Eric Joyce

Labour Party | Falkirk

Fairtrade Label

Mr. Eric Joyce (Falkirk, West): I want to take this opportunity to say a few words about the Fairtrade Foundation and the Fairtrade brand. I also intend to say a word or two about the Soil Association, an excellent organisation, and similar related organisations. Finally, I shall make a number of points about the interrelationship between what one might call the international development charities behind the Fairtrade Foundation and domestic agricultural interests, with particular emphasis on the possibility—in my view, ill advised—that the produce of developed economies such as the United Kingdom could in future receive a Fairtrade mark.

The Minister will be aware, having attended the recent seminar at Stonleigh park on 14 March, and no doubt through many other channels, that the Fairtrade Foundation and similar organisations are wholly independent of Government yet dependent at various levels on taxpayers' funding, irrespective of whether the direct source of grants to and agreements with the organisation is the European Union, the UK or a regional body. That means that the Government have an interest in monitoring whether money is being well spent and that recipient organisations are effective and fit for a purpose that is in itself useful. The Fairtrade Foundation appears to be on a firm footing in that respect.

Perhaps some information about Fairtrade is appropriate at this point. I have borrowed extensively from literature provided by the foundation and related organisations, since that seems to be the best way of putting on the record the organisation's description of itself and its objectives. The Fairtrade Foundation exists to ensure a better deal for marginalised and disadvantaged developing world producers. It was set up in the early 1990s by CAFOD, Christian Aid, New Consumer, Oxfam, Traidcraft and the World Development Movement. Its formation was a response to the collapse of world commodity prices in the early 1990s. The foundation awards a consumer label, the Fairtrade Mark, to products that meet internationally recognised standards of fair trade. In the foundation's own words, the brand challenges the conventional model of trade and offers a progressive alternative for a sustainable future. It also empowers consumers to take responsibility for the role that they play when they buy products from the developing world.

Crucially, in recent years Fairtrade has placed great stress on quality issues. That means that supply chain consistency issues must be in order and, fundamentally, that the stuff people buy off the shelves is edible and drinkable. I have to say that during the mid- to late 1990s my family had two or three packets of Fairtrade tea and coffee permanently in the cupboard. We would take it out of the cupboard and use it once so that it did not look as though we were wasting it, then it would stay in the cupboard to be replaced by a new one three or four weeks later. Although that practice, albeit inefficient, produced a passable turnover for Fairtrade branded products, the recent focus on quality has produced remarkable results, with sales now up 90 per cent. on previous years. Indeed, the House has Fairtrade products located in each dining and recreational area, and I understand that sales are brisk.
The foundation lays down five principles of fair trade. The first is to assist disadvantaged producers. That means developing access to markets in developed countries for producers who tend to be marginalised by conventional trading structures. There is a focus on smaller-scale producers, although that depends on the commodity in question. Coffee producers tend to be small and family owned, with production and marketing organised through co-operatives. Tea, on the other hand, is produced on estates where the focus of the Fairtrade brand is oriented on employment and environmental practices.

The second principle is direct trade—in other words, cutting out the middle person and buying direct from farmers' organisations at a guaranteed price. The world coffee market militates against many small producers, who may sometimes receive far less than a reasonable rate—even in local terms—for their labours. Often, production methods are not what consumers in developed countries would approve of, but consumers cannot know, in the usual run of things, that that is the case. In the Fairtrade Foundation's words,

"By bypassing the international commodity market and buying direct from farmers' associations or co-operatives, Fairtrade enables farmers to get a greater share of the rewards for their labour."

The third principle is a fair price. For most products, Fairtrade criteria establish a minimum guaranteed price that covers the cost of production and ensures a living wage for growers. The set Fairtrade price is always the minimum price paid, but it rises in line with market prices if they rise above the minimum Fairtrade price.

The fourth principle is pre-finance. Some small producers find it difficult to obtain finance to make their products available for export. They often have to pay very high interest rates. Producers may therefore request part payment of orders in advance of delivery, for which a fair commercial cost should be passed on by the importer.

Finally, the fifth principle is that of a premium being payable by importers in addition to the purchase price. This payment is designated for social and economic development in the producing communities. The farmers and growers themselves decide how those funds are to be allocated. The money is normally used for improvements in health, education or other social facilities, although it is sometimes used to improve productivity or to reduce risk by introducing diversity into the product range of the producers.

In addition to these principles, the Fairtrade Foundation seeks to establish long-term trading relationships, with orders being placed early in order to enable longer-term economic planning in the areas of production. The Fairtrade Foundation lays down criteria for product and producer eligibility that extend from the principles that I have just described. These are oriented around ingredients, labour management, monitoring and inspection processes, and licensing. The foundation lays out the details of the Fairtrade supply chain, which covers producers, importers, licensees and retailers. The assumption in this description of the supply chain that importers will always play a key part is important. I will come back to that later in my remarks. For the moment, I will augment that comment with a quote from the Fairtrade Foundation literature.

"The success of the Mark depends on consumer confidence in the guarantee it offers that third world producers receive a better deal."

I agree wholeheartedly. In many ways, that is the nub both of this debate and early-day motion 865.
Just to put a bit of flesh on the bones, it is worth mentioning some of the products and countries of origin. Typical products include—as I am sure that you and the Minister are aware, Madam Deputy Speaker—coffee, tea, bananas, chocolate, honey, mangoes, sugar and orange juice. The producers are based in countries such as Belize, Bolivia, Ghana, Cameroon, Haiti, Ecuador and the Windward Islands. There is no doubt that the Fairtrade brand, founded by international development organisations, is doing fine things for producers in the developing world. The Fairtrade brand is in the ascendant, with sales for 2002 exceeding £63 million in the UK. I understand that that is 90 per cent. up on the previous year.

I have already mentioned quality. Quality is vital when it comes to getting major retailers in the UK to take on Fairtrade products as a wholly viable commercial venture. The Co-op has now, for example, switched all its own-label chocolate bars to Fairtrade, and all filter coffee in the sandwich chain Prêt a Manger is now Fairtrade. That is commendable of both organisations, of course, but ultimately both require a solid rate of return, which means sales in volume. Quality lies at the heart of that.

Growth in sales is leading to an early form of mainstreaming of Fairtrade products, which in turn helps some of the world's poorest people. The Fairtrade Foundation locates its role not simply in helping countries in the developing world but in reforming international trade. That may orientate around what might be called the Fairtrade philosophy. We do not have time now to interrogate the philosophy, but there seems to be a significant gap between the philosophical aims of the Fairtrade Foundation and the reality that most people buy Fairtrade products to help the developing world rather than as a critique of the world farming economy per se. The important thing to note is that while most people would concede that there are maleffects on developing world producers as a result of the common agricultural policy and other aspects of production in the developed world, they do not necessarily extend that to a philosophy that includes producers in the developed world. Of course it is perfectly possible to argue rationally that producers in this country, such as small producers of organic products, could benefit in the same way as producers in the developing world, and for the same reasons under the fair trade banner, but there are usually a number of competing but equally rational lines of argument available in any situation. The question is which is the most appropriate and effective in the context in which it is presented.

The Fairtrade Foundation is at present conducting a study, in conjunction with the Soil Association, which could result in granting some United Kingdom producers the right to use the Fairtrade label. That is something with which I and many of my colleagues and our constituents disagree profoundly. The study will end in early 2004, at which point Fairtrade Labelling Organisations International will decide whether producers in the UK will qualify for the Fairtrade label. MPs and others have been asked to take part in the consultation phase, yet at one level that seems tokenistic, since it seems to me that the philosophy of the consultation, laid out in a number of Fairtrade Foundation documents, is already clear and mitigates in favour of so extending that label.

One release said:

"The Fairtrade Foundation is investigating if and how the philosophy and principles of Fairtrade could be applied in the UK. We are doing this mainly because over the past two years, as the profile of Fairtrade has grown and as the situation facing many UK farmers has deteriorated, our supporters . . . have asked us to. There is a body of opinion who believe that extending the principle of Fairtrade could actually help build its constituency."

The release says that

"the problems facing farmers in the developing world are not only due to trade rules. Equally problematic is the position of farmers as the weakest participant in a long supply chain onto whom all the risk and all the price reductions are always pushed . . . eleven UK farmers go out of business every day, their profits squeezed to non-existence."

The same release notes:

"Enabling farmers to stay on their land and find sustainable livelihoods must be central to the agricultural and rural futures of this country."

That release was issued after an excellent article by The Guardian journalist Charlotte Denny.
It is perfectly logical and desirable that an organisation such as the Fairtrade Foundation should be based on a wider philosophy. Indeed, many hon. Members have been an integral part of the development of that philosophy, including my right hon. Friend the Secretary of State for International Development. I have no doubt that many hon. Members lent their support to the idea because they saw it fundamentally as something that aided the developing world, and if we introduce a new feature into the equation, which is essentially that it becomes an argument about world farming and therefore has significant implications for UK farmers per se, that becomes a rather different proposition from what I think hon. Members, and members of the public and consumers, have supported until now.

I happen to have a high regard for the Soil Association, which is the UK's leading organic organisation. I would say more about its merits, but I am constrained by time. Suffice it to say that the organic sector is a crucial part of the UK farming economy and the Government recognise that. I am sure that the Minister will say that in due course. However, if Fairtrade labels were to be extended to UK organic products, the same philosophy would have to be extended to UK non-organic products because Fairtrade products are not necessarily organic. Therefore one would effectively be extending the label possibly to a large number of producers in the developed economies. That would fundamentally damage the Fairtrade label. As early-day motion 865 says, many of my colleagues now believe that the extension of that label could be profoundly deleterious to the Fairtrade brand.

I can only speculate as to the reasons why the Fairtrade Foundation has extended its underpinning philosophy to the conservation of UK farming. Although it is an argument that many well-known bodies put, it seems clear as day that it should not be a function of an organisation with a mission to help the developing world. However, if we were to speculate we might look closely at the influence of particular interest groups on the internal politics of the Fairtrade Foundation. That might include the excellent women's institutes or indeed the Soil Association or other farming interests. It is not to say anything negative about those organisations—quite the reverse. It is simply to say that where successful non-governmental bodies such as Fairtrade grow, their growth becomes central to their operations and people's careers come to depend on liaisons with other organisations, with perhaps overlapping but not necessarily exactly similar objectives.

I conclude by reiterating my belief, and that of many of my colleagues, that extending the Fairtrade brand to cover UK products would be seriously detrimental to that brand. I hope that the Minister will continue to engage with the concept of fair trade and encourage his colleagues in the Department of Trade and Industry and Department for International Development, to whom I will also write, to express their concern about what I regard as a worrying development.

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(21st Mar 2003, c1263-1267)