This is the FLO label:

This is the IFAT mark:

The FLO label is a certification logo for products. The certification system is audited by a third party and applies to a limited range of products (the list of products is expanding). These products are mainly food items but also include cotton, roses and soccer balls. No handcrafts are covered by a FLO label. FLO 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. If a product does not have a FLO label it does not necessarily mean that it is not fair trade, however you will have to ask questions of the product/producer yourself instead of depending on the guarantee that is provided with the label. Without a FLO label it can mean one of three things: that the product is not eligible for certification (eg. olive oil, handcrafts etc), it can mean that the retailer has chosen not to join the certification programme even though the product was produced under fair trade conditions, or that it is not a fair trade product.

For further information about the FLO label visit the FTAANZ website

The IFAT mark is an organisational mark, not a product label. It identifies an organisation which has fair trade at its core. It is only awarded to organisations who are members of IFAT (International Federation of Alternative Trade). It means standards are being implemented regarding working conditions, wages, child labour and the environment. These standards are verified by self-assessment, mutual reviews and external verification. The FTO Mark is available to all IFAT members who have been through the first tier of the IFAT Standards and Monitoring System.

For further information see the IFAT website.

“By propping up the price, the Fairtrade system encourages farmers to produce more of these commodities rather than diversifying into other crops and so depresses prices.”

This comment forms part of an argument against ethical food shopping that appears to have gained traction amongst those looking to criticise fair trade. This statement however is based entirely on economic theory and not on producer and industry realities.

This comment seems to be specifically relating to the fair trade coffee trade. The argument explains that fair trade has the unintended effect of increasing the supply of coffee in the marketplace, and uses the 2002 price crash as an example of these market forces in play. There was indeed a surplus of coffee in 2002, a period which according to CoffeeResearch.org and the International Coffee Organization saw Brazil increase coffee exports by more than 200 percent and Vietnam's production almost triple from 1995 to 2002. Vietnam and Brazil are two of the three largest exporters of coffee in the world so naturally in this 7 year period, worldwide coffee production peaked.

However mostly to blame for this rise in coffee supply was international pressure from bodies such as the IMF encouraging countries (specifically Brazil and Vietnam) to plant cash crops to finance their international debt. The IMF were so successful that Vietnam went from an insignificant coffee producer to the the second largest exporter of coffee in the world. Any argument that suggests these peaks in supply are a result of normal supply and demand market forces or worse still, a result of fair trade fiddling in the market, are unplausible. Furthermore, to suggest that our current 'free' market system is really free, overlooks the vast sums of money spent by First World governments to artificially inflate domestic food prices, thus creating problems of 'dumping' of heavily subsidised First World agricultural produce that devastate Third World markets.

Fair trade farmers do want to diversify and are encouraged to through fair trade. Coffee farmers know that the world export market is fickle and that prices may dive again at any time. Because of this, a really important element of the service fair trade farmer co-operatives provide to their farmer members is encouragement and expertise for the producers to diversify as much as they are able. In complete contrast to the above statement this diversification is often only achievable using the profits from the fair trade price to invest in other crops.

With coffee farmers currently selling only an average of 20% of their crop at fair trade prices – there is no reason to believe that this would substantially encourage increased production of coffee beans, nor be enough to encourage others to jump from other crops onto the coffee bandwagon.

As this cocoa farmer's son knows, fair trade is helping his family pay for his education and then he will have the chance to follow a different career path should he choose.

“I am Victor Owusu, Age 17, and my father is the president of the Mim Kuapa Kokoo Society. I don’t want to be a cocoa farmer because it’s really hard work and you don’t earn very much. But I do know that Kuapa Kokoo is good for my family and makes farmers lives easier.”

Guaranteeing a minimum price means there is no incentive to improve quality

Our own experience has been somewhat different.

In Nicaragua, for example, we buy our coffee from the PRODECOOP co-operative, who state: ‘At PRODECOOP we have worked to satisfy our clients, to improve the quality of our coffee, and to develop our production infrastructure, but none of this has meaning if the thousands of small-scale producers in the co-operatives don’t improve their quality of life’.

The coffee co-operatives we support put a great degree of effort into quality improvement - from the construction of better processing mills, through to constant training in the field, through to the continuous work they put in (where they have them) at their cupping facilities. Improvements to coffee quality are rewarded with improving prices – in practice, we now pay well above the fair trade minimum price for all of our coffees as reward for their quality.

How much more do the coffee producers you buy from, earn through your fair trade than they otherwise would?

There are potentially four ways we know of that coffee growers can benefit from a genuine fair trade trading relationship, in comparison with their other options.

Firstly, the grower is generally assured of receiving more money up front for their coffee from fair trade buyers than they would receive from other coffee traders. Here are some recent examples we know of from field visits:

In Guatemala, street prices varied between 600-700 Quetzales/quintal this season in Huehuetenango. Our growers were paid 815 Quetzales. Similarly, growers in the Harrar region of Ethiopia were receiving 10-15% above market rate from fair trade buyers. In Papua New Guinea, farm gate prices for coffee parchment last year at the co-operative were less than half the price we calculated they would earn from our order. These figures, it should be noted, relate to a period when world coffee prices were at a higher level than they have been in recent years, when we know (and various other studies online also confirm) that farmers sold to fair trade buyers coffee at up to triple the price that they would otherwise have received.

But this is just the first of several differences we can point to between fair trade and conventional coffee trading.

Secondly, certified fair trade co-operatives also always receive a premium of US 5cents per pound as a social premium from fair trade buyers; the co-operative’s members jointly agree what to spend this premium on for the wider benefit of the community. Typical examples of social premium spending are construction of schools, construction of medical centres, spending on projects that will enhance income generation in future years (typically, these would further enhance coffee quality – construction of better drying facilities, wet mills etc). Coffee sold through conventional channels brings none of these additional benefits to growers.

Thirdly, the co-operatives spend money on projects that further benefit their communities – this encompasses a raft of different projects including the funding of additional quality-enhancing technical staff, provision of scholarships for students, organisation of social integration activities (crucial in areas where there may be growers from a range of ethnic or religious backgrounds) and so on. Dividends from profits are also common; for example the coffee growers of Yirgacheffe in Ethiopia also receive one half of all profits that the Oromia Coffee Farmers’ Co-operative Union generates. This, together with their social premiums, makes them much better off financially than they would otherwise be from selling to street traders.

Finally – and this is not a condition of our fair trade certification agreement but our own modus operandum – Trade Aid also returns a share of profits to co-operatives in the form of a rebate. Last year, this amounted to a 10% bonus for our trading partners, which was generally used by the co-operatives to either further strengthen their infrastructure, or else to provide further services to their members (in Yirgacheffe, they used the money to buy desks for their new but unfurnished classrooms).

It is important to also recognise indirect advantages to growers from our trade, which include greater access to more affordable credit, access to training, increased self-esteem, and enhanced family stability.

So, a long answer to the question! There is no simple way for us to claim ‘X% more money' goes back to growers thanks to our orders but from our practical experience, including the consistent feedback we receive from the growers themselves, it is clear that buyers such as Trade Aid working within the fair trade certification system are benefiting coffee farmers to a much greater degree than uncaring, normal market forces will allow.

Trade Aid imports food products from all over the tropics. Doesn’t that involve quite a lot of food miles, and how does this fit with your environmental policy?

Trade Aid actively encourages better environmental practices and the application of responsible methods of production, while at the same time supporting communities in need throughout the developing world by purchasing their products at fair trade prices. Typically the food products our trading partners can provide us are not grown in New Zealand – eg. coffee, tea, cocoa – and so there is no contradiction in regards to our environmental policy in the promotion of these items.

However, there are occasional instances when competing products are produced in our country. A good example of this is olive oil, which we import from Palestine, but which is also extracted here. While Trade Aid appreciates the global benefit of reducing food miles wherever possible, we also recognise that this consideration alone should not prevent us from supporting groups which are in great need. Part of our focus and part of our longer term goal is to help our producers to improve their capacity to operate better within their local markets and thus to reduce their dependence on world markets and exports.

Ultimately, we are making decisions which we believe to be in the wider interests of people and planet combined.

Do fair trade organisations advocate for tariffs, are you for or against them?

Like fair trading organisations around the world, Trade Aid supports the rights of developing countries to nurture their own agricultural, industrial and service sectors in any way they deem appropriate, just as today’s industrialised countries did to support the employment and economic security of their fledgling industries.

A recent report from the development agency Action Aid warns that developing countries will be trapped in poverty if they are denied the right to protect their economies against international competition. The study shows how free trade policies and economic liberalisation have resulted in farmers going out of business and factories closing down as cheap goods from abroad flood in as soon as trade barriers are lifted. The removal of tariffs on textile imports in Nigeria, for example, forced 20 factories to close with the loss of over 16,000 jobs. A further 18 factories are now under threat.

A history of protecting fledgling industries has undoubtedly helped give developed countries the strong financial and social basis they enjoy today – and countries like the US continue to pour millions into subsidising home-grown industries and erecting barriers against imports from developing countries.

A sovereign country has the right to protect certain vulnerable sectors such as agriculture from competition on the grounds of food security, livelihood security and sustainable rural development, just as it has the right to impose anti-dumping or health and safety legislation or decide when, how and if it will dismantle such processes.

If New Zealanders buy goods from developing countries through Trade Aid aren't we undermining our own manufacturers?

The Buy New Zealand Made campaign aims to encourage consumers and organisations to buy New Zealand goods and services wherever possible. As the campaign website says, “When you buy a New Zealand produced product or service, you’re helping to create jobs, promote growth and improve our balance of payments”. Trade Aid supports this philosophy. Our work involves supporting small, local craftspeople who are disenfranchised often because of trade liberalisation policies and competition from large multinational organisations – the same things that threaten NZ manufacturers. A vibrant local manufacturing business is critical for a sustainable community and country and a 'Buy New Zealand Made' campaign is a small but vital part of trying to reverse the direction of exporting jobs overseas. In supporting the craft making initiatives of people in some of the poorest countries in the world we are supporting their bid to “create jobs and promote growth” and offering consumers an alternative to often exploitative factory-made overseas craft.

Why do you buy from countries like India, whose economy is expanding rapidly right now, shouldn't you be helping the poorer countries?

It is correct that with current economic growth in South Asia at 5%, India and the surrounding countries are looking at a potentially brighter future than many other developing countries.

However a large majority (40%) of the world’s poor still come from India and South Asia. Even with high economic growth, a country who is starting with next to nothing takes a long time to reach a status where the most marginalised and disadvantaged are reached by improvements in the economy. Next to Sub Saharan Africa, Pakistan and India have the highest child mortality rates in the world and although the percentage of people living in South Asia in extreme poverty has reduced by 10% since 1990 it is still at a very high 31% of the population.

Part of Trade Aid’s objective as a development organisation is to change trading relationships contributing to a more sustainable form of change. Due to the unfairness of the conventional trading system the benefits of a good economy such as India’s do not tend to reach the most disadvantaged in an equitable way. Fair Trade allows these producers to build themselves a base from which they then have opportunities to enter other markets and industries which have been reached by the booming economy.

Other countries that you may consider in the same position as India would be countries such as Peru whose gross national income per capita puts them into the lower-middle class income bracket but still has some of the most disadvantaged producers due to their marginalised indigenous status. Ostracised from being able to participate in the Peruvian economy, Trade Aid’s producer partners in Peru are some of our poorest producers.

Through reports and site visits, Trade Aid continually assess the level of capacity achieved by our trading and producer partners and will always endeavour to remain true to our stated objective of working with the most disadvantaged of producers.

In India’s case it would be great to reach a stage when we could replace all our Indian producers with other marginalised groups from developing countries around the world and should this be required Trade Aid will make this change. 

Why do we trade with groups in countries with corrupt governments?

Often the main reason we end up buying from the trading partners that we do, is because their governments are corrupt and resources are not shared with those who need them the most. While it is understandable that people might assume that to order from a given country is to give a nod of support for the regime in place there, this is not the case at all. Trade Aid’s suppliers are totally non-partisan and are at least as likely to oppose, as they are to favour, their own government’s policies and practices.

How much of the retail price goes back to the person who makes it?

Fair trade promises a better return to those who make or supply the goods you buy, but what actually are our profit margins and what percentage of the retail price is returned to the producers? This is always a difficult question as Trade Aid does not have a set mark-up on the items we sell. We tend to have higher margins on products from Asia than those from Africa and Latin America. Certain products also have different margins – textiles, for example, are at the low end while jewellery lies at the high end. Jewellery, however, does have extra costs, such as more frequent writing off of stock due to the fast-changing fashion cycles.

Trade Aid also has a number of small “at risk” producers where very low margins are applied. That said, a typical mark-up ratio for Trade Aid would be 1:5; that is, the landed cost of the product is about one fifth of the retail price (for mainstream craft retailers ratios vary from 1:5 for discount operators to 1:20 for top brands). Trade Aid also has either a direct relationship with producers, or works through a local not-for-profit organisation, enabling the producers to receive a higher price than they would through a conventional supply chain.

Much of the remaining four-fifths go into costs which are aimed at benefitting the producers – costs such as education, lobbying, fair trade campaigns and marketing support. In 2005 and again in 2006 Trade Aid rebated one third of its profit back to our trading partners – a rebate equal to about 10% of the value of the order we placed with them.

How can you promote fair trade as a sustainable business model when you use volunteer labour in your shops? 

Trade Aid supports fair wages for work, and we promote fair trade as a viable alternative to standard trading practices. So how does voluntary labour fit these objectives?

For over 30 years Trade Aid has relied on unpaid support. Indeed, without these years of voluntary work Trade Aid would never have survived and grown as it has. The contribution from volunteers allows us to undertake work beyond that done by normal importers/retailers, work such as promoting fair trade, running campaigns, producing educational resources and lobbying for change to trading systems.

Second to this is that voluntary labour never comes without some costs – the costs of training and supporting are as much for unpaid as for paid staff.

For many New Zealanders giving to more impoverished peoples involves a one-off or monthly payment of money. For others, it involves giving time. The generosity of those who can offer unpaid hours to support those who work desperately hard to feed and clothe their families and communities has allowed Trade Aid to make a real difference to those most in need.

What is the difference between Rainforest Alliance and Trade Aid fair trade practices?