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Fairtrade – a brand that originated in the Netherlands as a way of giving farmers a better deal for their coffee – is influential in the industry but is not without critics.
It works because buyers and the producers meet a set of Fairtrade criteria established by the International Fair Trade Association or the Fair Trade Labelling Organisation. The producer (farmer) gets a Fairtrade minimum price. When the market price is higher than the Fairtrade minimum price, the market price is payable.
On top of this, farmers have to be part of a co-operative and get a “premium” for agreeing to provide good working conditions and health standards for their workers. This money is then invested in social, environmental and economic developmental projects.
Fairtrade has become a business in its own right – globally sales of Fairtrade certified products including coffee, tea, sugar, cocoa, cotton, rice, quinoa and sports balls rose by 12 per cent on the previous year to almost $6.75 billion in 2011.
In Australia, sales of Fairtrade certified coffee rose from $36 million in 2010 to more than $41.7 million in 2011, although it still remains a relatively small part of the total $5 billion coffee industry.
Di Bella and others such as Illy don’t believe that Fairtrade gives the best result, either in terms of the quality of coffee or for the farmers. The argument is that it doesn’t give an incentive for the farmers to upgrade their skills and benefit in the long term.
Illy has its own accreditation system, which allows it to deal direct with farmers. The man who imports Illy coffee into Australia, John Frisco, says that while Fairtrade benefits some farmers, it disadvantages others. “A third-generation farmer in India says to me, ‘I have to sell Fairtrade to stay in business’ – he has to pay money to be a member and for Fairtrade to exist to maintain overheads,” Frisco says. “But for the smaller farmer who hasn’t got money to pay, Fairtrade can’t exist.”
He says farmers and local roasters have realised they are not getting value for money under Fairtrade “because the quality in the cup is not there”. The executive director of the Fair Trade Association of Australia and New Zealand, Stephen Knapp, concedes it’s not a quality control device but says Fairtrade has been successful in improving the lives of farmers and their communities.
“Fairtrade isn’t a quality standard that’s true,” he says. “But the farmers are paid properly. So they don’t have to worry about where their next meal is coming from and can send their kids to school. They are able to cover their basic needs then they can start investing in the quality and improve their crops.”
He says Fairtrade also has a third-party verification across the supply chain, from farmer to importer to roaster. Once a year Fairtrade will audit farms to check they meet the certification standard.
“We work to a standard and audit and inspect to those standards,” Knapp says. “No accreditation system can provide an absolute guarantee on what happens on farms. No system is 100 per cent perfect – where we do find non-compliance with the standards – such as the most severe instances of child labour, we react to that immediately.”