Newspaper Articles

Fair trade organisations have an important role in putting pressure on companies to comply to socially responsible criteria and to denounce violations of regulations.

by Vince Caruana

Many people consider fair trade to be marginal or alternative because the total amount of trade in fair traded products as a percentage of all world trade is still very low. However, there is another often overlooked aspect to fair trade and that is the pressure fair trade organisations put on mainstream business to act more responsibly.

Fair trade organisations have contributed significantly to the empowerment of an ethical consumer movement and to the creation of an ethical consumer market. Corporations are now striving to meet these new consumer demands with claims of being concerned about their social responsibility and with various statements of intent and codes of conduct.

Fair trade organisations have thus laid the foundation for economic and business practices that respect producers and workers involved in the production chains. A number of companies and major corporations are setting up networks to jump on the bandwagon of social responsibility and to devise strategies that might help them implement their commitments to social responsibility.

Although fair trade organisations approve and encourage initiatives from companies to be more socially responsible, their first priority is to set the basic standards. Unfortunately, various commitments on paper often fall short of social responsibility and various efforts by corporations can be regarded as "window dressing". Fair trade organisations believe that increased accountability requires hard facts to be put into the public domain so that people can judge how and whether the industry is meeting credible corporate social responsibility targets. A statement of intent is not enough.

One global observation that can be made is that working conditions have not really improved and the efficiency of codes of conduct is controversial. Here are some examples:

The ethical trading initiative (ETI) was initiated by NGOs in the UK and is an alliance of NGOs, trade unions and corporations. ETI is mainly committed to developing the implementation of codes of conduct and ethical trade. In a recent survey on the compliance with its own code among 11 of its 14 member companies, the ETI assessed 1,183 suppliers. Sixty-six per cent did not comply with the code, mainly insofar as working hours, minimum living wage, health and safety and freedom of association go.

A government survey carried out in 70 textile workshops in Los Angeles in 1998 revealed that compliance with the main labour standards (child labour, minimum wages, overtime, etc.) had remained significantly unchanged for six years in spite of various schemes being set up to verify the implementation of labour laws.

Nevertheless, other efforts show a good direction, really leading to improvements in social conditions. For example the Clean Clothes Campaign has established important contacts between northern and southern organisations, thus strengthening the monitoring of voluntary initiatives.

Fair trade organisations have an important role in putting pressure on companies to have them comply to socially responsible criteria and to denounce violations of regulations. While they are powerless to impose sanctions, they can impose moral sanctions, which in some cases can be prejudicial to the company's interests as it tarnishes its image.

For more information contact Koperattiva Kummerc Gust at http://www.maltaforum.org or kkg@maltaforum.org.

Some 25 million families who produce coffee struggle to survive

by Karsten Xuereb

Coffee farmers in developing countries do not even cover production costs.

The price of coffee has fallen by almost 50 per cent in the past three years to a 30-year low. The price farmers in developing countries get for their coffee is lower than production costs - for example, only 60 per cent of production costs in Vietnam's Dak Lak province - forcing them into a cycle of poverty and debt.

Farmers sell at a heavy loss while branded coffee sells at a hefty profit. According to Nestor Osorio of the International Coffee Organisation, the major coffee companies' revenues have doubled in the last decade whereas the earnings of ordinary coffee farmers have been slashed by two-thirds in the same period.

According to a recent Oxfam report, the long-term prospects of coffee farmers are grim and the coffee crisis has become a development disaster whose impacts will be felt for a long time.

Families dependent on the money generated by coffee are pulling their children, especially girls, out of school. They can no longer afford basic medicines and are cutting back on food.

Fair Trade certification is an alternative approach to the coffee market that puts more of the profit in the hands of coffee farmers. Coffee companies that import and roast Fair Trade coffee guarantee farmers a minimum price of Lm1.19 per kilogramme and Lm1.34 if certified organic. This can be as much as a three- or even four-fold increase to what some farmers might otherwise receive for their crop. This increase is possible because the Fair Trade system eliminates a number of middlemen where much of the profit goes in the open coffee market.

To obtain Fair Trade certification an importer must meet other stringent international criteria apart from paying a minimum price, which include providing much needed credit to farmers and providing technical assistance such as help the transition to organic farming.

Fair Trade Labelling Organisation also certifies that the profits from the Fair Trade premium price are used in ways that help small scale coffee farmers increase their income and invest in community improvements, such as clean water, medical clinics, and schools.

Thus, Fair Trade offers consumers a way to channel their purchases into socially responsible products that support families who might not otherwise get a fair deal.

At a conference on the implications of Free Trade and globalisation on the Mediterranean, held by Alternattiva Demokratika and the European Federation of Green Parties, the finance minister was asked whether Malta had a policy on fair trade in general and fair traded coffee in particular. The answer was that the Maltese government did not have such a policy. This is a real pity.

Fair Traded coffee is served in the European Parliament, several national and state legislatures and numerous city councils. By supporting Fair Traded coffee, legislatures and governments are supporting a socially just system that makes the world a better place.

For more information contact Koperattiva Kummerc Gust at http://www.maltaforum.org or kkg@maltaforum.org.