Cadbury, Sainsbury’s, Tesco have sought alternative accreditation after concerns regarding the effectiveness of the scheme
Our appetite for Fairtrade had seemed insatiable. Other than a blip in 2015, when the march of the discounters trampled a £37m hole in sales of the ethically accredited food and drink, the fortunes of the iconic blue, green and black logo have risen steadily for more than 20 years. Last year, sales grew an impressive 7.1% thanks to a £30m boost from Mars switching over its flagship chocolate bar to accredited cocoa.
The first blow came in November. Mondelez confirmed it would be ditching Fairtrade from its Cadbury bars in favour of the stamp of approval from its own in-house ethical trading scheme Cocoa Life. Though Fairtrade publicly backed the move and partnered with Mondelez on its execution, alarm bells tinkled.
Their volume grew in May when Sainsbury’s confirmed it would be piloting its own ‘Fairly Traded’ sustainability standard across own label tea, stripping SKUs of their Fairtrade logo.
And they reached fever pitch last week when Tesco suppliers told The Grocer that the mult was opting for Rainforest Alliance (RA) accreditation over Fairtrade on the majority of its own-label coffee, following a similar move for tea announced in February.
Although Tesco insists “all of our finest roast and ground coffee continues to be Fairtrade”, claiming moves to RA accreditation will not come at the expense of the Fairtrade logo on any tea or coffee SKUs, the move has prompted serious questions over the future of the scheme. Why are so many dropping the Fairtrade name? And will it signal the end of the scheme?
Concerns over the effectiveness of the Fairtrade scheme at lifting farmers out of poverty have long been bubbling beneath the surface for years. As far back as 2010, the Institute of Economic Affairs claimed the Fairtrade rhetoric wasn’t “generally justified” with costs for producers “not inconsiderable” and “the objectives often fulfilled in conventional markets”. And these murmurs of discontent haven’t disappeared.
Some companies want “both more direct relationships with growers and producers and more transparency,”says founder of the Innovation Forum Tobias Webb, as they become “increasingly concerned about impact along with policy.”
Sam Bowman, executive director of think tank The Adam Smith Institute, says the scheme is not “inherently bad” but does arguably “divert people’s purchasing to less poor farmers” as a result of its focus on Latin America. There are also “problematic requirements about the types of farming and ownerships models that can take place.”
But Bowman believes the bottom line will be the biggest driver behind these moves. “Fairtrade goods do cost more; not massively more, but 10p or 20p more and sometimes as much as 50p if you’re talking about coffee. At a time like this when incomes are pretty tight, you can see why that might be an issue.”
In fact, following furore over its own trial switch Sainsbury’s referred explicitly to the fees it paid Fairtrade to display the logo, a cost both it and Mondelez will save by bringing the scheme in house. Similarly, RA accreditation is widely seen as less onerous, only requiring products to contain 30% certified content “as a starting point” to display its label, albeit with a qualifying statement, while for Fairtrade 100% of ingredients must meet the criteria.
The loss to Fairtrade of these high profile names is significant. As the world’s biggest retailer of Fairtrade products Sainsbury’s stocks 100+ SKU’s across fruit and veg, hot drinks, confectionery and other categories, with 61 of these (or 56%) currently own label. Tea and coffee dominate with 31 Fairtrade lines in total, 12 of which are own label. If - as Sainsbury’s say is the plan - the mult extends its pilot across more of these categories the blow to Fairtrade sales will be substantial.
Meanwhile though Tesco says it “offers our customers a wide selection of Fairtrade products” and has no plans to switch existing Fairtrade SKU’s away from the scheme, by opting for RA in its future accreditation plans it seems to paint a worrying picture for Fairtrade’s growth.
It will be producers in developing countries that currently receive the Fairtrade premium that will feel the impact most acutely
“We don’t look at it in those terms,” says commercial director of the Fairtrade Foundation Euan Venters. “We continue to be successful. Our sales are growing 2%, our major commodities are growing and Fairtrade Fortnight (in March) saw more people buying Fairtrade products than ever before.”
Many other retail partners also remain “hugely committed” with Co-operative members voting overwhelmingly to back the Fairtrade mark at its 2017 AGM and Waitrose too “making more and more products Fairtrade.”
A Co-op spokeswoman confirmed “as a long standing Fairtrade champion, we will continue to provide our customers with the opportunity to support farmers through offering as wide a range of Fairtrade Marked products as possible.”
It will be producers in developing countries that currently receive the Fairtrade premium that will feel the impact most acutely of less rigorous in-house schemes, insist both Venters and a number of NGO’s. “Sainsbury’s actions threaten to undermine decades’ worth of progress achieved by Fairtrade,” says Oxfam policy advisor Sloane Hamilton. “It is very concerning that farmers will no longer have direct control over how the money that is intended to benefit them is spent.”
On retailers opting for alternative independent certification meanwhile, such as the Rainforest Alliance “our view is pretty clear,” adds Venters. “We’re here to do what’s best for producers, and we believe that Fairtrade is of maximum benefit to farmers and would encourage anyone who wants to certify to choose Fairtrade.”
The Fairtrade mark does benefit from 97% recognition among shoppers too, claims the Foundation, making it the most easily recognisable ethical logo on the market. For that reason the major mults are unlikely to entirely back away from the scheme, believes Trefor Griffith, head of food and beverage at Grant Thornton. “Consumer trust is a hard fought commodity,” he says. “The Fairtrade accreditation provides universal recognition that products have been ethically and sustainably produced.”
New ethical schemes, with remarkably similar names, are only likely to confuse the issue, say critics. “As a customer-facing business we have concerns around the introduction of yet more ‘ethical’ schemes, particularly ‘Fairly Traded’ which will easily be confused with Fairtrade, the most recognised and developed of all existing independent ethical marks,” say the Co-op. So don’t expect a mass exodus anytime soon.
But for others diluting Fairtrade’s status as the ethical gold standard and introducing more choice could be a positive move for the world’s poorest. “My biggest fear was that Fairtrade was becoming a one-size fits all approach to helping developing world farmers,” says Bowman. “If consumers get into the mindset of only going for Fairtrade and ignoring all alternatives that would be a bad thing so I’m glad it looks as if people are not exactly wedded to Fairtrade as a brand and instead interested in the concept of how can I make my consumption something that helps people I’m buying from.
“I’d love it if all the schemes started exposing each other’s inefficiencies and started competing not just on price but on how good their projects are at helping people in the developing world. That’s how competition can work at driving up standards and outcomes for the people we’re trying to help.”