Indicator 2.4
Issue: Support for smallholder producers in developing countries
Indicator: Availability of and promotion of Fairtrade marked products
Rationale - why is this an important issue?
UK supermarkets have several thousand supply chains which deliver their fresh and processed food products from countries of the South (Africa, Asia-Pacific, Caribbean and Latin America). These supply chains rarely involve direct producer-retailer relationships. In practice, many Southern producers supplying UK supermarkets are the more capital-intensive, medium- to large-scale, export-oriented enterprises; a trend encouraged by the investments associated with complying with hygiene, labour and environment standards required by the supermarket ‘governors’ of supply chains.
If primarily rural economies of the South are to benefit from trading with the North, these trading relationships must be expanded to the smallholder sector.
Again, this is a supply chain and not just a supermarket issue: exporters, importers and processors along supply chains are also responsible for this price gouging. But the RTTT project seeks to ‘reward’ retailers that adopt policies and practices, which specifically encourage fairer trade with smallholders in the South.
In order to arrive at a quantitative indicator to at least partially describe the relationship of retailers with the large number and diversity of Southern producers, we have necessarily to choose a proxy measure. By choosing sales of ‘Fairtrade’ labelled goods, it is possible to develop an indicator that is both measurable and verifiable.
The Fairtrade label is the only one of the current generation of initiatives on voluntary social standards which is directly visible to consumers in the food sector. This gives the advantage of an indicator over which consumers have a direct influence through individual purchasing choices. It is also an indicator over which the supermarket can have a direct influence through its choice of pricing and promotional policies. Certified producers of Fairtrade labelled products are nearly all small-scale, exporting products such as coffee, cocoa, bananas, honey and sugar. The label guarantees that a minimum price has been paid to the producers and the higher social (and, in some cases, environmental) standards are being met through the payment of a ‘fair trade premium’ to the producer organisation.
How the indicator is measured
The supermarkets will be asked to provide data on the proportion of stores stocking at least one Fairtrade Marked product in various categories, how many Fairtrade Marked products are sold in total in each category, and whether any of these are own-brand. They will also be asked to describe activities which they undertake to promote consumer awareness of Fair Trade issues and products. The Fairtrade Foundation also piloted a store survey during Fairtrade Fortnight, in partnership with RTTT, this can provide a means of triangulation of data provided by the supermarkets, but needs to be developed methodological before it is suitable as a scored part of this module.
Limitations of this indicator
Fairtrade labelled produce represents only a limited percentage of total market share of products from the South. Fairtrade branded products are viewed by some sectors as a poor proxy for breadth of commitment to small producers in developing countries. A clear limitation of a focus on Fairtrade labelled products is that it passes the responsibility for business ethics onto consumers. Most consumers don’t want fair trade (or wildlife, or labour standards, or animal welfare), to be relegated to a high price niche market; they want it to be a policy of the supermarket company itself and apply to the entire product range—a company standard. But it does offer a measurable indicator of a retailer’s willingness to offer consumers a product where the terms of trade are not solely determined by market forces.
The most important limitation of this indicator is the fact that retailers with a high income customer demographic will inevitably rank high on availability of Fairtrade Marked products, because their customers seek out these higher priced ethical products. Likewise, supermarkets with a C2DE demographic will automatically be penalised. It is also harder for supermarkets with smaller store formats where shelf space is at a premium to justify stocking large number of lines of FT products. Judging stores on the number of FT product lines skews results in favour of companies with megastore formats and discriminates against smaller store formats.
These effects can partly be circumvented either by weighting scores, or (prefgerably) by ‘rewarding’ supermarkets that are committed to growing the market, not just responding to it. Commitment can be measured in promotions, proportion (rather than number) of lines, and development of own brand products.