve of the middle classes.
From Fairtrade own-label tea and coffee ranges to chocolate favourites, along with 100% of bananas in Sainsbury’s, Co-op and Waitrose, there are lower priced everyday products available too.
For example, tea and coffee at high street giants Greggs is Fairtrade and they are currently trialling Fairtrade bananas in 350 outlets. Those looking for a floral bargain will also note that discounters Lidl even sell Fairtrade roses. With more supermarkets and mainstream brands than ever selling Fairtrade, can people really afford to keep saying it’s more expensive?
Myth 2: “Anyone can stick the Fairtrade badge on their product and claim it’s ethical”
The idea that companies can just slap the FAIRTRADE Mark on their products when they want to claim ethical credentials just isn’t true. The Mark is a registered certification label for products sourced from producers in developing countries. Products that display it must meet Fairtrade Standards, set by Fairtrade International.
The Standards apply to both producers (farmers and workers) and traders (the shop you buy from) and are agreed through research and consultation with Fairtrade stakeholders, including farmers and workers themselves, traders, independent experts and national Fairtrade organisations such as the Fairtrade Foundation in the UK.
If a company wants to get a product certified (and have the FAIRTRADE Mark displayed on their packaging) they have to first ensure that it meets all of the above Standards. Any company ‘just slapping the Fairtrade badge on their product’ without meeting the above standards for that product would be investigated and could even open themselves up to legal action.
Myth 3: “Only a small percentage of the price you pay for a Fairtrade product goes back to farmer”
This one occurs all the time and is based on the misunderstanding that Fairtrade farmers are simply paid a percentage of the retail price you pay for a product in a shop – this is not the case.
The retail price you pay as a customer is determined by the retailer. While paying farmers and workers a percentage of the retail price might appear a good way to demonstrate the impact of Fairtrade from the customer’s perspective, it doesn’t address the real inequities in conventional market arrangements.
The Fairtrade price that the farmer receives occurs at the point where the producer organisation they’re part of (e.g. a coffee co-operative) sells to the next person in the supply chain (usually an exporter or importer). This is intended to ensure farmers and workers can cover their costs no matter how low the world price for their commodity falls. You can find a more in-depth explanation over on the Fairtrade Foundation FAQs page.
Myth 4: “Fairtrade locks farmers into a fixed price”
You may have read about the ‘Fairtrade Minimum Price’, and this is indeed a real thing. But it’s a safety net calculated to cover farmers’ costs of production, and only coming into play in a worst case scenario – it’s not something that locks farmers into a fixed price.
Let’s use the example of Maria, a farmer for a Fairtrade coffee co-operative in Colombia, to explain. If the market price of coffee should fall below the Minimum Price set in the Fairtrade Standards, then Maria’s cooperative would receive this guaranteed Fairtrade Minimum Price.
This safety net means Maria and other farmers in her co-op can cover their production costs which helps them to predict their income and budget for the future. However – and this is really important – if the market price of the coffee is above the Minimum Price, then the market price is the basis for negotiations between Maria’s co-op and their buyers (they can and do also negotiate higher prices on the basis of quality and other factors).
This is something that people often don’t realise, assuming that under Fairtrade farmers receive a fixed rate that can never change, even if the market price of the crop they’re growing is high.
In addition to the Minimum Price or market price, Fairtrade producers receive a bonus-type payment called the ‘Fairtrade Premium’. This is an extra sum of money that they decide democratically how best to spend. Some might spend it on improved training and farming techniques, others on building schools and medical clinics. Fairtrade doesn’t dictate what it’s spent on, it’s entirely up to the producers, but in the interests of transparency this Premium spending is audited.
Myth 5: “Our company ALWAYS pays farmers more than Fairtrade”
Occasionally we see companies making claims like ‘we always pay our farmers more than Fairtrade’. But in light of the Minimum Price/market price explanation above, what do claims like this really mean? Do they mean they pay more than the Fairtrade Minimum Price? What if the market price of the commodity is high and Fairtrade farmers are receiving the higher market price?
When companies make claims like this without independent third party verification, we as consumers are essentially having to take them at their word. PACT coffee who claim on their website to “always pay our farmers 25% more than the Fairtrade rate” admit themselves that they currently have no independent third party verification to ensure this happens, or for the monitoring of conditions for the farmers they source from.
The FAIRTRADE Mark on a product means that the Fairtrade ingredients in that product have been independently verified by FLOCERT – an independent certifier accredited by the International Organization for Standardization (ISO). FLOCERT can and do suspend – or in some cases even decertify – Fairtrade producer organisations if their audit shows that Fairtrade Standards are not being complied with.
When it comes to Fairtrade products, when we say that buying is supporting farmers to get a better deal, you don’t just have to take our word for it.
Myth 6: “Fairtrade doesn’t encourage farmers to improve quality”
This myth is occasionally aimed at coffee farmers. The argument goes that the ‘safety net’ of the Fairtrade Minimum Price means there is little or no incentive for farmers to improve the quality of their crop.
But as mentioned above, producer groups are not tied in to receiving the Minimum Price. Higher quality produce can and does attract higher prices, so there is genuine incentive for Fairtrade farmers to innovate and improve quality, not to mention the pride they feel in their work – like most of us!
In addition to the price they receive, farmers also earn a Fairtrade Premium to invest in projects that will benefit their business or community. Coffee farmers must invest 25 per cent of this back into initiatives to improve quality and productivity, which are fundamental ways of increasing their incomes.
Over the years, many Fairtrade coffee producers have won Cup of Excellence awards and many retail products, including coffees from Grumpy Mule and Cafedirect, have also won various taste awards which is testament to the quality achieved. In fact, Fairtrade coffees have won over 28 Great Taste Awards in the last 3 years!
If you have questions about Fairtrade or Fairtrade Labelled products, we’d love to hear them. We’ve been supporters of fair trade products for many years and will continue to do so – watch this space!