LifeAid UK 

 

CIC  Ltd

Fairtrade?

 

Is Fairtrade not so Fair trade?

 

There has recently been criticism of the Fairtrade brand and certification processes.

 

One study in 2015 concluded that benefits to producers were close to zero as Fairtrade were too keen to certify products and some cooperatives, producers and importers were profiting by using the Fairtrade logo but not implementing Fairtrade standards.

 

Evidence suggests that consumers buy Fairtrade in the belief this helps the poorer farmers.  Fair-trade charge a 1.9% fee to use their licence but prices are increased by retailers to allow for this.  It is almost impossible to tell by how much as Fairtrade and non-Fairtrade products are very rarely sold side by side.  It has been shown that in one case coffee was sold for $10/kilo more due to Fairtrade certification being shown an effective 100% rise in price.  Of this extra $10 per kilo raised, only 20c was actually returned to the farmers and one UK coffee chain was found to be passing less than 1% on to the producers.

 

The problem lies in that Fair-trade does not monitor how the extra money is raised or how the extra raised is actually returned to help those it should.

 

Some would say that Fair-trade is a misguided attempt to make up for market failures, encouraging inefficiency and overproduction and also provides more opportunities for corruption including false labelling.

 

Where are we different?

 

We buy direct from the producing farmers.  We pay them the market price for their produce.  This is a price they are happy with and allows them to feed and provide for their families.  In some cases were are actually paying local farmers 25-400% more than the market price as small farmers will have to sell to larger farms or cooperatives who themselves sell to global customers driving prices down leaving less and less for the producing farmer.

 

We then arrange the export, import and distribution, cutting out middle men as much as possible therefore decreasing the risk of corruption and fees affecting the end price we charge.  

 

Of course we would not survive if we did not make a profit.  But at the end of the year the profit left over is returned by law to the producing communities.  We have to provide a yearly report to the UK registration authority confirming this and this record is publicly accessible through the UK government web site.  

 

In addition to this we have a team of 6 non-executive directors who will verify that our costs are reasonable, we have taken every possible step to minimise these costs and so maximise the profit available to be returned to the producing communities.  

 

The producing communities themselves will have to nominate someone to receive these funds on their behalf and we require this receiving person or cooperative to produce an annual report to us verifying and explaining how they too used the funds.  Provided these funds are used wisely and to the satisfaction of our board of non-executive directors they will be eligible for funding in future years.

 

This we believe makes this the fairest of Fairtrade.