What next for Fairtrade? Ethical trading trends 2024

It’s three decades this year since the UK’s first Fairtrade product, Green & Black’s Maya Gold chocolate, hit supermarkets. Now, as Fairtrade turns 30, there’s much to celebrate – and not just the millions of farmers the foundation says it has secured fairer prices for in 68 countries.

Celebrations are already underway. Last year, one of Fairtrade’s 30th birthday wishes was granted early, when the CMA advised that retailers could collaborate in sourcing Fairtrade commodities without fear of falling foul of antitrust laws.

“The Green Agreements Guidance enables companies to be confident they can fulfil their green potential without breaking the law,” said CMA chief executive Sarah Cardell on announcing the guidance on Fairtrade cocoa, coffee and bananas in October 2023.

“This will help grocery retailers improve the green credentials of Fairtrade products”

The decision was “the latest update related to our wider work on environmental sustainability, and will help grocery retailers further improve the green credentials of the Fairtrade products they place on shelves”, she added.

The Fairtrade Foundation has since launched a pioneering Shared Impact pilot scheme, in which supermarkets are collaborating to agree the terms on which they source cocoa from a pool of Fairtrade producers.

So, what does all this mean for farmers, retailers and the future of Fairtrade?

The CMA says a key objective of its new guidance is to provide Fairtrade farmers “longer-term contractual stability” in the face of growing climactic and economic volatility. It will enable farmers to “invest in more environmentally sustainable farming practices, such as reducing monoculture”, it claims.

The pilot – which will inform further schemes involving coffee and bananas – involves several UK supermarkets, including Co-op. Tesco and Sainsbury’s were also in talks about joining, the FT reported in May.

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“It’s super exciting because this will be the first buying season where cocoa has been purchased on Shared Impact terms, and next summer we’ll deliver the first insights on how it’s worked,” says Anna Mann, Fairtrade associate director for responsible business.

The scheme means farmers will “get additional price protection and the Fairtrade premium without being dependent on one buyer – and then will use that to invest in their big sustainability challenges,” she adds.

Challenges

There’s certainly no shortage of challenges for farmers at present. “We’re in danger because of climate change,” wrote Jaime Alberto García Flórez, a Colombian coffee farmer, in a Fairtrade blog published in May. “We’re the first generation to feel the change and the last generation to be able to change it.”

“ We are the first to feel climate change and the last generation to be able to change it”

García Flórez is one of countless Fairtrade farmers around the world being forced to change their ways. He is planting more cocoa, a crop better suited to hot weather, and introducing native plants to offer shade to his remaining coffee plants. Other farmers talk of moving up mountain slopes to plant their coffee in cooler climes.

Pressure is coming from regulators, too. Take the new EU Deforestation Regulation, which comes into force for large operators at the end of 2025 and smaller players in June 2026. Under it, businesses will have to prove products traded in the EU are deforestation-free and degradation-free. Failure to comply could cost operators fines of up to 4% of annual turnover.

“The fines are substantial, so it means the [question of sustainability] moves from the corporate social responsibility department to finance,” says Fairtrade Foundation trustee Simon Wright.

Fortunately, the Fairtrade premium – an additional sum of money that goes into a communal fund for workers and farmers to use – has helped farmers prepare for the EU legislation, he adds. For example, farmers need geolocation data to demonstrate cocoa and other crops aren’t  grown in deforested areas. This requires smartphones and training to provide the data in the right format, which the premium – and the greater stability afforded by the Shared Impact scheme – can help fund.

Economic volatility is another challenge for the movement. “Fairtrade has seen shoppers pull back on volume during the past year,” says Kantar consumer insight director James Allan. He points to the 3.6% decline in Fairtrade food and drink volumes [Kantar 52 w/e 1 September 2024]. In the same period, total grocery volumes grew 0.6%.

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The problem is price. “The sector can be viewed as a ‘nice to have’ or a luxury given its premium price point,” says Allan. “Couple this with the fact Fairtrade prices have been increasing at double the rate of wider grocery, it’s no surprise shoppers are putting Fairtrade in their baskets less often.”

Fairtrade hot beverages have seen the sharpest decline, losing 13.2% of volumes in the past year. Fruit and veg saw the next steepest decline of 4.9%. Ice cream   and confectionery saw the biggest volume gains of 9.5% and 5.9% respectively.

Retailers’ strategy

Kantar’s numbers don’t tell the whole story, however – when it comes to fruit, at least. “Around half of all Fairtrade-produced bananas end up being sold as conventional because consumers often aren’t prepared to pay extra and retailers aren’t happy asking for the premium,” says a source at a fresh fruit supplier. “It’s quite possible this is related to the cost of living crisis.”

Fairtrade farmers, of course, are guaranteed a minimum price agreed through a consultative process, so are not directly affected if their produce ends up not being sold at a premium in UK supermarkets. Retailers, on the other hand, have more to lose if demand for Fairtrade falls. 

“Retailers like to do their bit – and be seen to do their bit,” says Hamish Renton, MD of retail consultancy HRA Global. “And, of course, they like to sell things that cost more because typically the retail margin will be a few percentage points higher.”

How much depends on the type of product and the state of the market. Take Sainsbury’s, the UK’s biggest Fairtrade retailer with 25.5% share. It’s currently selling five Fairtrade bananas for 78p, matching Aldi’s price on non-Fairtrade bananas [Kantar]. So, Sainsbury’s shoppers are not being asked to pay for a cleaner conscience when it comes to bananas right now.

Price will remain key for Fairtrade’s fortunes, says Allan. “To continue sustainable growth in the category, Fairtrade will need to find ways to grow volume,” he says. “Volume growth, of course, becomes a simpler task if price increases are less prevalent.”

Communicating more to shoppers about how retailers are collaborating to make trade fairer may help, too.