The Fairtrade Foundation has reported a 12% rise in estimated retail sales of Fairtrade products in the UK for 2011 to GBP1.32bn (US$2.09bn). Chief executive of Fairtrade pioneer Traidcraft, Paul Chandler, discusses the continued strong growth in Fairtrade, the pros and cons of multinational involvement and the potential for further growth.
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just-food: What does the growth in Fairtrade announced today say about the robustness of the ethical goods market in the UK and changing consumer sensibilities?
Chandler: It is clearly very encouraging that despite the challenging economic environment sales of Fairtrade products have continued to grow. This reflects the continuing commitment of the British public to buying ethical goods, and the priority many of them still give to such issues despite having to tighten their belts. The growth in ethical consumption patterns over the past decade has been remarkable.
just-food: Do you think the 2011 growth rate can be maintained in 2012?
Chandler: I see no reason at all why the rate should not be sustained. In 2012 we will see the impact of Maltesers going Fairtrade, the advent of Fairtrade sugar in Morrisons and the continued extension of Fairtrade ranges in the Co-op, and as other companies switch to Fairtrade there is every prospect that this momentum will be sustained.
just-food: As Traidcraft was a pioneer of Fairtrade sugar, how satisfying is the 21% growth in sugar?
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By GlobalDataChandler: Traidcraft is delighted by the significant growth of Fairtrade sugar, which provides opportunities for many more farmers. As well as bagged sugar, sugar is of course a key ingredient so there are good opportunities for further growth.
just-food: How do you feel the advent of big business has changed Fairtrade?
Chandler: Traidcraft has always been supportive of bringing in the bigger companies. If we’re serious about helping millions of people out of poverty through trade then we need the scale, the market access and the skills transfer that can come from engaging with these bigger companies.
just-food: But has it brought challenges for the pioneer brands?
Chandler: At a very practical level, it clearly does challenge some of the longer established brands because we now have very powerful competitors operating in the same product categories as ourselves.
Whilst I wouldn’t say that is necessarily a bad thing, it poses a challenge to us and the things we’re trying to do in Fairtrade which go beyond that which is stood for by the Fairtrade mark.
just-food: Such as developing new sectors?
Chandler: Traidcraft tries to pioneer new sectors for Fairtrade, moving into areas where the Fairtrade mark doesn’t yet exist. We can do that with credibility in a way that the bigger companies can’t. But we need an underlying business that’s sustainable in order to be able to invest in this sort of pioneering work.
just-food: Could you given an example you’re currently working on in the food sector?
Chandler: We’re now beginning to look and explore what Fairtrade would look like in palm oil, which is one of the biggest commodities where there is small producer potential and existing involvement but where there’s no Fairtrade standard.
just-food: Are there also differences in the way multinationals develop Fairtrade supply chains?
Chandler: The big companies like to purchase Fairtrade often from their existing supply chains, rather than taking on new producers. And often those are from larger scale estates and plantations. There then comes a danger that a system whose origins were to help small-scale producers actually could begin to work in ways which exclude the small producers access to the markets.
just-food: How can this impact be mitigated?
Chandler: I’ve argued that when a new big company is coming in, a proportion of their throughput ought to be reserved to new smallholders and more impoverished or marginalised producer groups who don’t have access, so that we don’t lose the developmental edge.
Requiring development of some additional suppliers would be a reasonable ask to make and I don’t think we’re making it strongly enough.
just-food: But isn’t it more or less inevitable that powerful corporate players will end up dominating the agenda and shaping multi-stakeholder systems by dint of their scale and resources?
Chandler: There is definitely a risk of it. Where Fairtrade has an advantage over some other systems potentially is that the governance structures give a strong voice to producers, and so that can act as a constraint on the power of multinationals. But that is not a complete safeguard and it is something that I would agree one has to be very wary of.
Thus far, I don’t think I’ve seen any major undue compromises as a result of corporate pressure, but it’s an ever-present danger and we have to keep very alert to it.
just-food: So presumably you welcome the announcement in October increasing producer representation in the Fairtrade International (FLO) General Assembly?
Chandler: I think the fact that producers now have 50% of the votes at the FLO General Assembly is the right way forward in terms of accountability, because the producers are the most important and legitimate voice in safeguarding standards.
just-food: Has the expansion of Fairtrade meant Traidcraft has had to change its business model?
Chandler: What’s changed is that we are entering into more partnerships with companies to bring new products to market, in particular going into new sectors.
For us, the church base remains absolutely vital because most of the supermarkets don’t stock a wide range of Traidcraft-branded products. It’s also more profitable per pound of sale and therefore enables us to invest in these wider aspects of our business that we’ve been talking about.
just-food: Are your traditional customers now making more of their Fairtrade purchases at supermarkets?
Chandler: The competition from supermarket Fairtrade is having an impact. We’re having to raise our game in communicating to our traditional supporter base why Traidcraft is doing things for development that go well beyond the normal Fairtrade mark itself, and it’s fair to say that it’s quite challenging.
But we’re holding the church sales steady and growing our direct, mail order and web store sales. And our strategy has always been not to grow for our own sake, but to bring in others. Our market share has declined, but we were always about growing the market and being a catalyst.
just-food: Where can Fairtrade go in terms of scale?
Chandler: Under the current model, there’s no reason why it couldn’t grow hugely bigger. We’re still at a very small percentage of what could be fairly traded. It will take time to transition enough producers to make it possible. But the scope is there. It could grow very large indeed.
The key concern is that smallholders don’t get completely squeezed out in that process, but there are many workers on estates and plantations who will benefit as well and we must welcome that. And the larger Fairtrade gets, the more it influences the general ethical agenda around food and other products.
just-food: And the demand will be there?
Chandler: With the growing enthusiasm of school children and university students for Fairtrade there are promising signs that consumer demand will continue to grow in future years, as the next generation adds their support to the movement.
