Return to Main
TWIN Trading
1 Curtain Street, 3rd floor
London EC2A 3JX, United Kingdom
Tel. 44-171-375-1221 fax 44-171-375-1337
Email: info@twin.org.uk
TWIN (Third World Information Network) and Twin Trading are British companies which assist small producers in overcoming obstacles to independent trade through direct trading activities and the provision of trade information services.
Twin's Network magazine
Twin's "Tropical Commodities and Their Markets"
|
We do not want charity because it demeans. With the money earned from trade you can buy what you want. You cannot demand what you need from people who are helping you. - Mazide Ndiaye. RADI. Senegal |
Fairly traded goods from the Third World represent a rapidly growing market. Throughout Europe, consumers are demonstrating that they are concerned not just about the quality of products they buy, but where and how they were produced and who benefits from their purchase. The range of goods now being fairly traded, and the number and variety of outlets in which they are available, has increased dramatically since the late 1980s.
Now is the time for companies to start putting fair trade into practice. Certainly there is an urgency for much of the Third World: current structures of international trade are condemning millions of people to worsening poverty, greater dependence on aid and unjust working conditions. However, there is also a commercial imperative; early response to growing consumer demand can lead to significant competitive advantage.
This booklet introduces fair trade, with practical examples of companies already showing that it can be done. It gives stories and comments for those involved in both the First and Third Worlds, and tackles the questions most often raised by industry and consumers alike. It is a `Rough Guide' pointing the way forward towards creative and positive results for all those involved in the trading chain.
It is becoming increasingly apparent that a major shift is occurring in consumer attitudes towards a preference for fairly traded products. Manufacturers and retailers have already seen the impact of consumer concerns about the environment, health and animal welfare - and they have responded accordingly. Now fair trade looks like making a similar impact.
Consumer power has long been recognized as a force in the U.S. What used to be dismissed as 'food fads' are now taken seriously.
Fair trade in practice means:
Consumer surveys have indicated the strength of opinion on fair trade. A National Opinion Poll of 1000 shoppers conducted for Christian Aid in 1993 revealed that:
What consumers want is not just "fair" as a general term, but specific and reliable reassurance about the positive impact of their choices on the living and working conditions in the Third World.
|
I am grateful to your store for introducing me to Cafedirect, a fair trade coffee that is providing invaluable help directly to small farmers in Third World as they build their self-reliance.... What plans do you have for introducing it to all your stores? - Customer quote, Sainsbury's magazine, March 1994 |
Current international trading structures are a major cause of poverty and underdevelopment in the Third World. Ex-European colonies, established int the past in Asia, Africa and Latin America, continue to export primary products for processing in the First World where much of the value is added. This division has become increasingly unequal during the 1980's:
Trading structures have to change if there is to be a check to growing in so much of the world. Aid can only be part of the solution. For every 1 received in aid, developing countries earn about 8 from trade. Practising fair trade is one way to benefit people and countries both North and South.
|
At this moment the Senegalese market is flooded by potatoes, onions, and the like from abroad - mainly France and the Netherlands - which are cheaper than ours. I am not against liberalisation by a young economy has a right to be protected. You subsidise your farmers in Europe, whereas we are not allowed to subsidise ours. - Mazide Sdiaye. RADI. Senegal |
|
In Tokyo I paid US $5 for a cup of coffee. This is the same price as coffee producers in West Africa are paid for around 15kg of coffee beans. The best help you can give is to return the difference to us. Then we would not need your aid. - Mazide Ndiaye. RADI. Senegal |
The Ica valley is dry and prone to drought. "Most farming families live life on the edge reports" Arturo Granda from Candela, a Peruvian fair trade organisation. " Since the cotton price crashed, existence from one season to the next is vulnerable. One bad crop could mean the difference between enough until the next harvest, or having to go to the city for work, maybe even selling up completely."
Pecan nuts were always an incidental extra in the valley. Middlemen would buy the crop on the tree, harvest it themselves and pay what amounted to pocket money, timed just before the celebration of Peruvian Independence Day. Now Candela is giving farmers the confidence to produce, process and sell their own nuts.
Change is a slow process. The aim is not to alter dramatically the lives of the farmers, but to increase their stability through having a more reliable outlet. Candela is able to get for the farmers almost three times as much as the middlemen offer. With a fairer price for pecan nuts bringing in half the annual income, this can mean sending the children to school, and resources to irrigate the land, and improve and diversify production.
International trade is crucial, as the local market for the nuts is almost non-existent. Supportive overseas trading partners have given Candela the space to improve the quality of the nuts, invest in machinery and training, and run a system of revolving loans.
|
Early in the morning an aeroplane dusts with chemicals, not only the crops, but the workers, their homes and local water supplies. Many of these dangerous chemicals are banned in Britain, yet they are used at every stage of banana production in the Philippines. |
This is not an isolated "bad case" - it is a scenario all too often repeated in production processes throughout the Third World. However, many are working for change and the stories told here show how they are going about it.]
RADI is an African development organisation working mainly in an arid area of Senegal about 100 kms from the capital, Dakar. Marketing of agricultural produce in the country is traditionally highly concentrated. There are few traders and they pay badly. The commercial arm of RADI has tried to challenge this system as part of a strategy to enable farmers to gain access to new markets, both within the Senegal and abroad. Many in the area have only recently become part of this "cash economy". It is crucial for them to learn how it works in order to survive. RADI has supported a number of villages to set up small-scale irrigation schemes, greatly needed for local peasant farmers to secure and improve their food supply. By selling their surplus production of fruit & vegetables, villagers are able to pay regular contributions for the water. This income is used to maintain the water pump, run adult literacy courses and finance cereal banks.
As well as learning to manage the system viably, the effects are seen in other ways with past debts being repaid, marriage payments made, new homes built, livestock and farm implements bought. Nutritional levels have improved, and there is greater stability in the family as the heads of households no longer seek seasonal work in the towns.
Ometepec means "beautiful nest". It is here, in the South-West Mexico, that a union of farmers, URECCH, is based. They have been exporting their members' honey since 1988. The beekeepers live in 27 scattered communities. Many are only accessible on foot and the higher areas are very dry. Lack of clean drinking water is a major problem, leading to diseases among the children.
URECCH members have an average of 10 hives each, with each hive producing around 70kgs of honey per harvest. The honey is officially recognised as organic, which increases its value internationally. However, the management of the hives needs to be of a very high standard. Pests are a major problem - mainly ants, toads and Africanized bees - all of which need to be treated and combated using organic means. Another major problem for URECCH is cash flow. The middlemen pay very badly but they pay in advance. URECCH need to do the same, as well as buy the barrels to transport the honey. Meanwhile the honey can take weeks to sell. Loans are hard to attract within Mexico without tough terms and conditions. Transport to the port for export is also a problem, and URECCH currently have to make several trips in their small truck.
Despite set-backs, sales of honey now account for 25% of the family income each year. A small network of shops has been established, and URECCH's position locally has been strengthened.
|
Producers in the Third World face constraints even over and beyond those imposed by governments and international trading structures. It is hard to gain access to credit, transport and reliable information, as well as to adequate health care education. These of Candela, RADI and URECCH show how fair trade organisations in the South are already working creatively to overcome these problems. |
Practice, however, reveals something different. There are already a number of commercial initiatives in European, North American and Japanese markets which are proving that fair trade is viable, is mutually beneficial and does involve high quality, environmentally-sound products.
|
In business the received wisdom remains that fair trade directly conflicts with market forces and means higher prices, lower sales and a "cranky" image. - "Shoppers shell out for fair trade." The Sunday Express, November 1993 |
There are different ways to make this a reality:
Independent trademarks are nothing new. They are used to reassure customers that the products they are buying meet certain specific criteria, that they are safe, that they are organic or, in the case of fair trade, that primary producers really have benefited from the exchange.
A second way to introduce fair trade is by launching a special brand which incorporates all the elements of the "fair trade message". Customers are reassured about the origins of the product and reputations of the brand owner. Two such brands launched in the UK are Cafedirect and Maya Gold.
|
Cafedirect is doing a very good selling job for fair trade and a very good selling job for Safeway. I look forward to seeing Tea Direct and other products with a fair trade component. - Andrew Cole, Buyer at Safeway Plc. |
What is more, quality has not been compromised despite fears expressed by other mainstream traders. Farmers have been fully involved in the development of the brand and feel responsible for the quality of their product.
|
It is hopelessly naive to think that consumers will accept lower quality products just because they are fairly traded. - Simon Wright, Development Manager at Whole Earth Foods Ltd. |
Companies have been concerned about their environmental record for some years, and social programmes run by big corporations are not new. What is new is a growing trend to introduce ethical practice throughout an entire corporation and particularly to trading relationships.
For us, human rights, environmentalism, animal protection and fair trade are not "fads" or "marketing gimmicks" but fundamental components in our holistic approach of life of which work and business are part. - Gordon Roddick, Chairman, The Body Shop International Plc.]
|
In the past, some companies have chosen to set aside a small percentage
of the sales price of a particular brand for an aid project in the Third
World, though not necessarily one linked to the source of the product.
The product was traded as normal with no effort to pay more to producers
or enable them to gain greater control of their market. |
Q: Won't fair trade cost the consumer more, or reduce profit margins?
Not necessarily. A higher price to the producer need not be translated into a higher price for the customer, or reduced margins for the trader. Cafedirect is able to pay farmers more than double the market price for their coffee while maintaining a competitive retail price.
The three case studies show how much of the value of the goods is swallowed up by middlemen. Although trading more directly with producers involves extra time and investment, this can be balanced by shortening the trading chain. Both producer and buyer benefit, and value is added where value is needed and due. Further, opinion polls and sales performance of fair trade marked products have shown that consumers are actually willing to pay more where necessary.
Q: Won't fair trade encourage over-production?
No. With the decreasing price of agricultural commodities such as coffee and cocoa, people try to produce more to maintain their income. It is often the small-scale and poorer families who are least able to change to another crop. Greater production depresses the price still further. Fair trade can help counter this trend by offering a decent price for a smaller crop.
Q: Won't the quality of products suffer if producers get a fixed minimum price?
Practice has shown that this is not the case. With open and transparent trading chains, producers feel involved and hence responsible for the whole process. They understand that it is in their interests to maintain quality.
Q: Could a change in the trading terms threaten jobs in the North?
A wealthier Third World would provide a market for goods and services from the rich countries, meaning more, not fewer, jobs. Writer Susan George estimates that between 1982 and 1988 a total of US $171 billion of European exports was lost as a direct result of the economic recession in the Third World. That adds up to between 500,000 and 700,000 jobs a year. Keeping poor people poor does not make commercial sense.
Q: Will fairer trade really change anything?
It already has, as the three producer stories show. During the five years to 1993, sales of Max Havelaar coffee generated more than 10 million over and above what farmers would have received on the world market, extra income which has enabled farmer's communities have been able to diversify away from sole dependence on production of one raw material, developing a more balanced and stable economy.
However, major structural imbalances in current international trade cannot be changed by this type of initiative. These include the escalating tariffs which make it unviable for many Third World countries to export processed goods, and the massive debts that many countries are struggling to pay off. Yet fair trade is an increasingly significant force for change, with suppliers, buyers, consumers and governments all starting to take note.
Q: What does FAIR really mean?
"Fair" can cover a wide range of interpretations, but "fair trade" is considered to mean that:
While the interpretations of these conditions for individual products will vary, clear, internationally accepted standards are gradually being defined for a range of goods. For example, specific obligations applied to fairly traded coffee in Europe cover such issues as price, pre-financing and continuity of contracts.
This section addresses the crucial question of how to put fair trade into practice and offers a collection of ideas and options to help take the first steps. Each company and those directly involved must plan how to adapt and introduce the basic requisitions of fair trade for their own business. What is most important to note is that fair trade is not something that happens overnight.
|
Visits, perhaps overseas to beneficiaries, have been shown to improve staff motivation for implementing a strategy of fair trade, and to speed the familiarisation process. Looking at other case studies can also be useful reinforcement. |
|
Remember, fair trade introduced with time, commitment and patience can deliver a competitive edge, a good image, improved sales and increased customer loyalty. |
|
Judging pay-off should be done with the usual market-testing used by the company. For example, fair trade products, like any product are not "goods" if they do not sell. Further, if the products sell only on the message of fair trade and not on their intrinsic quality or place in the range, then this is charity and not fair trade. |
|
Market research has shown that people like to be surprised by the fair trade message. The product can be seen as successful if people pick it out because of its intrinsic appeal or presentation, and only then "discover" the message. This experience has been shown to be positive and reinforcing, and liable to lead to repeat purchase and customer loyalty. |
Like any new company policy or strategy, fair trade needs to be discussed and backed by all relevant decision-makers, including public relations and finance departments. In particular:
- Marketing messages and campaigns used to sell the product must clearly fit the wider financial and trading practices of the company.
- Implementation of fair trade strategies is generally smoother and easier when goals are clear.
- Sufficient time must be allowed for determining budget lines, briefing personnel and other requirements.
- Elements for a workplan will likely include: internal discussion phases, consultation processes, extra new product development work where needed and marketing resources.
|
|
Good communication with producers and clear contacts have been shown to reduce costs overall. Farmers need to know about quality control and current standards. This enables them to produce to expected standards and reduces the need for technicians and intermediaries. |
|
Whosoever commands the trade of the world, commands the riches of the world and hence the world itself. - Sir Walter Raleigh |
[Other Fair Trademarks] [Resources]