New Spice Standards for Fairtrade

Fairtrade has issued new standards for Fairtrade spices which seem to be a recipe for chaos.  They basically say that you can trade any spice or herb as Fairtrade and that the Fairtrade price is the price agreed between the buyer and the seller.  A premium of 15% then needs to be paid on this to the Fairtrade social fund as normal.  The list of herbs and spices is very wide, even including sweetcorn which could be a huge market for the likes of the Jolly Green Giant, where it could set prices as it sees fit and say it’s Fairtrade.

Where a Fairtrade minimum price exists, the higher of this and the market price prevails, e.g. for vanilla and pepper (where it has been set for India & Sri Lanka but not Brazil or Vietnam).  Also, certain countries have opted to continue with the minimum price route, e.g. India and Sri Lanka, while the rest of the world has not; therefore those going for the more interventionist route will be squeezed out of the market by more aggressive intensive growers from Vietnam and Brazil.  And the consumer will not be able to differentiate between old-style Fairtrade and new-style Fairtrade countries, since there is no attempt at a level playing field.

As someone who has put a lot of effort (even if it seems small to some out there) into Fairtrade spices, getting them up and running, launching them into the UK market and trading them with other producers, I am disappointed with the new spices standards, to say the least.

They seem to be a gigantic cop-out.  These standards don’t appear to be any different from normal spices without any Fairtrade protection, where the price is agreed between the buyer and the seller, except for the Fairtrade premium.

Also, who’s going to police the pricing when the markets plummet – I thought one of the key features of Fairtrade was that there was a minimum price, a floor.  So for an example we can use a product that does have a set price such as vanilla, we could buy organic or conventional vanilla at present for less than $20/kg in the open market but the Fairtrade floor price is €43.83/kg, but for new products this potential 100% differential would have disappeared and Fairtrade producers are stuck.  But if I found vanilla in an area that had no price floor, e.g. Central America, I could buy it at $20/kg or less.  Of course I still have to find a Fairtrade certified buyer who was willing to sell at these below Fairtrade set prices.

It feels as if Fairtrade felt that working out the Fairtrade pricing for spices & herbs was too difficult, so they just compromised and gave up – perhaps the supermarkets were asking for them to get a move on, or perhaps the big boys, like Fuchs in Germany or McCormick/Schwartz, wanted to launch their own products using their own sources.

All-in-all, I am very unimpressed, but who really cares about my viewpoint as my voice is very weak.

What’s next, will banana producers say that the price of bananas should be agreed between Chiquita and Wal-Mart rather than using the Fairtrade mechanism?  Perhaps we should ask the cotton growers to accept what they are forced to pay by sweat shop owners in the developing world so that the large retailers in the EC and the USA can meet the margins and pricing requirements that Governments want and consumers demand, while meeting the internal rates of return of Wall Street and the Square Mile.

My view is that Fairtrade could do better.  They should see the potential damage this could do to its brand as it starts watering down its principals at the edges.  Or aren’t spice growers valued as highly as the coffee growers?  I think not.

Just like in the current Ali al-Megrahi debate: you either have red lines over which you will not cross and keep these as fundamental principals, or you say we will sell our soul whenever it gets too complicated or the economic stakes are high enough.

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7 Responses to “New Spice Standards for Fairtrade”

  1. Scott says:

    Thanks for sharing this interesting information about what appears to be a real challenge to the quality of FLO decision making on standards.

    Not being directly involved with spices, I struggled to understand some aspect of your argument. To overcome my comprehension deficiencies, I was wondering if you would be wiling to share the source of your information of the new spice standards? Are they available on the FLO or FLO cert website or published elsewhere.

    Once again thanks for sharing your insights and help more of us understand another small piece of a complex fair trade puzzle!

  2. axel says:

    The new standard for Herbs & Spices can be found on the FLO-Cert web site in the Small Producer Section. Here’s a link that should get you there:

  3. Scott says:

    Thanks Axel,

    After checking out the info on the small producer section I most certainly agree with your summation…the standards seem to lack significant elements of standardization..

    It would be nice to understand FLO Certs reasoning for “direction gaps”…what were they thinking and why were they thinking that way…unfortunately when you don’t know you always envisage worst case scenarios.

  4. joe says:

    AGGGRRRHHHH :( that is rubbish and another nail in the coffin of the fairtrade mark and the standard which increasingly means nothing at all very much.

  5. Ines Teles says:

    My first impression is that it seems to me that this goes against the very tenets of Fairtrade: providing a living, fair, guaranteed minimum price, no matter what the economic climate. To provide some certainty to the who need it.
    I understand that there is a 15% FT premium, but this can be used as a bargaining chip to bring the main price down – ‘we won’t pay more than $20/kg so the 15% better be included in those $20.’

    I need to go read up about this subject as surely this can’t be the whole story!

  6. Pierre says:

    The problem is in the absence of fair trade minimum price, who will calculate the price for a “the costs of sustainable production and of processing”.

    I’ve been supporting fair trade producers since 1997 and importers since 2002, and this problem is not new. Their is a permanent ambiguity with FLO on the balance between ethics and market forces.

    We could discuss this and inside strategies to address this situation.

  7. axel says:

    Fairtrade does remain the best ethical trading system by a wide margin. It is transparent and its members are rigorously audited and checked; this gives great integrity to the brand. Our business, Steenbergs, has been audited recently and it was a robust check on us.

    For me, this has been a failure of communication between FLO in Germany and participating Fairtrade members, activists and consumers. Perhaps, it comes as a shock to them that there are people out there who think about Fairtrade, what it means, how it should work as a system and passionately believe in maintaining the strengths of the concept.

    FLO needs carefully to articulate its thinking when it makes philosophical changes and to disseminate its views carefully, clearly and precisely to stakeholders. Issuing an ukase without forewarning, without any communication programme and without canvassing support was ill-judged and must not be repeated.

    These new Fairtrade standards have been issued to satisfy the demands from farmers who want access to the commercial benefits of Fairtrade. It is good that more farmers wish to join Fairtrade and it is good that FLO wants to widen its appeal and develop the commercial scale of Fairtrade. These are positives.

    However, watering down some of the core principles is not, in my opinion, the right way to bring this about.

    I do believe that there will be a suitable mechanism to protect Fairtrade farmers from pricing risk on the downside back into the standards. Moreover, I have every intention of bringing pressure to bear on FLO to incorporate any practical ideas into the standards.

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