Are ethical and fair trade schemes working for poor producers, or - PowerPoint PPT Presentation

Are ethical and fair trade schemes working for poor producers, or do we need a new 'Good for Development' label? 20 th November 2008

Our starting point… • Most agricultural exports are good for development • Consumers want to support development → growth in ethical trade schemes • But they worry if it isn’t Fair Trade, it is unfair trade • Insufficient information available on development impact • So ‘Good for Development’ label = possible solution • Study to review existing schemes: is there a gap in the market?

Outline • Framework for analysis • Methodology • Findings • The case for a GFD label

Framework for analysis The main labels and standards reviewed were: • Fair Trade • Rainforest Alliance • Ethical Trading Initiative • GlobalGAP • Utz Certified / Utz Kapeh • Marine Stewardship Council • Forestry Stewardship Council For each of the schemes we considered: • Objective and focus • Economic and social impacts, broken down into: – Scale of coverage – Potential impact on participating farmers – Compliance costs – Overall development impact

Methodology Methodology involved: • reviewing impact assessments; • examining data on scheme coverage; • reviewing market research reports; • consulting a range of stakeholders.

Key Findings • Fair Trade only scheme with higher economic benefits for producers as main objective; • Benefits for participating producers, sometimes including a price premium; • But high compliance costs, often borne by the producers; • This excludes many producers, and reduces scale of impact.

1. Fair Trade Countries Products Coverage FT 4% Caribb. SE Asia 2% 2% S Asia 14% Other 96% Africa Latin Am. 28% 54% 4% total UK imports analysed (volume) certified by Fair Trade. UK sales were equal to 0.4% total spending on F&B. 20% Fair Trade certified produce purchased at the Fair Trade price. 7 million farmers benefit (directly and indirectly). Cost of Compliance / Certification Producers Buyers

2. Rainforest Alliance Countries Products Coverage US$1.2billion worldwide sales of coffee, bananas Asia and cocoa in 2007. 2% Caribb. Africa 0% 4% 1.3% worlds coffee certified. 15% of global banana sales. LA 94% Costs of Compliance / Certification Producers Buyers

3. FSC Countries Products Coverage FSC-certified forests account for 7% of the Asia worlds ‘productive’ forests. Africa 2% Oceania 3% North 1% The value of FSC labelled America sales is equal to 32% US$20billion. South America /Caribb. Tropical forests account for Europe 10% 56% of global forest cover 52% but just 13% of FSC certified forest. Costs of Compliance / Certification Producers Buyers

4. MSC Countries Products Coverage Estimates of the total global catch that is Other certified range from 19% Mexico 3-7%. US 4% 26% Norway Developing countries 6% account for less than 15% of certified Sweden fisheries though 6% UK developing countries 89% of certified 23% account for nearly ½ products contain either Australia of global fish Alaskan Salmon or NZ 6% Canada exports; low income Hoki. 10% countries account for 20%. Costs of Compliance/ Certification Producers Buyers

5. Global Gap Countries Products Coverage Most countries that export Most agricultural agricultural produce to European exports to European markets. markets (mostly supermarkets). Over 68,000 producers, 2254 in Developing countries SSA, 1538 in South 19% Africa. As a group, LDCs in SSA have seen their small share in fresh World fruit and vegetables 81% (FFV) trade shrink (UNCTAD 2008). Costs of Compliance/ Certification Producers Buyers ~

6. Ethical Trade Initiative Countries Products Coverage All countries that supply UK All products covered by 52 UK based buyers/retailers and who ET members (Food, companies. 20,000 are members of the ETI. clothing etc.) suppliers. Estimated 157million workers worldwide. Costs of Compliance / Membership Producers Buyers ~ / /

Summary of findings Scope of Required for Labour Environmental Compliance coverage in Scheme UK market standards standards costs developing access countries � � � High Low Fair Trade Rainforest � � � High Low Alliance Marine � � � High Low Stewardship Council Forestry � � � High Low Stewardship Council � � � High High GlobalGAP Ethical Trade � � � Low High Initiative

Conventional exports also benefit producers Example: Costco’s green bean purchases from Guatemalan producers: • 2,000 MT of Guatemalan French beans purchased • $1.5 million went directly to farmers • $779 per family on average • Increased access to health care, education and improved housing.

What could a ‘Good For Development’ label achieve? The proposed label: • would not create new standards; • would indicate positive development benefits associated with conventional exports; • would cover more developing country exports, especially those from the poorest countries; • could expand the market and support more jobs.

What could a ‘Good For Development’ label achieve? • It could be graded (gold, silver, bronze) depending on pro- development contributions such as: • help in meeting other standards; • free technical assistance or training; • access to finance; • contributions to local infrastructure development; • investment in healthcare for workers; • best practice in supply chain management; • responsible resource management. • Could help to incentivise improved development contributions by food retailers / manufacturers.

How does the GFD label compare? Extra Required development Scope of for UK contribution coverage in market Labour Environmenta by retailers/ Compliance developing Scheme access standards l standards importers costs countries Fair Trade � � � � High Low Rainforest � � � � High Low Alliance Marine � � � � High Low Stewardship Council Forestry � � � � High Low Stewardship Council GlobalGAP � � � � High High Ethical Trade � � � � Low High Initiative Graded for Proposed importers, High Good for � � � � zero for Development producers Label

Issues for consideration • Avoiding proliferation • Scaling up existing schemes • Other ways of communicating development impact i.e. league table • Independent verification of business impact – could reduce proliferation and greenwash • Next step: how to measure development impact