“It’s a coloured graph: it’s even more real”

1. ‘It’s a well known coloured label: it must be legitimately fair trade. Mustn’t it?’ “It’s a coloured graph: it’s even more real” Performance and Legitimacy of Fair Trade in Public Procurement Supply Chains Presented by Alastair M. Smith Performance and Legitimacy in Social Enterprises 3rd-4th March 2011 – HEC Management School University of Liege

2. Argument • UK Government policy encourages procurement of “fair” and “ethical” goods to promote sustainable development • Terms signify heterogeneous practices with different legitimacy and performance characteristics • However, arguably legitimacy a greater influence that performance for local decisions • Empirical investigation of social enterprise suggests legitimacy and performance are not necessarily correlated in public procurement Although it depends on your perspective…

3. UK Gov’ Discourse on Fair (& Ethical) Trade Anthropocentric and essentially an issue of Social Justice (Langhelle 2000) ‘the essential needs of the world’s poor to which overriding priority should be given’ (WCED 1987: 43)

4. OGC Discourse on Fair Trade…(and ethical trade)

5. Discourses and Practices of FT ‘Softer, more commercial’ ‘reformist’ version World Fair Trade Organisation Organisational (crafts & food) Negotiated or min prices Up-fron credit Stable Supportive Relations Direct Capacity Building Fairtrade International Product (arifood goods) Min Prices Up-front Credit Predictions of Demand Social Premium Promotes more equitable trade through existing structures and commercial channels which have no social objectives and bring less benefit to small farmers. To internalise cost traditional ‘externalised’ to south. Social Enterprises Internal norms Legitimised by reputation Profit Orientated Certification Approach

6. Consequences? Fischer (2009, p. 995) has suggested that the incorporation of fair trade within public procurement could either raise standards or, ‘because some companies supplying the public sector can be categories as “market driven buyers” (Raynolds 2009) or “corporate licensees” (Reed 2009), [equally] associated with the more worrying dimension of mainstreaming’.

7. OGC Discourse on Fair Trade…(and ethical trade)

8. 1st Buyer 1st Buyer Producer Producer Academics Differentiation

9. Research Questions • How is the concept of ‘fair trade’ incorporated and interpreted in public procurement discourse? • What factors have shaped these interpretations? • How does the contestation of the term fair trade impact the actual procurement strategies of public institutions? • What are the consequences of this process for producers in the global south?

10. Scotland as a Case Study • Scotland and Wales developed the Trade Nation scheme: • Developed out of partnership between civil society in Wales and WAG. • Long consideration of criterion: • Practical need to make quantitative requirements. • Wanted to work with what was out there. • Wales was declared first Fair Trade Nation 2008. • Scotland has embedded objective to attain status in International Development policy.

11. The Fair Trade Nation Criterion • 100% of Local Authorities have Fair Trade groups working toward Fairtrade Zone status • 55% of our Local Authorities having achieved Fairtrade Zone status. In following years, this must increase 10% per year until all 32 are Fairtrade Zones • 100% of cities have achieved Fairtrade City status • At least 55% of towns have Fair Trade groups working toward Fairtrade Town status • 60% of universities have active Fair Trade groups working toward Fairtrade status

12. Fairtrade Foundation’s Fairtrade Town scheme • The local council must pass a resolution supporting Fairtrade, and serve Fairtrade coffee and tea at its meetings and in offices and canteens. • Fairtrade products must be used by a number of local work places, educational establishments, faith communities and other community organisations. A flagship employer is required for populations over 100,000.

13. Sample Council Motion • The initiative involves a commitment to: • Widely offer FAIRTRADE Marked food and drink options internally and make them available for internal meetings • Promote the FAIRTRADE Mark using Fairtrade Foundation materials in refreshment areas and promoting the Fairtrade Towns initiative in internal and communications and external newsletters • Use influence to urge local retailers to provide Fairtrade options for residents • Use influence to urge local business to offer Fairtrade options to their staff and promote the FAIRTRADE Mark internally • Engage in a media campaign to publicise the Fairtrade Towns initiative • Allocate responsibility for progression of the Fairtrade Town initiative to a member or group of staff • Organise events and publicity during national Fairtrade Fortnight - the annual national campaign to promote sales of products with the FAIRTRADE Mark

14. Empirical Impact in Scotland • Majority (6/8) of LA motions with a general commitment use the term ‘Fairtrade’. • 4/9 motions which make procurement commitments specify Fairtrade certification. • 4/9 use the phrase ‘fair trade (such as the Fairtrade Mark)’ • 1/9 uses ‘fairly traded goods’.

15. Empirical Results in Scotland • General preference for FLO (fair trade) certified goods over Rainforest Alliance and Utz Café (ethical trade). ‘because we are a Fairtrade City under the Fairtrade Foundation scheme, we should only be using tea or coffee with the FLO Mark’. • Examples of more reflexive thinking: • Ensuring Fairtrade MARK for hot drinks but thinking more widely for other products.

16. Just Trading Scotland Imani Development Local Authority NASFM A More Creative Example • Local authority highly and reflectively embedded in community Fairtrade group. • Purchased non-certified ‘fairly traded’ rice based on reputation of ‘social economy’, ‘not from profit’ social enterprise importer. Malawi Scotland

17. ‘Producer’ Perspective • Malawi 160/182 UN HDI • NASFAM’s Initial mission to support smallholders during liberalisation of tobacco farming. • Also facilitates diversification of community and national production Tobacco  Groundnuts & Rice • Provide inputs and support. Acts as buyer. • Pays prices based on cost of sustainable production

18. Radical Fair Trade? • Kaporo Small Farmers Association is democratic farmers association • Just Trading Scotland (JTS) is a not for profit actor • JTS pay what is calculated • Proactive efforts to add as much value in Malawi and Kaporo as possible • JTS & Imani have invested in rice processing plant in Karonga • Value chain upgrading is fundamental to sus development • Provided scholarships

19. NASFAM and Fair Trade • Some FLO certification for groundnuts • Assisted market access, premium beneficial: ‘Without Fairtrade we would have never exported ground nuts to Europe’. ‘Fair Trade provides a great market angle!’. ‘Fair Trade is a very important market, the brand recognition side, if you are supplying to Fair Trade in Europe, any other conventional buyer will know that you are able to comply with the standards and that you are probably not able to cheat the farmers’.

20. Limitations to FLO Certification • Costs of Certification ‘Fees are quite high and management was of the view that it is like we are subsidising Fair Trade...Yes the farmer members are maybe benefiting in one way or another, but from a corporate point of view we are subsidising Fairtrade’. • Geographic restrictions: FLO certification for rice is only currently available for small farmers in Benin, Egypt, India, Laos, Sri Lanker and Thailand. • NASFAM are seeking cheaper WFTO membership for KSFA as a means to legitimise Fair Trade credentials. • Producer knowledge about fair trade depends on ‘who shouts the loudest’

21. Analysis • Fairtrade Foundation Towns scheme has influenced government procurement. • Fair trade and particularly FLO certification prioritised over Ethical Trade and particularly Rainforest Alliance certification. • Procurement likely to reinforce softer version of FT due to best value for money criteria • But: local steering groups can shape council policy and procurement decisions to differentiate. • Such choices shape opportunities for producers and set limitations for who gets assistance. • De facto requirement for FLO certification might bar some producers from market opportunities.

22. Questions and comments please!