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Meeting 7: Ethics and fairness in trade

Held on 5th October 2005 at Sustain, 94 White Lion Street, London N1

Secretariat: Jeanette Longfield - Sustain

Attendees:
Iliana Garcia - City University
David Barling - City University
Gaetane Binon - City University
Rachel Dechenne - City University
Rachel Dixon - City University
Liz Dowler - Warwick University
Jessie Dowling - City University
Abigail Dunn - City University
David Goodman - King's College, London (and University of California, Santa Cruz)
Michael Goodman - King's College, London
Miriam Greenwood - City University
Sue Haddleton - City University
Vicki Hird - Friends of the Earth
Elizabeth Kaelin - City University
Tim Lang - Chair of meeting; City University
Tom MacMillan - Food Ethics Council
Polly Russell - University of Sheffield/British Library
Jim Sumberg - New Economics Foundation
Lisa Vaughan - City University
Zoe Wangler - National Consumer Council
Marjon Willers - Islington Primary Care Trust
Desta Wolde-Geletu - RDCEB
Helen Wright - City University

Papers

  1. Rob Harrison, Ethical Consumer Research Association
     
  2. Harriet Lamb, Fairtrade Foundation
     
  3. Lindy Sharpe, City University - 'Ethical traceability' and the UK wheat-flour-bread chain.
    PDF Icon Download as PDF - 158kb
     
  4. Helen Taylor, Soil Association - The Soil Association Certification ethical trade pilot scheme.
    PDF Icon Download as PDF - 132kb

 

Summary of presentation by Rob Harrison

Rob outlined a number of trends he sees in ethical consumption, some of which are mutually reinforcing, while others are contradictory:

  • Although the growth in ethical consumption has been, and continues to be slow, the trends has been inexorably upwards so far
  • As well as ethical consumption by individuals, ethical consumption by the public sector, with public money, is becoming a focus for increasing attention
  • The boundaries between traders and campaigners may be starting to blur - some retailers are running campaigns, and some campaigners are selling products
  • Government seems content to continue to rely on giving consumers the information to choose between products and services - this seems to have worked well with energy labelling on white goods, for example, but not so well in other areas
  • It is not clear how the energy and creativity created by competitive markets can be harnessed for the common good
  • Rob noted that the seminar was held on the eve of the launch of a Fairtrade coffee brand for Nestlé, which was likely to generate considerable controversy. It was helpful that it was now possible for proponents and opponents of such a move to engage in a mature public discourse.


Summary of presentation by Harriet Lamb

Harriet began by outlining some impressive statistics about the market for products labelled as Fairtrade:

  • The range of products is growing and the market is growing by around 40-50% each year
  • 20% of the fresh ground coffee (and 5% of instant coffee) in the UK is Fairtrade
  • 50% of the bananas sold in Switzerland are Fairtrade
  • 50% of people recognise the Fairtrade brand - this is growing fastest among the young, and among socio-economic groups D and E - and 25% say they know about the Mark through word of mouth
  • there are around 150 Fairtrade towns and cities, and some 1,500 Fairtrade churches
  • Despite this encouraging growth, in global terms, fairly traded products remain a tiny niche, and are far from mainstream. Harriet concluded by outlining some research questions that, once answered, might help to make this small market become the norm:
  • There is a need for the fair trade movement to obtain the same quality and quantity of information about what consumers 'want' as the major companies like Tesco
  • In partnership with researchers in the South, can we research and show long-term benefits from fair trade for producers in the South? In particular, how can value be added - and retained - in the South rather than in the North?
  • How can transnational companies be regulated by what are still, essentially, national regulatory systems?
  • The World Trade Organization could, potentially, regulate in this area, but what policies should we be asking for?

 

Summary of discussion

In this summary, the terms 'ethical' and 'fair' are used interchangeably, in the interests of brevity. It is recognised that there is considerable debate around the definitions of both these terms.

  • If people are to continue to trust ethical products, independent verification of standards is vital. It was noted, though, that consumer trust derives not only from individual product labelling, but also from, among other things, manufacturing and/or retailing brands.
  • Even with independent verification, there is considerable downward pressure on standards. Many large and/or transnational companies want to be able to make claims about the 'ethical' standards of the products they sell but are unwilling or unable to meet the current high standards of some labels.
  • The European Union is becoming a focus for this pressure since, if they can be persuaded to produce an EU-wide fair trade labelling standard - but at a lower standard than existing labels - then the market may become saturated with almost meaningless claims.
  • On the other hand, if the EU does not develop a fair trade standard, private companies may simply invent their own, corrupting the market with a plethora of competing labels of varying quality.
  • Are mainstream fair trade, and the globalised food system compatible concepts? Can a transnational company become a fair trade company, or have fair trade products? Or would the sheer scale and complexity of the logisitics overwhelm the capacity of any system for traceability and independent verification.
  • A key element, for example, of transnational companies, is their ability to switch their purchasing from anywhere, to anywhere in the world, according to price, quality and availability. This is particularly the case for commodity crops, and it is currently impossible for labelling to reflect accurately the source - let alone the production and trading standards - of, say, palm oil in a very large range of products.
  • If fair trade could become mainstream, then consumers might not have to make choices, and could simply consume fair trade products passively. Would this matter?
  • Governments are very keen to promote consumer choice as a solution to a range of market failures, as it allows them to abdicate their responsibility to regulate markets.
  • However, without regulation, companies taking the lead in fair trade are at a competitive disadvantage, since other companies can and will undercut them with lower standards, lower costs and lower prices.
  • If producers in the South are ever going to be able to create and retain some added value on primary products, then a good deal of investment, over a considerable period of time is likely to be necessary. However, the source of such investment is far from clear.
  • Some companies in the North have been able to create and retain value by creating direct links with consumers through, for example, farmers markets, box schemes, farm shops and other similar initiatives.
  • These direct links also have the advantage of creating the trust relationship (where the discussion began), often without the need for costly certification and labelling systems. The disadvantages include limits on the size and geographical scope of these direct producer-consumer links. It is difficult to see how they could be applied to the current global food system.

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