CTS Essay//Preperation//Research//Fairtrade Certified.

Researching general information about 'Fairtrade'- the scheme, bodies and companies actively involved, 

and so on.

Information sourced from Wikipedia: http://en.wikipedia.org/wiki/Fairtrade

Fairtrade certification is a product certification system designed to allow people to identify products that meet agreed environmental, labour and developmental standards. Overseen by a standard-setting body, Fairtrade International (FLO), and a certification body, FLO-CERT, the system involves independent auditing of producers to ensure the agreed standards are met. Companies offering products that meet the Fairtrade Standards may apply for licences to use the Fairtrade Certification Mark (or, in North America, the applicable Fair Trade Certified Mark) for those products.

The Fairtrade International certification system covers a growing range of products, including bananas, honey, oranges, cocoa, coffee, shortbread, cotton, dried and fresh fruits and vegetables, juices, nuts and oil seeds, quinoa, rice, spices, sugar, tea and wine.

In 2009, Fairtrade certified sales amounted to approximately €3.4 billion (US $4.9 billion) worldwide, a 15% increase from 2008. Sales are further expected to grow significantly in the coming years: according to the 2005 Just-Food Global Market Review, Fairtrade sales should reach US$ 9 billion in 2012 and US$ 20-25 billion by 2020.

As of 2011, 827 producer organizations in 58 developing countries were Fairtrade certified.

Although many attempts to market fair trade products were observed in the 1960s and 1970s, fair trade sales only became widespread with the Max Havelaar labeling initiative in 1988 and the establishment of Fairtrade International (which included other regional initiatives like it) in 1997. Fair trade sales prior to labelling initiatives were contained to relatively small world shops (also called charity shops), operated by alternative trading organizations (ATOs) such as Oxfam and Traidcraft. Many felt that these world shops were too disconnected from the rhythm and the lifestyle of contemporary developed societies. The inconvenience of going to them to buy only a product or two was too high even for the most dedicated customers. The only way to increase sale opportunities was to start offering fair trade products where consumers normally shop, in the large distribution channels. The problem was to find a way to expand distribution without compromising consumer trust in fair trade products and in their origins.

At the initiative of Mexican coffee farmers, the first fair trade labelling initiative, Stichting Max Havelaar, was launched in the Netherlands on November 15, 1988 by Nico Roozen, Frans van der Hoff and Dutch ecumenical development agency Solidaridad. The initiative offered disadvantaged coffee producers following various social and environmental standards an above market price for their crop. The coffee, originating from the UCIRI cooperative in Mexico, was imported by Dutch company Van Weely, roasted by Neuteboom, sold directly to worldshops and, for the first time, to mainstream retailers across the Netherlands.

The initiative was groundbreaking as for the first time Fairtrade coffee was being offered to a larger consumer segment. Fairtrade labelling certification provided some assurance that the products were really benefiting the farm workers at the end of the supply chain.

The initiative was a great financial success and was replicated in several other markets: in the ensuing years, similar non-profit Fairtrade labelling organizations were set up in other European countries and North America, called “Max Havelaar” (in Belgium, Switzerland, Denmark, Norway and France), “Transfair” (in Germany, Austria, Luxembourg, Italy, the United States, Canada and Japan), or carrying a national name: “Fairtrade Mark” in the UK and Ireland, “Rättvisemärkt” in Sweden, and "Reilu kauppa" (Finnish) or "Rejäl handel" (Swedish) in Finland.

Initially, while the Max Havelaars and the Transfairs co-operated product by product with equivalent standards and producer lists there was no contractual agreement to ensure global standards. In 1994, a process of convergence among the labelling organizations – or “LIs” (for “Labelling Initiatives”) – started with the establishment of a TransMax working group, culminating in 1997 in the creation of Fairtrade Labelling Organizations International, now simply known as Fairtrade International (FLO). FLO is an umbrella organization whose mission is to set the Fairtrade Standards, support, inspect and certify disadvantaged producers and harmonize the Fairtrade message across the movement.

In 2002, FLO launched a new International FAIRTRADE Certification Mark, effectively replacing most previous Max Havelaar and TransFair certification marks. The goals of the launch were to improve the visibility of the Mark on supermarket shelves, facilitate cross border trade and simplify export procedures for both producers and exporters.

Today, all but one labelling initiative have fully adopted the new mark. TransFair USA has apparently elected to continue with its own Fair Trade Certified Mark for the time being, while the Canadian organization currently allows certified products to carry either mark, it is transitioning toward sole use of the International Fairtrade Certification Mark.

In January 2004, Fairtrade Labelling Organizations International was divided into two independent organizations: Fairtrade International (FLO), which sets Fairtrade Standards and provides producer business support, and FLO-CERT, which inspects and certifies producer organizations. The aim of the split was to ensure the impartiality, the independence of the certification process and compliance with ISO 65 standards for product certification bodies.

At present, over 25 labelling initiatives and producer networks are members or associate members of Fairtrade International. There are now FAIRTRADE Certification Marks on dozens of different products, based on FLO’s certification for coffee, tea, rice, bananas, mangoes, cocoa, cotton, sugar, honey, fruit juices, nuts, fresh fruit, quinoa, herbs and spices, wine and footballs etc.

Given the development focus of Fairtrade, Fairtrade Standards contain minimum requirements that all producer organisations must meet to become certified as well as progress requirements in which producers must demonstrate improvements over time.

There are two types of Fairtrade Standards: Standards for small farmers' organizations and for hired labour situations. Fairtrade Standards for small farmers' organizations include requirements for democratic decision making, ensuring that producers have a say in how the Fairtrade Premiums are invested etc. They also include requirements for capacity building and economic strengthening of the organization.

Fairtrade Standards for hired labour situations ensure that employees receive minimum wages and bargain collectively. Fairtrade-certified plantations must also ensure that there is no forced or child labour and that health and safety requirements are met. In a hired labour situation, Fairtrade Standards require a “joint body” to be set up with representatives from both the management and the employees. This joint body decides on how Fairtrade Premiums will be spent to benefit plantation employees.

For some products, such as coffee, only Fairtrade Standards for small farmers' organizations are applicable. For others, such as tea, both small farmers' organizations and plantations can be certified.

Fairtrade Standards and procedures are approved by the Fairtrade International Standards Committee, an external committee comprising all FLO stakeholders (labeling initiatives, producers and traders) and external experts. Fairtrade Standards are set by FLO in accordance to the requirements of the ISEAL Code of Good Practice in standard setting and are in addition the result of a consultation process, involving a variety of stakeholders: producers, traders, external experts, inspectors, certification staff etc.

Fairtrade inspection and certification

Fairtrade inspection and certification are carried by FLO-CERT, an independent body created by Fairtrade International in 2004. FLO-CERT ensures that both producers and traders comply with Fairtrade Standards and that producers invest the benefits received through Fairtrade in their development.

FLO-CERT works with a network of around 100 independent inspectors that regularly visit producer and trade organizations and report back to FLO-CERT. All certification decisions are then taken by a Certification Committee, composed of stakeholders from producers, traders, national labelling organisations and external experts. An Appeals Committee handles all appeals.

FLO-CERT inspections and certification follow the international ISO standards for product certification bodies (ISO 65). Typically, in order for a product to be marked as "Fair-Trade" at least 20% of its mass must be made up of a Fairtrade product.

Fairtrade pricing

The main aspects of the Fairtrade system are the Minimum Price and the Premium. These are paid to the exporting firm, usually a second tier cooperative, not to the farmer. They are not paid for everything produced by the cooperative members, but for that proportion of their output they are able to sell with the brand 'Fairtrade Certified', typically 17% to as much as 60% of their turnover.

• The Fairtrade Minimum Price is a guaranteed price.
• The Fairtrade Premium is a separate payment designated for social and economic development in the producing communities. The producers themselves decide how these funds are to be spent. As part of the Fairtrade criteria, registered producers are accountable to FLO-CERT for the use of this money. It is generally used for improvements in health, education or other social facilities, although it may also be used for certain development projects to enable farmers to improve productivity or reduce their reliance on single commodities.

In practice the exporting firms do not always receive the full extra payment specified.

A significant proportion of the extra payment, sometimes all of it, is spent on meeting the criteria for certification, and added costs of membership. The Fairtrade Foundation does not monitor how much of the extra money paid to the exporting cooperatives reaches the farmer. The cooperatives incur costs in reaching the Fairtrade political standards, and these are incurred on all production, even if only a small amount is sold at Fairtrade prices. The most successful cooperatives appear to spend a third of the extra price received on this: some less successful cooperatives spend more than they gain.

There is no evidence that Fairtrade farmers get higher prices on average. Anecdotes state that farmers were paid more or less by traders than by Fairtrade cooperatives. Few of these anecdotes address the problems of price reporting in Third World markets, and few address the complexity of the different price packages. Cooperatives typically average prices over the year, so they pay less than traders at some times, more at others. Bassett (2009) is able to compare prices accurately where Fairtrade and non-Fairtrade farmers have to sell cotton to the same monopsonistic ginneries. Fairtrade encouraged Nicaraguan farmers to switch to organic coffee, which resulted in a higher price per pound, but a lower net income because of higher costs and lower yields.