April Update from Robin Roth
Last month I shared with you the three things that we really care about. Just to recap for you:
These are enormous themes. They are not always easy to understand and sometimes the lofty ambition can get lost in excruciating detail. Today will be an introduction of sorts to the reality of being transparent.
So yes, I want to begin with Transparency.
When I first stated that Traidcraft was going to become more and more transparent, I focused on the question of price. Most people do. In fact, when people think about “Fairtrade” they immediately connect it to a fair price, and they assume that the one equals the other.
And, just so that you are not disappointed, we will start publishing our coffee contracts on line later this month. I will let you know more over the coming months and help explain what “$ per US pound” really means, as this is how all international coffee contracts are priced. We will break down the price we pay to producers and compare it with how much we charge customers. It’s illuminating, and you will become coffee experts.
However, real justice in trade is not so much about what you pay, but how you are treated and how you treat others. For 40 years, Traidcraft has pre-financed goods that we buy from the developing world without charging interest, we have not charged late fees when producers have failed to deliver on time, and we have always, even in the darkest times of late last year, honoured all our obligations. We have not always been treated in the same way. For the sake of transparency, I will share with you some really wonderful stories about suppliers and customers who really treated us well in the coming bulletins. You may well be surprised by the names.
Real Fair Trade in Practice.
So, forgive me, if I tell a complex story and ask for your advice. But getting it right is sometimes really hard.
For our products to carry the Fairtrade label we need to comply with a lot of quite strict rules. We need to follow the standards set by Fairtrade International (FLO-eV) and to check that we do, we are audited by Fairtrade Certification GmbH (FLO-Cert). If we follow the rules, we may use the Fairtrade label and pay a volume related licence fee to the Fairtrade Foundation in London. In total we pay around €5,600 a year to be audited by FLO-Cert and last year we paid £16,545 a year to the Fairtrade Foundation for using the label.
If FLO-Cert thinks we have broken the rules, then we could be decertified and unable to use the Fairtrade label. I told you it might be complicated – but transparency really requires you to open the books.
Last year we bought some Fairtrade certified ingredients from a supplier. The supplier was also audited on the waiting list to be audited by FLO-Cert, having previously been audited by the Fairtrade Foundation, and so we felt confident buying the ingredients from them and, of course, we paid the agreed Fairtrade price. We used those ingredients in our iced fruit slab cakes.
Unbeknown to us, however, the supplier “had let their certification lapse, which Traidcraft failed to notice”, and, as a consequence, it transpires that the ingredients we had bought were therefore no longer “Fairtrade certified”. Our supplier was actually in the process of reapplying to FLO-Cert for an audit but had missed their document deadline.
When we were audited last year this all came to light. An honest mistake? Good faith? Well, rules are rules and transgressions need to be appropriately policed. We have been informed by FLO-Cert that we need to resolve this “major non-compliance”.
1. We either pay a fine of €5,000
2. We need to buy the equivalent weight of the original ingredient from another Fairtrade supplier and sell it to a 3rd company who will use it in a non-Fairtrade product.
The logic is that, over time, we have bought non-Fairtrade ingredients and put them in a Fairtrade labelled product, and we will have also done the exact opposite. Everything balances out and Karma is restored. Our total margin on the slab cakes last year was £4,700. If we do not do either of these, we will be decertified and no longer able to use the Fairtrade label.
Somehow, I am not quite sure what all of this has to do with trade justice.
I would genuinely love to hear your thoughts on this, and if you want to share them with us please write to me at firstname.lastname@example.org. If you are happy for me to share your thoughts in the next bulletin, let me know.
At the start I defined our understanding of Trade Justice as follows:
We are painfully aware that 40 years of fair trade has not done enough to counter the incredible power imbalances in international trade. We are passionate about economic justice and believe that transparency is key in achieving this.
Transparency is messy, but it needs to be honest if it is going to work. And it needs to start at home before we point the finger at others. Do we pay a fine? Do we “do the substitute option”? Or should we take a stand? Please join us in the journey. It’s much more fun together.