This is a site dedicated to promoting our status as the largest Fairtrade city in the world, and to providing a place for issues around Fairtrade to be discussed. So you’d think that this is too simplistic a question for such place. And until I started volunteering with the Fairtrade London Campaign I’d probably have agreed. However, having immersed myself thoroughly in the blogosphere listening to the discussions raging around free versus fair trade (if only the world were that black and white), about which of the various labelling initiatives was “the best”, about how mainstreaming is just a marketing scam, I thought perhaps I should take myself back to basics.
What exactly does Fairtrade do to benefit the producers?
Well, I’ve also spent some time in the real world as well as cyberspace, and have been privileged to hear directly from producers about what difference Fairtrade has made to them and to their communities. As you’ll know, under Fairtrade the farmers receive:
Agreed stable and sustainable prices
An extra payment (a “social premium”) to invest in their community
In all the talk about fair-washing and price fixing this second commitment is the bit that seems to get lost.
So how are the premiums set?
These social premiums are set by the Fairtrade Labelling Organizations International (FLO) Standards and Policies Committee, which includes producer representatives. Farmers and farm workers (and industry workers, in the case of manufactured goods), thus participate in determining appropriate premiums for new products, just as they participate in determining appropriate Fairtrade minimum prices.
How can the premiums be used?
FLO does not attempt to dictate specifically how these funds must be spent, except to state that social premiums should not be spent on operating costs or salaries. Instead, the model allows cooperatives and joint bodies to determine for themselves how to best meet their local development needs. The Fairtrade standards require that these funds be distributed democratically and transparently. Cooperatives send reports of their premium expenses to FLO, and must be able to document their plans for use of premiums in their business plans.
And because Fairtrade requires cooperatives and other organizations to demonstrate progress towards socioeconomic development, the producers’ organizations without exception invest some of their revenues in educational and social programmes. Examples of these range from cervical cancer screening programmes to hospital buildings, from ensuring all school age kids had a midday meal to IT centres and basket ball courts.
According to the producers I’ve met, this social premium, this empowerment to invest in what their specific community needs, is what really makes Fairtrade stand out.
More information on the premium and its uses can be found within FLO’s Standards for various Fairtrade products can be found here.
For more about the producers and how Fairtrade is helping them, click here.
And you can watch cocoa producers from Ghana explain more here: