Beverages: Ethical trading

18 May 2006
Beverages: Ethical trading

The image of "ethical" trading has recently come in for some knocks. The Adam Smith Institute report called Fairtrade "a well-meaning dead end", and councillors in Esher, Surrey, called it "a seductively branded racket". In an article entitled Just Say No To Fairtrade in a US newspaper, an economist argued that Fairtrade cannot benefit poor farmers.

Starbucks recently suffered an international PR disaster when an internet group decided to test its claim that Fairtrade coffee was available on request. Over-the-counter reactions from around the world ranged from "fair what?" to "all our coffee is Fairtrade" - which it's not. And this is the great problem for ethical trading - most caterers only vaguely understand either the dynamics or the public acceptance of it.

The two major bodies that the British trader will hear of are Fairtrade and the Rainforest Alliance. They're not direct rivals, and a crop may be certified by both - the roaster Matthew Algie has a uniquely triple-certified coffee in Tiki, which is Fairtrade, Rainforest Alliance and audited as organic.

Fairtrade was formed to protect against exploitation and sets a minimum price for coffee and tea bought from accredited farms. The Rainforest Alliance works for environmental sustainability and sets no price guide, but because the growers are helped to improve product quality, they usually achieve better prices.

Accreditation involves inspections to advise on growing methods and social conditions, and costs money. Sometimes the farmers raise it and sometimes coffee-roasters in consuming countries will pick up the tab - when Lavazza recently devised its new Tierra coffee, blended from the produce of farmers in Honduras, Colombia and Peru, the brand chose to hire Rainforest Alliance as an independent auditor of the growers' social and working conditions and the way in which their land was being used.

Fine Foods International (FFI) has run detailed research into the number of caterers working with Fairtrade or fairly traded products and reports that almost 40% claim to do so to some degree.

The reasons for it being a minority are at first puzzling -
42% of caterers simply hadn't considered it, 26% say their wholesaler doesn't supply Fairtrade products, and 6% had never heard of Fairtrade, with hotels in particular suffering from low awareness of the issue.

To be fair, the supply problem is understandable. Until recently, the Fairtrade Foundation's own directory of trade suppliers was highly inadequate. And yet Fairtrade has had big successes. Public interest is shown by the UK's current roster of 149 Fairtrade Towns, with 238 more working towards the status, and the organisation's last annual survey suggestion that half the population now recognises the Fairtrade mark, with 25- to 34-year-olds the most active supporters.

This points to a business opportunity, and by the time Marks & Spencer saw the trend and turned entirely to Fairtrade beverages, the Glastonbury festival had done so, and so had railway-station kiosk company AMT. The Slug & Lettuce bar chain now serves only Fairtrade coffee and tea, and food director Jason Danciger says this was partly because of commercial practicality. "We tasted Fairtrade beans against a variety of others - in simple terms, we wanted Fairtrade, but only if the quality was good enough," he says.

There's more to that comment than meets the eye. Part of the reason why Fairtrade is not universally loved within the beverage trade is because of product quality. Fairtrade says its support helps farmers to produce better crops, but the very demanding speciality coffee roasters are not satisfied.

Typically, Steve Leighton, owner of the Staffordshire craft roaster Has Bean, explains why he abandoned Fairtrade completely. "The beans offered under Fairtrade are often far from the best," he says. "A product that has no quality checks and still demands a premium from the importer and consumer is a strange concept. Instead, I support the Cup of Excellence."

The little-known Cup of Excellence is an intriguing concept. Seven Central and South American countries take part, and any farmer can put forward his coffee without paying a fee. International judges choose the very best coffees to forward to auction, and the prices paid are staggering. It's not Fairtrade as such - but the record price paid, in January this year, was $49.75 (£26) per pound at a time when commodity coffee could be bought at less than a dollar a pound, and those who have taken part in auctions tell of farmers breaking down in tears as one great crop wiped out their family's debts.

"Recently we paid a farmer $16.30 [£8.74] a pound for a Cup of Excellence coffee, when the market was at around $1.15 [62p] a pound," confirms Leighton. "So, is our coffee Fairtrade? No. Is it fairly traded? Yes. Don't be fooled into thinking the only fair deals are done under the Fairtrade label."

Some coffee roasters agree with him and some don't. Harriet Lamb, executive director of the Fairtrade Foundation, says that it's up to the buyer to decide what's good quality, and at Matthew Algie, marketing manager Colin Hopkins agrees. "It used to be that Fairtrade coffee wasn't any good, but that argument just doesn't hold water any more. Your buyers have to go and find the good quality coffees and that's not the job of the Fairtrade Foundation."

At Bolling Coffee, roaster Ian Balmforth is impartial. He criticises some Fairtrade quality, yet is also involved in making his home area a Fairtrade Valley and is working to help customers make an informed choice between accreditations.

Ian Breminer, managing director of coffee importer Ridge & Breminer, sees a national preference. "The caterer might ask ‘what are my customers interested in?', and the answer is that the British are generally in favour of helping people. Other European countries prefer environmental causes."

At Gala, which holds the Lyons brand, food service director Jim Cain observes that the caterer's usual supplier may already have chosen a cause. If it has, he suggests, it's a very good idea to ask what the supplier understands about it because some salesmen have a very sketchy knowledge of it, and there have actually been Fairtrade fakes.

In genuinely ethically sourced coffee, there is terminology to watch - Fairtrade, with a capital F, means produce certified by the Fairtrade Labelling Organisation. But fair-trade, with a small F, refers to produce traded under other ethical conditions, and there are dozens of legitimate individual campaigns supporting growers.

Typically, Ridge & Breminer supports Children of the Andes, which has rescued more than 25,000 Colombian boys and girls from life on the streets, Café du Monde sponsors a coffee-growing village in Kenya with a monthly cash aid, and Aylesbury roaster Hill & Valley has helped build a refuge for street orphans in Bogota, and supports Aids orphans in Africa. First Choice supports both Rainforest and Fairtrade, and goes for organic certification as well. Cafédirect is the UK's largest Fairtrade beverages brand, and the first to carry the Fairtrade Mark - as well as paying the accepted premium price, the brand also adds a premium of its own, and as a result, its Teadirect's sales in
2004-05 boosted growing communities by £1.8m.

Some suppliers support the Coffee Kids charity, founded by a coffee importer who visited a growing community and saw poverty which changed his life. He now has major supporters - Percol put his logo on supermarket shelves.

Visibility Some of these initiatives have wide public visibility and some don't - the Progreso coffee bars, run jointly by Oxfam and the Matthew Algie roastery, have only a handful of sites but a solid following from those who know that a co-operative of small farmers has been given a share in the business.

All this initiative in ethical trading has come from independent companies. The multinational brands acknowledge that they were late on the scene, and although they have yet to win unequivocal admiration from cause activists, most of them have at least started. Nestlé launched its Partners Blend, bought to Fairtrade standards, last October. Kraft launched Kenco Sustainable Development, choosing Rainforest as its certification.

Does it make business sense for the caterer? In recent years, there was a problem - ethically sourced coffee cost far more than conventional commodity coffee. Some caterers charged the customer more for it. Now, the majority of trade suppliers acknowledge that ethically-sourced coffee does cost them a premium but they subsidise it.

In the FFI survey, less than 10% of caterers said they now charge a premium, preferring to absorb what was seen as about half a penny a cup. One caterer in seven switched to Fairtrade because of customer demand.

"It is clear," confirmed FFI in the conclusion to its report, "that market dynamics are now very much in favour of fair trade."


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