Fairtrade Labelling Organizations International (FLO) Shaping Global Partnerships Forum on Global Citizenship YMCA Asia

1. Fairtrade Labelling Organizations International (FLO) Shaping Global Partnerships Forum on Global Citizenship YMCA Asia Youth Center, Tokyo Japan 18th October 2008 Kaori NAKAJIMA, Fairtrade Label Japan

2. Why Fair Trade? • Not all producers benefit equally from the advantages of international global trade • No access to markets and price information • Dependance on middlemen, No negotiation power • Not abel to get fair price • For workers, low wages, unsafe working conditions, no freedom to join a union •  Fair Trade or Alternative Trade to the existing “Unfair” International Trade •  Fair Trade addresses the injustices of conventional trade

3. The Arabica Coffee Market 1989-2006Comparison of Fairtrade and New York Exchange prices

4. What is Fair Trade?the basic principles (FINE definition) “a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, disadvantaged producers and workers – especially in the South.” Central values: partnership, dialogue, transparency, accountability, respect, (gender-)equity, sustainability

5. FLO International’s mission To enable thesustainable development and empowerment of disadvantaged producers & workers in developing countries through Fairtrade labelling by: • setting international Fairtrade standards • certifying production and trade according to these Fairtrade standards • facilitating producers’ compliance with the standards, and facilitating producers’ access to the preferential fairtrade market • promoting the case for trade justice

6. Aims of Fairtrade Aim: Sustainable development through trade, for disadvantaged producers in developing countries Fairtrade Labelling combats poverty through trade. Means: Market access under good trading conditions It is a market-based approach to supporting development and empowering producers most disadvantaged by unequal trade conditions, primarily in the Global South. Instruments: • Standards for producers and importing traders – mutual effort for sustainability • Certification by FLO-CERT – certification mark for the consumer / end user

7. History of Labelling Initiatives and FLO • First Fairtrade label, called Max Havelaar, was initiated in 1988 in the Netherlands. • After this first initiative, other national Fairtrade labellers soon followed, some using the same name, other introducing new names like TransFair or the Fairtrade Foundation. • In 1997, FLO International was established, as a sectretariat for all National Labelling Initiatives. At first it was seen as an internal service office for all member organizations.

8. History of Labelling Initiatives and FLO II • Since 2001: Harmonization of Standards, certification procedures and trade certification • On September 2003, FLO transformed its former certification department into a separate legal entity: FLO-CERT GmbH (Ltd.). The main reasons for the foundation of FLO-CERT were to make Fairtrade certification operations more transparent, to fully comply with ISO 65 (the worldwide quality standard for certification organizations) and to limit the liability of FLO e.V.

9. Fairtrade Labelling Organizations (FLO) International FAIRTRADE LABELLING ORGANIZATIONS INTERNATIONAL (FLO) was established in 1997, and is an association of 20 national labelling initiatives that promote and market the Fairtrade CM in their countries. FLO International is the worldwide standard setting and certification body for labelled Fairtrade. It regularly inspects and certifies producer organizations in more than 50 countries in Africa, Asia and Latin America, encompassing approximately 1.5 million families and workers

10. FLO International is made up of two organizations 1) FLO International e.V. is a publicly recognized non-profit multi-stakeholder association involving FLO’s 20 member organizations (or Labelling Initiatives), producer organizations, trader and external experts. It develops and reviews Standards and assists producers in gaining and maintaining certification in order to capitalize on market opportunities. 2) FLO-CERT GmbH is a limited company that coordinates all tasks and processes all information related to the inspection and certification of producers and of trade. Operating independently from any other interests, it follows the international ISO Standard for Certification Bodies (ISO 65).

11. FLO’s Structure Labelling Initiatives (LI) (20LIs・21 Countries) Producer Networks 3 continents - Latin America, Africa and Asia FLO International (Association) ・Setting Fairtrade Standards ・Producer Support FLO-CERT (Limited Company) • Producer Certification • Trader Certification

12. How Fairtrade works Fairtrade is best described from three points of view: • Producer side • Market side • Four elements of infrastructure and governance

13. How Fairtrade works – the producer side • Fairtrade standards, which aim to encourage co-operation and collaboration • Producers apply for certification • Producers are certified by FLO-CERT, a separate certification body • Certified producers are guaranteed a price that covers • minimum cost of sustainable production, • a “Fairtrade Premium“ for social, environmental or capacity projects • Producers receive no guarantee on levels of sales

14. How Fairtrade works – the market side • 20 nationally-based labelling initiatives license the Fairtrade label to manufacturers and retailers • The costs are absorbed by the licensee or passed on to the consumer • Trade certification – conducted by FLO-CERT or labelling initiatives – ensures product and supply chain integrity

15. The four elements of Fairtrade Labelling

16. The four elements of Fairtrade Labelling

17. The four elements of Fairtrade Labelling

18. The four elements of Fairtrade Labelling

19. The four elements of Fairtrade Labelling

20. Fairtrade Standard Setting • Producer standards: • Small farmers / Hired labour • Generic / Product specific • Minimum requirements / Progress requirements • Trading standards: • Price • Premium • Pre-financing • Medium/long term commitment Standards Unit and Committee: Stakeholders participation

21. International Fairtrade Standards

22. Food Products Non-Food Products Products

23. Who are the Fairtrade producers? • Small farmers:they are part of organizations, which are able to contribute to the social and economic development of their members and their communities and are democratically controlled by their direct members. Hired labour:Organizations which use hired labour can only participate in Fairtrade if they are organized, normally in unions, and if the company they work for (farm, plantation, etc.) is prepared to promote workers’ development and to pass on to the workers the additional revenues generated by fair trade.

24. Producer Standards Minimum Requirements: • Must be met at moment of Initial Certification • Show that organisation has potential for development • Make sure that Fairtrade benefits can reach target group Progress Requirements: • Dynamic issues addressing the development process

25. Achievements in the South • Fairtrade directly benefits over 1.5 million producers & workers • Including their families, 7.5 million people benefit indirectly • Fairtrade certified producers operate in 58 countries • 632 producer organisations are in Fairtrade • 100 million Euros additional income in 2006 alone • 35% of Fairtrade volume also organically certified

26. Premium Projects Water Education Infrastructure Health

27. Impact of Fairtrade for producers FT means that producers receive a fair price but it goes far beyond a simple economic transaction: • Producers and workers get experience in organising themselves to defend their rights • Producers learn about the international trade of their product and acquire export experience • improve the quality of their product through close cooperation with Fairtrade registered importers. • Workers learn what their rights are and how the organisation is managed. • They are also involved in project definition of the Fairtrade premium income.

28. Market Development

29. Over 1500 product lines available in over 60 countries

30. International Fairtrade Sales (estimated retail value in million Euros) Annual Compound Growth 2003-2006: 39%

31. Sales Volumes Fairtrade Coffee

32. Sales Volumes Fairtrade Coffee • In the UK, 20% market share for roasted and ground coffee and an estimated of 5% market share for instant coffee • 5% market share in Canada • Marks & Spencer converted its entire coffee range to Fairtrade in 2006 • Dunkin Donuts, a global retailer and franchiser adopted a policy of 100% Fairtrade espresso coffee in Northern America and Europe

33. Sales volumes Fairtrade bananas

34. Selected Market Shares

35. Fair Trade in Trend: Examples Sells exclusively Fair Trade bananas Unilever (Europe): launch Ben&Jerry’s Fair Trade Icecream Over 100 brand products,Over 30 private label products Nestlé UK launched «Partners Blend» Complete switch of coffee / tea (6% growth vs. 1.5% market), textiles Cafédirect sells exclusively FT certified products Various offers in restaurant chains and public transport Michel: Conversion of Michel Orange Premium and Bodyguard Companies oftenserve FT productsin canteens

36. Marketing FTL Products Overall objective: Increase sales of Fairtrade labelled products Specific objectives: 1. Increase awareness of Fairtrade 1.1. Awareness on consumer level 1.2. Awareness in policy discussion 2. Increase availability of Fairtrade products 2.1. Market penetration 2.2. New Product Development 2.3. New Markets 2.4 Link up certified producers & registered traders in the South with Fairtrade markets in the North

37. The Fairtrade Certification Mark (CM) The Fairtrade CM is a “seal of approval” that appears on products that meet internationally agreed Fairtrade Standards and which guarantees to consumers that their purchases will benefit the producers, their families and the surrounding communities from the developing countries that they originate from.

38. The Power of the Mark • 20 years of independent guarantee for Fairtrade • Recognition in Europe ranges from 42-84% • Bridging between commercial and civil organizations • Co-operates with major international NGOs, including Oxfam • Commercial partners such as Tesco, Carrefour, Coop, Marks & Spencer, Ben & Jerry’s • Each of us (consumers, businesses, NGO’s) can make a difference to reduce poverty, but by working together we can do more than we can separately.

39. What makes Fairtrade Unique? • Fairtrade is not only about social and environmentally friendly production methods, but about the empowerment and development of producers. • Fairtrade is a true multi-stakeholder organization whereby the producers take ownership in the system and participate at all levels of decision making.

40. Labelled Fairtrade:a viable tradealternative • 1. For producers • ▪ A fairer deal in a globalised market • ▪ An effective tool for autonomous development through trade • ▪ Empowerment of producers and producer organisations • For consumers • ▪An informed choice in (mainstream) shopping behaviour • ▪Consumers’ responsibility

41. Mobilizing Consumer Support Several important factors showing significant increase: • Awareness in richer countries of scale of global poverty and inequality. • Desire of individuals to “make a difference” • Interest in connecting individual actions with wider movements • Recognition of power as consumers to influence business practices Changing expectations are aproblem for businesses that fail to adapt, but anopportunityfor businesses that will.

42. Consumer Movement • Fairtrade is the sustainability label with the highest consumer awareness and likeability. • Fairtrade covers the largest range of products and therefore offers an opportunity for multi-category projects. • Fairtrade has a global reach and is present in all major consumer markets and supported by individual consumers, volunteers, NGOs, etc • Growing Movement - Fairtrade Town, Fairtrade University, Fairtrade School, Fairtrade Church • Education for Sustainable Development

43. Conclusion • In 20 years (since 1988) Fairtrade has established recognition, trust and support of consumers in most European countries, the US, Canada, Australia and New Zealand, Japan and the other Asian countries as well • Relative to its scale, Fairtrade is having a significant impact on producers in the developing world (> 1,500,000 farmers, workers and their families) • Each of us (consumers, businesses, NGO’s) can make a difference to reduce poverty, but by working together we can do more than we can separately.

44. Thank you for your attention! • FLO International www.fairtrade.net • FLO-CERT, the Fairtrade Certifier www.flo-cert.net • Fairtrade Label Japan www.fairtrade-jp.org