Farmers make the headlines frequently in Australia – crippling drought, unfair milk prices, water rights, and they’re rarely good news stories.
Farmers in the developing world are battling on additional fronts too, often living in extreme poverty and taking on hard issues like gender equality, child labour, good governance and climate change.
And many of these farmers are winning. They’re systematically changing how they work and the supply chains supporting them. And this is delivering benefits to their families and into their communities. The idea isn’t new, it’s been around for over 30 years and is known as Fairtrade.
We spoke with Molly Harriss Olson, the CEO of Fairtrade Australia and New Zealand to discover how this inclusive agricultural system operates and what lessons can be taken from Fairtrade farmers.
What’s the difference between how fairtrade farmers work and the rest of the agricultural industry?
Just like most of the world’s farmers, Fairtrade farmers are typically small land holders. To be included in the Fairtrade system, they must first join a local cooperative, this gives them much stronger bargaining power.
The Fair Trade Premium is the next thing that sets Fairtrade farmers apart. This is an additional sum of money they receive for their produce or labour that goes into a community development fund. The farmers and workers decide democratically how to spend the money, because they know best what’s needed to improve the quality of their lives. Activities they invest in cover economic, social and environmental projects. The Premium is calculated as a percentage of the volume of produce sold.
Fairtrade farmers are also less at the mercy of the international commodity market fluctuations because of the ‘Fairtrade Minimum Price’. This is calculated at the cost of sustainable production for that commodity in that region. If market prices fall below this amount, Fairtrade farmers still get paid the Minimum Price. But if market prices are higher, they sell their produce for the higher market price.
How do you make sure everyone’s doing the right thing?
Our ultimate goal is to transform trade, so we need a really comprehensive set of standards. We require social, environmental and economic achievements from all players across our value chains.
These are clear, measurable and transparent standards which are tracked and create trust. Unannounced audits are one example, they ensure high risk issues like child labour can be stamped out. There are significant consequences for any breach of the standards and producers groups, traders and licensees can be decertified.
I should add, Fairtrade is unique. It’s the only organization that’s demonstrated a comprehensive structural model on a global scale, with trade outcomes that create inclusive growth and reduce poverty for farmers in 75 developing countries.
Are fairtrade farmers paid more for their products?
Yes. Farmers selling on Fairtrade terms get the minimum price and premium, which on average gives some of them 19% more income for their crops. It depends what the crop is and where it’s grown. Plus they get the community development benefits of schools, hospitals or whatever the community democratically determine is needed for their collective development.
Where are these farmers from?
Fairtrade farmers come from 74 countries. Their products are then sold in 125 countries around the world.
Australian farmers are in the middle of a crippling drought. Why are we even talking about supporting farmers overseas?
We only have one planet to share, and what each of us do has a positive or a negative impact on lives right across that world. As bad as things may be here in Australian farming, the issues are amplified and often compounded in developing countries. But it is true that farmers everywhere face some similar challenges.
Put simply, trade should be conducted fairly. Farmers should get a fair price for their coffee or their milk. And until we really understand that, we’ll keep going to the supermarket and buying a litre of milk for $1 or a packet of coffee for $5.
I think it’s about understanding the present unfairness in trade everywhere.
Fairtrade understands these issues in their various contexts too. We have a policy that we don’t compete with local farmers in any market. For example we choose not to bring Fairtrade bananas into Australia because Australians grow bananas. We don’t sell them here even though we could help a lot of farmers in other countries. But we sell bananas in New Zealand where there’s no local competition. In New Zealand, which is a very similar market to Australia, bananas are the biggest Fairtrade product.
It’s funny, we have Australian and NZ dairy farmers come to us all the time saying, ‘Can you help us – we want to do what you’re doing in Fairtrade. We want you to help us get a fair price for our milk.’
They’re facing the same problem as Fairtrade farmers: The common situation is that a small group of traders or retailer can change the price by what they do. In cacao or coffee we’re talking about two or three traders controlling 40% of the world’s commodity. In Australia we have the same situation with dairy retailers.
So I think it’s good for people to understand what’s happening with the dairy industry. It creates more empathy because about 80% of the world’s farmers are in the same situation. They’re often producing commodities below the cost of production which grinds them further and further into poverty.
What do you think the Australian dairy industry should do next?
We couldn’t begin to advise the Australian dairy industry, but all are welcome to use and learn from the methodology and framework that is successfully changing the lives of many marginalised and vulnerable farmers across 75 developing countries. It is a system that works and could be adapted to any traded products.
All over the world, we see family farms struggling to survive in competition with the global industrial agricultural model. We currently have a global model in which you have to be big to compete. So, we get a concentration of resources in very few hands. Family farming doesn’t have a chance in that game.
New Zealand has actually started to address this using a cooperative model for farmers. The beautiful thing about the cooperative model is that it enables small marginalised farmers anywhere to get together and have greater selling power which they wouldn’t have if they weren’t organised.
Helping them to organise into democratic institutions gives them more power. In New Zealand some dairy farming organisations like Fonterra have taken this approach. So the small family farmers can command more power in the marketplace and compete on a more level playing field. I think that’s an interesting example for Australian farmers to look at.
Are Fairtrade farmers doing more for climate change than traditional farmers?
The Fairtrade Standards emphasise ensuring farming is done sustainably and this includes mitigating the impacts of climate change. The Fairtrade Premium can be, and often is, spent on environmental protection programs such as reforestation or energy efficient cook stoves. Some of the communities of Fairtrade farmers have also become eligible for carbon credits.
How sustainable is the impact of Fairtrade on the farming industry?
We measured our work in the Pacific with the New Zealand Ministry of Foreign Affairs and Trade (MFAT) and found that we achieved a return on investment of $37 NZ dollars for our farmers for every dollar MFAT invested. This is a phenomenal measured financial benefit and doesn’t even include all the other social and environmental benefits to achieving all the other Fairtrade standards such as good governance and strengthened small business skills.
Before this five year program with MFAT, the farmers in Fiji used to protect and store agricultural chemicals under kids’ beds. They didn’t understand the risks to their family’s health or the environment. They commonly used the plastic containers for carrying water and they wouldn’t use gloves or boots. They just didn’t realise the risk that these agricultural chemicals presented or how to ensure their own safety or how to minimise the use of them.
After working with Fairtrade, A Fiji producer speaking to an international audience of civil society organisations said because of Fairtrade standards, 98% of the farmers now lock up their chemicals, don’t keep them in children’s bedrooms and use gloves and boots. They also cut the bottoms out of the containers so that nobody could possibly use them. And now they’re looking at how they can minimise the use of chemicals and even trying to find out how to become organic.
To me, that’s a much bigger impact than the $37 per one dollar return on investment. You see there’s an architecture of deep change that’s measurable in Fairtrade. Compare this to so many things in the world that are about feeling good and instant gratification or recognition rather than transformative change.
How are women treated under Fairtrade?
It’s very simple: A producer organisation can’t discriminate because of gender or marital status, or bring in discriminatory practices of any kind.
We’re very clear about upholding the rights of women. For example an organisation can’t force prospective workers to take a pregnancy test. And sexually intimidating, abusive or exploitative behaviour is not tolerated and can result in suspension or decertification.
A lot of the things we buy now are ‘green’ or ‘fairly produced’. How does Fairtrade navigate this?
Fairtrade International was the first organization to create a systematic scalable framework and structure to expose and stop unfair trade. It’s much easier to bask in the glow of claiming green or fair or sustainable and much, much harder to devise a system that works to achieve these outcomes.
Greenwashing and Fair-washing undermines the public’s trust. Often these claims provide no transparency of what’s measurable or done for the asserted positive impact.
People don’t want to have to take the time to research supply chains when they’re just doing their shopping. So I think it’s really important that we have easy ways for people to understand what they’re actually buying.
One of the many things I love about the Fairtrade structure, system and partnerships is that for the consumers, producers and businesses, everything is measurable. So our biggest challenge is helping consumers know the difference and support the genuinely transformative change with their purchases.
If Fairtrade is all about transparency, what’s the alternative?
I call this the ‘don’t ask, don’t tell economy’. We now have more slavery in the world than ever before. We’ve created blind spots in the supply chains where it’s easy to hide and it’s easy to have plausible deniability. This is exactly the opposite of what Fairtrade has designed, in terms of transparency, auditability, measurability and credibility.
How could agriculture change if Fairtrade became more commonplace?
Well for starters, if everything was as transparent and measurable as we’ve created for Fairtrade, sustainable livelihoods would be the norm rather than the exception. The shadows and the sort of ‘don’t ask don’t tell’ modern slavery economy wouldn’t be able to thrive the way it does now. There would be nowhere to hide. Even today, In developed economies like Italy and California, there are documented slave labour practices in tomato farming.
Ideally, we’d have ubiquitous real time transparency across trade and commerce. We should be able to geospatially locate our cacao by scanning any chocolate bar. Consumers should be able to have real time information. We don’t have that yet.
In the Fairtrade world for instance when we audit especially high risk places where there’s historically been child labour we conduct unannounced audits. Rarely, we find things, but when we do, we have a mechanism for suspending and decertifying any cooperative or trader or company involved in any activity violating the Fairtrade standards. The mechanism is explicit and clear: It’s the consequences for a breach in the standards that protects the integrity of the Fairtrade system and that’s why people trust it so much.
If it’s as good as you say, why aren’t more farmers and producers involved with Fairtrade?
The current system of commerce rewards the cheapest. So since slavery will always be cheaper than doing things fairly or sustainably – it’s hard to compete.
In Fairtrade we don’t buy and sell things. Instead we have a system, a bit like a set of rules for everybody to play by that protects and enables the most marginalised to have control over their future and to have a fair go. We have to work on consumer awareness at the same time as we are working on issues like quality, productivity and governance.
The challenge is that we have to have buyers. Companies are willing to invest in these supply chains and the people in these developing countries that just need a fair go. I think the new modern slavery legislation will help many more to see the benefits of transparency and thriving communities.
It requires consumers to be informed enough to demand Fairtrade certified products. Consumers need to push companies and the companies need to be profitable. We have amazing leaders in communities and companies across the world that invest in Fairtrade value chains. But we constantly have to help everyone understand the long-term benefits to us – and the world – of supporting the transformation of trade.
For more on the work of Fairtrade Australia and New Zealand and certified Fairtrade products visit fairtrade.com.au