CR Leaders Corner: Rob Cameron

rob-cameron

An Interview with Rob Cameron, CEO of Fairtrade International

Rob Cameron is CEO of Fairtrade International, the central body that sets Fairtrade standards, develops global strategy, supports producers, and promotes trade justice around the world.  Fairtrade is the most widely-recognized ethical label in the world, according to a comprehensive study of 17,000 consumers in 24 countries. More than 80 percent of consumers recognize the Fairtrade Mark in the UK, Ireland, Switzerland, Netherlands, Austria and Finland. Despite a difficult economic climate, Fairtrade sales have grown consistently, in the process strengthening local producers and improving the lives of millions of people in the developing world.  Prior to taking on the leadership role at Fairtrade in 2007, Rob was the owner and executive chairman of Flag, an international sustainability and CSR communication firm. In addition, he has served with many organizations in the CR arena, most notably as a UK Prince of Wales’ Ambassador for Corporate Responsibility.

1.  Accountability:  What is Fair Trade? What is Fairtrade?

Rob Cameron:  The term Fair Trade is used to refer to a concept and a broader movement which seeks to provide producers a fairer trade deal. The most widely recognized definition of Fair Trade was created by an informal association of the four main Fair Trade networks (Fairtrade International, World Fair Trade Organization, Network of European World Shops and European Fair Trade Association).

The term Fairtrade is used to describe the certification and labeling system governed by Fairtrade International. Fairtrade offers farmers and workers in developing countries a better deal and the opportunity to improve their lives and plan for their future. Consumers can identify goods that have met Fairtrade Standards via the international FAIRTRADE Certification Mark, an independent product label.

A product with the FAIRTRADE Mark means independent certification against the Fairtrade Standards at each step of the supply chain.  An independent certification company FLO-CERT certifies all Fairtrade producer organizations.  FLO-CERT or the national labeling initiatives (Fairtrade organizations in consumer countries) certify the trading companies.

2.  AA:  What are some of the problems Fairtrade seeks to address?

RC:  Not all trade is fair. Farmers and workers at the beginning of the chain don’t always get a fair share of the benefits of trade. Fairtrade enables consumers to put this right.

For a product to be labeled with the FAIRTRADE Certification Mark, certain standards must be met which cover areas such as pricing, financing, contracts, labor rights, environment, and democracy.

There are two distinct sets of Fairtrade Standards, which address different types of disadvantaged producers. One set of standards applies to smallholders that are working together in co-operatives or other organizations with a democratic structure. The other set applies to workers, whose employers pay decent wages, guarantee the right to join trade unions, ensure health and safety standards and provide adequate housing where relevant.

Fairtrade Standards also cover terms of trade. Most products have a Fairtrade Price, which is the minimum that must be paid to the producers.  This price aims to ensure that producers can cover their average costs of sustainable production and acts as a safety net for farmers at times when world markets fall below a sustainable level. Without this, farmers are completely at the mercy of the market.

Producers also get an additional sum, the Fairtrade Premium which goes into a communal fund for workers and farmer to improve social, economic and environmental condition.  Such funds are typically invested in education and healthcare, farm improvements to increase yield and quality, or processing facilities to increase income.

3.  AA:  In a tough economy, what is the current state of Fairtrade?

RC:  Fairtrade continues to experience strong growth despite difficult economic times. In 2010 shoppers spent more than 4.36 billion Euros on Fairtrade products, up by 27 percent over 2009 sales.  The UK is the largest consumer market for Fairtrade products, with 1.3 billion Euros in retail sales in 2010 (40% growth over 2009).

4.  AA:  What evidence is there that Fairtrade delivers the benefits advertised?

RC:  A number of reports and impact studies have looked into the benefits of Fairtrade. In 2009 the Natural Resources Institute conducted a review of the literature published on Fairtrade’s impact over a 10 year period. They concluded: “This extensive review of the literature finds strong evidence that Fairtrade provides a favorable economic opportunity for smallholder farming families who are able to form producer organizations and provide products of the right specifications for the market.

A high proportion of the studies reviewed found higher returns and more stable incomes as clear benefits enjoyed by Fairtrade producers from sales to Fairtrade markets compared to sales into conventional ones.

5.  AA:  How much does certification add to the price of the product?

RC:  There are numerous examples where the certification costs have been borne by the retailers (Starbucks coffee, Sainsbury’s bananas, Cadbury Dairy Milk) so there is no increase charged to the consumer when compared to other products.

Fairtrade doesn’t regulate the final consumer price, but we regulate the price paid to producers. Whichever Fairtrade product you choose, you can be sure that the full value of the agreed Fairtrade price and the Fairtrade Premium goes back to the producers – and that we are auditing that this is happening.

6.  AA:  What products typically have Fairtrade certification?

RC:  The major Fairtrade products are coffee, cocoa, bananas, tea, cotton and sugar. In total there are hundreds of Fairtrade certified products available, including a variety of fresh and dried fruits, herbs and spices, nuts and oilseeds, grains, wine, flowers, etc., etc.

Fairtrade mainly certifies agricultural products, but we also have sports balls (stitched/manufactured according to Fairtrade Standards), gold (in cooperation with the Alliance for Responsible Mining), and we are running pilots in timber (in cooperation with the Forest Stewardship Council) and exploring standards for aquaculture.

Since Fairtrade still makes up a small percentage of overall world trade we see a real opportunity to bring Fairtrade to scale in our major product categories. There is a lot of attention on ethically sourced cocoa at the moment with the 10 year anniversary of the Harkin-Engel Protocol.

7.  AA:  What drives the uptake of Fairtrade certification? Push from producers/retailers? Pull from consumers?

RC:  Both. We’ve seen great success in markets where there are awareness-raising campaigns among consumers, for example through the Fairtrade Towns campaign (fairtradetowns.org), and then the major retailers are brought on board.  A number of retailers have made important commitments to Fairtrade. For example, 100% of the bananas sold in Sainsbury’s are Fairtrade certified. Both UK and Germany have reported that supermarkets are expanding the range of Fairtrade products within their own-brand product portfolios.

8.  AA:  Some critics maintain that Fairtrade certification is a subsidy that impedes growth and distorts the market forces of supply and demand.  How do you respond to that criticism?

RC:  These claims tend to be based on ideological grounds and not on firm evidence. We are not aware of any concrete evidence that Fairtrade distorts the market. In fact, by providing producers fairly, they have more resources to invest in quality/productivity and crop diversification, and flexibility to respond to market signals.

9.  AA:  In an era of rising commodity prices, is there still a compelling rationale for a fair trade certification system?

RC:  Most of the commodities are highly volatile and a high price today does not necessarily make the Fairtrade Minimum Price irrelevant. It is a base price and when the market price is higher producers get the market price or the price negotiated at contract signing. But producers still have the security of knowing that they have a base price. The Fairtrade Minimum Price can also help producers access greater pre-financing for the harvest by demonstrating credit-worthiness to banks. Fairtrade also has links to development banks and under the Fairtrade Standards, producers can request up to 60% of the contract price to finance the harvest.

Regardless of the price, producers receive the Fairtrade Premium over and above the final price, which is used in social and business development projects in their communities.

Fairtrade provides a number of important additional (non-price related) benefits. It can facilitate market access, particularly for small-scale farmers. It supports organizational development. When farmers and workers are organized, they gain stronger bargaining power and can invest in shared projects.

10.  AA:  What are the major challenges for Fairtrade going forward?

RC: Climate change and Workers rights are the two big issues for us.

Farmers are often overlooked in the current climate change policy frameworks.  For example, climate change has wiped out nearly half of the 10 million coffee trees the members of the Fairtrade Mzuzu Coffee Planters Cooperative Union in Malawi have planted since 2003.  Elsewhere, some Fairtrade producers have experienced as much as a 28% yield reduction due to climate change. To vulnerable farmers, climate change is a reality that threatens their livelihood.  Fairtrade is therefore calling upon world leaders, at COP17 and beyond, to prioritize policies geared to agriculture dependent communities.

In regard to Workers rights, despite our rigorous Standards and certification system, we know that workers can face many barriers, some subtle, some overt to enjoying quality work conditions and to forming or joining a union, even in Fairtrade. That’s why we’ve launched a major program to deepen Fairtrade’s impact for workers and hired labourers.

Beyond these issues, the challenge of course, is always to take Fairtrade to scale. We’ve had very good growth since our beginnings, and now we want Fairtrade to reach millions more farmers and workers to transform the way trade is done.