Tag Archives: direct trade

Why are foodies turning their backs on Fairtrade: Part 1?

Small-holder walnut in shell

Is there is a growing critique of Fairtrade from the ‘foodie’ end of the market as was highlighted in the Guardian Development recently?

This is not the first time writers have explored this theme. The so-called ‘Direct Trade’ in the coffee industry, as also seen here in Australia, has had airings before, but what of ‘foodies’?

Rather than pose the disillusionment of foodies as a cause of the small fall in UK Fairtrade sales I would explore the opportunity that a growing foodie market represents and how it compliments a Fairtrade business strategy for small-holder farmers.

I suggest foodies have been around since well before Fairtrade grew to its current size. Certainly for the decade since I tried to sell Fairtrade certified products at Speciality Fine Food trade shows. For those that have never been, the sheer diversity and quality at these shows is mind boggling and for a foodie, it’s like being a kid in a toy shop. They are awesome fun but exhausting for the taste buds! Serr Walnuts from ChileWe struggled to find interest in high quality Fairtrade Darjeeling tea or fine Orange Blossom honey. We just couldn’t find UK customers willing to pay a premium for the world’s best walnuts grown by small holders in Chile.

The fact is, most speciality products are not widely distributed, selling through specialist retail or online so few get to supermarkets. Consumer trial and therefore the opportunity of developing scale will, for the most part, be small.

On the other hand, many such brands are the pride and joy of artisan food makers and growers too. The foodie market suits them well. Their food passion is unsurprisingly shared by foodie consumers. Very high quality cannot be mass produced, so it was common to see innovation, combining the feedback from market access, careful product development with the skills of farmers and growers on show at these Fairs each year.

In my experience smallholder farmers (even in developing countries) have always been good at responding to market exposure and they can easily acquire skills to grow amazing quality or taste. All it takes is that market access to begin with. In that sense, this is what the Workshop or Chef Roellinger is doing, providing the information and support for farmers to do better. However, and a critical difference, they neither have the intent nor the resources to develop transformational change at any scale, where the focus is on poverty alleviation, given the number of farmers that grow coffee or any other tropical crop and exist on precarious livelihoods. Product educationThis type of business development work is happening more and more in Fairtrade with the assistance of experts.

I believe if Fairtrade, had targeted it’s business strategy at this small specialist sector of the market 25 years ago it would have failed! We needed scale, both for impact but also to achieve competitive business costs and viable products. But several decades later, in a global billion dollar market, the time is now right for differentiation and we see ‘Direct Trade’ of high quality products and examples of foodie success in Fairtrade too. For instance Fairtrade company Zaytoun sells a wonderful freekah from small farms in Palestine. No doubt there are others, but even here, the cost of certification is prohibitive and for the farmer not the entire solution to better livelihood

Consumer foodies are naturally interested in the story of any product and its provenance so explored Fairtrade and its authenticity. So, many enthusiasts in the food trade also saw an opportunity to emulate the stories of traceability told by Fairtrade and told their own in similar terms. Even sometimes criticising Fairtrade to differentiate their own approach as a positive attribute, perhaps ideologically (not unusual here in Australia) or perhaps just from a business cost or quality perspective.

So what is happening to the foodie market (as the article rightly questions)? It is definitely growing and perhaps now fast outgrowing the ability of Fairtrade to deliver a range of high quality and interesting raw materials or finished products, especially in such a promiscuous category. By this I mean foodies get bored easily. They graze, moving on to the next tasty morsel for excitement! Whilst this is a fascinating aspect of consumer behaviour it is not a fundamental flaw in the Fairtrade paradigm. Of course a product can be ethical without being Fairtrade too! The key issue now is one of Fairtrade capacity to deliver. The same Annual Report highlighted the growing Fairtrade support from upmarket UK supermarket Waitrose; I hope Fairtrade can keep up with demand.

Both opportunities can complement each other providing a more secure livelihood for the small holder farmer. So let’s celebrate the skills and capacity of small scale farmers wherever they grow and whatever they grow. If you are a business, be ethical about product development and your terms of trade. If you want to use the complimentary certification, remember Fairtrade is fundamentally a tool to give market access to those who are marginalised.  If you are a consumer, enjoy your food but I would still urge you never to buy a Fairtrade product if you didn’t like the taste! That is the best feedback a farmer can get.

In the second part of this blog I’ll explore some of the Guardian article content in more detail.

 

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Coffee Rust: La Roya threatens coffee farmers in Latin America

 

The Coffee Rust fungus is devastating coffee production across Latin America. In many areas such as Peru, production is down by 75%. Climate change is a major contributor has been widely reported (Video).

As most coffee is grown on tiny family acreages this crisis is increasing poverty amongst those with least resilience.

Yet again, it is interesting how opinions become polarised once Fair Trade is mentioned as part of any sustainability solution once dialogue starts on forums. This is a shame as there is much practical experience to learn from all sides. In my experience there are farmers affected by La Roya supplying a bit of their coffee Fairtrade (FT) certified via coops and many many more unable to sell as the market is too small. The dominant tradition is Free Trade, not Fairtrade, nor Direct trade, nor any other cheaper certification. For those lucky enough to have a FT contract it does not offer a solution to La Roya any more than a Free Trade one. Premiums are just too small as it takes seasons to address the issue. 

That debate about effectiveness is therefore about one’s business philosophy. Whether one’s business is small, entrepreneurial, unprepared to have third party scrutiny and unaccountable or large and needing a cost effective CSR programme to field company ‘ethicality’ to shareholders. Either way the issue is systemic. Farmers are rarely powerful intermediaries in the coffee trade, an ocean of sharks few understand and even fewer have the skills and resources to influence, which is only too willing to exploit weaker players. Fairtrade, for all its faults at least gives consumers some insight and some control on the outcomes however imperfect and is at last redressing the balance. Small-scale coffee farmers begin to have a voice.

Most coops are unable to sell anything like enough certified FT to provide enough reinvestment to combat the fungus. Equally, so-called ‘direct’ trade offers such small purchase volumes to specific farms and does not get coverage nor offer down side security. Consumers have no idea who to trust and who is making it up as they go. The real issue for farmers is the trade itself, pushing prices lower for competitive advantage, whether for certified or uncertified coffee. This can happen in any coffee transaction.

FT has no power to adjudicate or influence the transaction when it is above the COP. It would be most interesting for consumers to have transparency on the price /quality/volume equation. A real choice could then be made.

Fairtrade International (who set global standards) remains the only third party certification system that farmers actually have an equal stake in governance, strategy and standards development. As such it can be promoted as part of coffee farmer’s strategy to secure more of the value chain.

Free Trade is in general unable to provide an element of price security that a well-functioning coop can offer when prices fall as supply increases. Unlike Fairtrade, it cannot offer finance for coops to make critical early harvest purchases, which makes farmers price setters. Fairtrade on the other hand can also provide many examples of coop good practice and re-investment. But as a third party certifier, it does not control the transaction between buyer and seller, only certify and there are good and bad coops just as there are good and bad farmers. Most small scale farmers therefore use coops/certification as a price risk strategy, exploiting any upside by selling outside it and utilising it more when there is a perceived downside.

No doubt some excellent coffee is shipped from a few family farms via so called ‘Direct’ trade businesses. Whilst certified Fairtrade was created over 25 years ago by companies doing ‘Direct’ trade, there is now a new wave that does not buy into the values of those pioneers. ‘Direct’ has become a marketing term meaning ‘fairer than fair’ to position the new wave within the customer base created by Fairtrade. However, ‘Direct’ trade by definition has no middle men when really ‘walking the talk’. Few individuals are prepared to finance all the value-chain steps to sustain this at scale though, cherry-picking a few bags of fine coffee and leaving the farmer to market the lower grades. Fewer still are owned (like coops) by the coffee farmers and able to offer a range of services. By definition, they are small businesses which see any additional cost, especially that of independent third party scrutiny as a burden to competing.

The scale challenge remains and investment is needed to create climate resilience for small scale coffee farmers. Once the ‘Direct’ traders can sell thousands of tonnes of Fairtrade coffee, like British companies cafedirect and Twin Trading who also have farmers on their Boards, consumers, perhaps sipping a fabulous ‘Geisha’ coffee can make their ethical choice accordingly, knowing that perhaps, they are creating resilience to coffee rust too!