You must have heard of Fair Trade coffee and even Fair Trade chocolate. You may well have heard of Fair Trade coconut oil. But what about Fair Trade gold? Fair Trade is not simply a description of a process whereby the grower gets a fair price for their product - it's a whole business model. Andreas Lombardozzi of African Pacific has been developing such a business model over the last 8 years. They initially chose the coconut to trade, because it is such an abundant product. It is impossible to run out of coconuts - they are the ultimate sustainable crop. They are abundant perennials - one of the most abundant crops in the world. They don't take up much space, and other crops will grow around them.
African Pacific - http://www.africanpacific.com.au/ - set up a Fair Trade charter in Vanuatu in 1998, buying sundried coconut flesh from local communities. Their model was based on integrating communities where they know how to trade, but have no access to the market, or get the wrong information. The coconut trees are all on communal land and the banks will not lend money on the product - everyone owns a coconut tree. The traditional marketing method is - when they need cash they harvest and dry coconut and sell it to the government.
The South Pacific, with its thousands of scattered islands, struggles to compete against the Philippines and Sri Lanka where the coconut trade is much better organised into big businesses. The world market price is fixed and the South Pacific loses out.
From a developer's point of view it's the brand you have to trust. For example in the South Pacific, certified organic can be a real pain, but people could trust NUI and know it's organic. Some big companies are supporting Fair Trade because they need to. Fair Trade alone is not sustainable -you must have Fair Trade and organic to make it viable.
Over the first 4 years African Pacific put a lot of research into soap to make it organic so that it would fit into a high priced commercial market. They could pay 10 times the current market price and still make the margin out of processing. They sell to different skin care companies, and they created their own premium brand - NUI.
They set an average sustainable and fair price to the producers, and sell their oil and soap at a fair price to other processors. They help their suppliers' communities, they educate them and support them, and they do lots of development and testing in Australia. When their communities cannot produce up to food standard, they accept it at the same price and put it to the soap production. So by having such an integrated company they don't penalise their suppliers, and they can encourage them to raise their standards. The NUI brand is there primarily to support what happens in the South Pacific.
African Pacific is a Pty Ltd ethical trading company because they believe you can focus on profit and do it ethically. They believe that trade is a process of seeking a mutually beneficial outcome - this is the future of world business. Having built a model that is working for coconuts, they are now looking at other products, such as timber and gold, to help local communities develop their own businesses.
The Fair Trade Labelling Organisation was set up in 1989 to independently certify products as Fair Trade. Otherwise anyone could just make claims to be Fair Trade. The FLO `fair trade certified' label has gone onto coffee, tea, rice, fruit, juices, cocoa, sugar, honey, soccer balls, wine and flowers, with the list steadily growing. Fair Trade standards are individual for each product, but basically the process involves local communities putting their own batch number onto the product, so that when it comes to gold, if you buy a ring from Mary gold it will have an identification that shows you exactly where it comes from. And you will know that the local people have received a fair payment for the value they have put into it. They are focussing on an organic economy with a variety of local industries - giving people price information, structure and confidence to trade into the world market through their own organisations and through African Pacific. Capitalism will work for the organic business as well as the big business market.
Joanna Juin from Toby's Estate - http://www.tobysestate.com.au/ - in Sydney got a first hand view of the Fair Trade process as it relates to coffee when she and Toby went to East Timor to check out the integrity of the system. Toby's Estate started with no organic six years ago and became certified Organic in 2003. At that stage, organic was only 10% of their coffee and the Fair Trade coffee available was only minimal. They started off with a selection of Fair Trade coffee and found a lot of them were not up to their preferred standard, so they quickly had to scratch them. The East Timorese coffee was not only fair trade, it was also good, because input from US and other outside funding has improved their production.
Joanna originally picked up on the Fair Trade and organics issue because coffee is the second most sprayed crop after cotton, although there is lots of coffee that is naturally organic from Ethiopa, Sumatra, East Timor and New Guinea, because people are too poor to buy any chemicals to use. Now Toby's Estate has grown from producing 60kg/week organic coffee to 400-500kg /week organic, and 300kg Fair Trade, representing about 30% of production.
The Fair Trade label on coffee simply means that there is an auditing system, and the sellers make a payment to the Fair Trade organisation. Fair Trade is not available to large organisations, only to small holders and co-ops. The way it works is that farmers bring the coffee from their family run farms to the co-op, and sell the coffee cherries at 16c/kilo. Fair Trade in East Timor benefits everyone - not just the farmers selling their coffee. Everyone brings coffee to the co-op and then it goes to another co-op for processing. Once the cherry is processed they get 80c per kilo, and then an extra bit goes back to the grower community. In East Timor there is another project set up by a Japanese organisation, whereby instead of farmers selling the red cherry, they process the cherry themselves, so that they can get a lot more money. While this means a lot more work, not only do they get a better price, but they also become more involved with the whole process and end up becoming more empowered.
Tim Toft started sourcing organic cotton for his retail store, The Organic Trading Company - http://www.organictradingco.com/ . Cotton is one of the most important things in the world to have as organic, because it has such a massive impact on the environment with its use of pesticides and herbicides. Once Tim and Michelle had set up their shop, they started to find out about fair trade, and how much it goes hand in hand with organics. Growing organics is about having respect for the soil, the land, the farmers and the workers, and this goes hand in glove with Fair Trade.
The emphasis on Fair Trade is generally consumer driven. There is research that 25% people are making their decisions on social and ethical issues rather than price. For example, 85% students will spend their income based on ethical issues rather than price. The whole idea of globalisation has broadened the issue of unfair price to the man in the street. In Britain, because of Oxfam, community awareness of Fair Trade has been very high. In Australia we had Community Aid Abroad which is now Oxfam. Tim and Michelle became involved with Oxfam last year, and found people hadn't heard of it. But since the recent the Live Aid campaigns, they are coming to the shop looking for fair trade products. .
It's easier to get information across to consumers now because of the internet. Consumers are taking back their power and there are a lot more ways and means of communicating with them. People do want to participate. The consumer plays the last link in the chain so that if they don't purchase and re-purchase that is the end of the story. No matter how you produce the product it has to have a consumer.
If you want to find out much much more about Fair Trade, go to Wikipedia http://en.wikipedia.org/wiki/Fair_trade where there are links aplenty, and explorations in depth of all the basics and associated debates. It includes a link to Yellowiki http://www.yellowikis.org/wiki/index.php/Fair_trade which is attempting a listing of all licenced Fair Trade dealers. I couldn't see one Australian company there.