AIRBORNE GRAVITY GRADIOMETRY

Given the success of Max Havelaar certification, similar systems soon grew up in other European consumer countries such as Belgium in 1990 and Switzerland in 1992 (Nicholls and Opal 2005, p. 10). A similar certifying initiative, TransFair International, was organised by the European Fair Trade Association (EFTA) and TransFair Germany in 1992, with new Transfair organisations established soon after in Luxembourg, Japan, Canada and the United States (Reed 2009, p. 5; Rosenthal 2011, pp. 163-166). Organisations also appeared in Sweden, Finland and the United Kingdom, where Oxfam, Traidcraft, CAFOD, Christian Aid, New Consumer, and the World Development Movement, set up the Fairtrade Foundation in 1992 (Brown 1993, pp. 180-184; Nicholls and Opal 2005, p. 10).

While initial expansion came in the form of independent National Labelling Initiatives (NLI), these began to coordinate in 1993 by agreeing criteria and maintaining a register of certified producer organisations (Renard 2005, p. 425). This process was consolidated in 1997, when the various national organisations merged to

46 form the Fairtrade Labelling Organisations (FLO) – subsequently renamed to Fairtrade International in February 2011 but still abbreviated to “FLO”. This “higher stage of institutionalisation” (2005, p. 425) reconciled different standards of national certification systems and created a mostly unitary certification mark under the brand of Fairtrade (Raynolds 2000, p. 301)²⁰. In order to develop the legitimacy of the certification system, FLO established a separate independent certification unit, FLO-cert GmbH (Tallontire 2009, p. 1006), and obtained ISO65 and EN45011 accreditation (Renard 2005, p. 425). In this way, while the now 21 NLIs are responsible for monitoring the supply chains and licensing buyers to use the Fairtrade Mark, FLO sets the standards and FLO-cert interpret these standards, carry out audits and provide certification (FLO, p. 27).

As well as this geographical expansion and institutionalisation, NLIs and FLO as a central organisation have increased the number of product categories for which certification is available. Although certification began with coffee, by 2010 the FLO Mark was applicable to food products of: Bananas, Cocoa, Coffee, Dried Fruit, Fresh Fruit, Fresh Vegetables, Fruit Juices, Herbs & Spices, Honey, Nuts/Oil Seeds, Quinoa, Rice, Sugar Cane, Soya Beans & Pulses, Tea and Wine Grapes; and non- food products of: Gold, Cut Flowers and Plants, and Cotton (FLO 2010b WS).

In order for these products to be certified, FLO has evolved to administer a number of different standards: Generic Standards for 1) the producer organisation where the product originates and 2) the trade organisation that makes the initial purchase from the producer. Furthermore, there are Product Standards which mainly apply to the producer organisation but also outline specific details relevant to the relationship with the buyer. While certification was originally only applicable to products from Small Farmers’ Organisations (SFOs), following the lead of Transfair in Germany, it has subsequently also become available for plantation or Hired Labour (HL) production (Reed 2009, p. 5) – a move that, as discussed below, has been highly controversial.

Both SFO and HL certification require compliance with a number of minimum economic/business, social and environmental standards, all of which are designed to

20 In the USA and Canada Transfair refer to the FLO governance with the term “Fair Trade” and the certification system is demarcated with a different mark (Dolan and Blowfield 2010, p. 10).

47 promote social justice and environmental sustainability and ensure that labour conditions meet International Labour Standards (FLO 2007a, 2007b). These are summarised in Table 3 below. As well as minimum standards, which must be met in order to obtain certification in the initial instance, FLO standards contain “Process Requirements” that promote continual change and development within certified producer organisations (Courville 2003, p. 280).

Small Farmers’ Organisation Hired Labour

Organisation must be commercially viable and able to deliver a product ready for export.

Democratic cooperative structure Workers are democratically organised Freedom of Association and Collective Bargaining, Conditions of Employment and

Occupational Health and Safety

Environmental standards: Avoid prohibited agro chemicals and take precautions in their use, deal appropriately with waste, take measures to conserve soil and water etc

Table 3: Minimum FLO Requirements

Once producers are registered, buyers seeking to enter into FLO certified relationships can select potential supply partners from the FLO registry. In order for a product to be eventually certified as Fairtrade, the buyer must fulfil a number of requirements:

Minimum Prices A Minimum Price set for each product at a level which is considered to at least cover the cost of sustainable production, and means that producers will always be guaranteed that price even if the market price is below that level. Where the world price is higher than the minimum price, buyers are required to pay whichever is higher.

Social Premium The Social Premium must be paid in addition to the Minimum Price and is set as a percentage of the unit price. This component of the remuneration must be spent by the producer group on developmental projects which enhance the capacity of the organisation and/or the surrounding community. As such FLO issues guidelines on what is considered to be appropriate investment of these funds.

Up-front Credit On request by the producer, buyers are required to extend up to 60 percent of the final price as up- front working credit so that producer organisations can alleviate cash flow problems typical of the sectors in which Fairtrade certification is available.

Long-term, stable relationships

Buyers should attempt to engage in long term relationships but this long requires that buyers provide some sense of future demand for some products.

Table 4: FLO Requirements of Buyers

48 The above developments have led to a huge widening of the fair trade movement. In line with the objective of the system, FLO certification has facilitated the increasing involvement of profit orientated actors such as supermarkets and food multinationals in the commercialisation of FLO certified goods (Huybrechts and Defour 2010, p. 4).

As a result of this involvement, the global retail market for FLO Fairtrade certified products has recently grown by 40 percent per annum, and in 2009 had an overall value of US$ 3.8 billion (FLO 2010a WS). The expansion of retail sales has also meant that in 2010 there were almost 800 Fairtrade certified producer organisations in Latin America, Africa, and Asia (FLO 2010a WS). The growth of FLO certified goods is strongest in the UK market where certified sales have grown 40 percent to reach an overall value of £1 billion in 2010 (Fairtrade Foundation 2011 WS). This makes the UK the most well developed and physically largest fair trade market in Europe (Davies 2010, p. 455).

Despite such impressive expansions, however, the institutionalisation of fair trade has engendered some significant tensions relevant in the critical analysis of the relationship between FLO certification and sustainable development. The root of these tensions has come from the very aim of FLO certification to facilitate greater involvement of profit orientated actors in fair trade supply chains. Indeed, although the Fairtrade Foundation initially aimed to “provide the certification mark to small and medium organisations with a particular interest in the developing world” (Davies 2010, p. 465), the volume of potential sales offered by large commercial players has led to a revision of these commitments. The Foundation has subsequently encouraged the involvement of even the large brands who were initially “reluctant to support fair trade activities” (Tallontire 2007, p. 39) and now licenses use of its mark to companies such as Starbucks and Nestle (Davies 2010, p. 465).

In the view of many, this corporate involvement has also turned FLO into a site of

“negotiating, establishing, enforcing and reformulating the standards and certification” (Jaffee 2010, p. 268) in which an increasing amount of concessions have been granted to commercial players (Jaffee 2010; Renard 2005, p. 421 & 424). This is viewed to have “weakened” (Jaffee and Howard 2009; Renard 2010, p. 290) or even

“corrupted” (Doppler and González 2007, p. 190) the principles and practices

49 promoted, in a way that is detrimental to the interests of southern producers (Reed 2009; Tallontire 2009). Indeed, the involvement of profit orientated companies is seen to be “contingent entirely on corporate profitability and the need to protect their corporate image, not on the needs of southern producers” (Fridell 2004, p. 153).

As evidence that there is a trade-off between corporate involvement and the strength of fair trade standards, there have been considerable changes to the practices of governance²¹. In terms of the prices paid to producers, FLO certification has shifted the emphasis from buyers aiming to pay as much as possible, to requiring payment of a minimum or world market price, depending on which is higher. While there is evidence that profit orientated buyers treat minimum prices also as a maximum, others suggest that they have influenced the setting of minimum levels and are generally feared to threaten a lowering of these prices (Barrientos and Dolan 2007, p.

18; Tallontire 2009, p. 1011). Indeed, it is noted by Renard (2010, p. 290) that FLO was considering the elimination of minimum prices altogether as a means of increasing overall sales. Supermarkets are known to have intentionally sourced from areas where FLO minimum prices are lower (Smith 2010b). In his analysis of minimum coffee prices (which did not change between 1988 and 2007), Bacon (2010) identifies that in real terms, returns no longer cover the cost of sustainable production in some contexts. This investigation also highlighted the issue that FLO policy is heavily influenced by NLIs, who have a strong incentive to promote the interests of commercial stakeholders – and as such, the extent to which producers views are taken into account is seen to be very minimal (Berghe 2006).

Another principle of fair trade weaker under FLO than other approaches to fair trade is in the area of technical support and capacity building. Under FLO this function is delegated to the producer organisation and funded out of Social Premium payments.

While some profit orientated actors involved in FLO certified supply chains have made additional and direct contributions to enhancing the capacity of suppliers (Smith 2010b), analysis suggests that this is more likely to be aimed at meeting the commercial needs of buyers, rather than the development needs of producers

21 For a comparison of specific practices as fair trade governance has been institutionalised with FLO certification see Appendix 4.

50 (Macdonald 2007; Tallontire 2009, p. 1009) – see below for other comparative investigation.

Another reason the FLO system draws criticism, is the expansion of certification beyond small farmers’ organisations to also cover plantation style production.

Although, this was initially only applicable to products, like tea, which were not produced by small farmers’ organisations (Renard and Perez-Grovas 2007, p. 150), after 2003, certification has been extended to other products where plantations compete wit h certified small farmers (Goigoi 2008) (see Appendix 1 on page 243 for details of certification availability). Here there is concern that unless differentiated prices are set, as with Rooibos tea (Raynolds and Ngcwangu 2010, p. 76), estates will marginalise the demand for small farmer products on the basis of differences between quality and stability of supply. It has also been noted that plantation production maintains traditional capitalist ownership structures and does not require worker participation in decision making (Renard and Perez-Grovas 2007, pp. 150-151).

For these reasons, the automatic assumption that FLO certification will promote the interests of poor southern farmers needs to be questioned. This is particularly important as while fair trade has expanded with the integration of profit motivated actors commercialising FLO certified goods, more longstanding developmentally oriented approaches have still remained.