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Trading in fairness

Saroja Coelho
September 16, 2012

The demand for Fairtrade-certified products is growing. Millions of farmers in Africa, Asia, and Latin America benefit, but unstable commodities prices mean it is still risky business.

Fairtrade chocolate (dpa)
Image: picture-alliance/dpa

Julian Müller is buying his weekly shopping at the discount grocery store in Cologne. In his shopping trolley he has coffee, tea, bananas, rice and red wine, all of which have the blue-green Fairtrade logo on them. "The products are more expensive, by one or two euros, but this matters to me," says Müller, who is in his mid-thirties. "I know that my purchase will help to improve the general living conditions of the farmers." Finally, he takes some Fairtrade roses from Kenya and places them in his trolley.

In Germany, more and more consumers like Julian Müller are choosing their groceries according to environmentally and socially sustainable criteria. In 2011, Fairtrade products generated 477 million euros in sales in Germany, 16 percent more than the previous year. "Within the last three years, it was possible to double turnover," Claudia Brück from TransFair Germany said. The organization awards Fairtrade certification on the basis of licensing agreements.

International production standards

"We have advisers on site in sixty countries around the world assisting with the conversion of production. And we have a network of auditors who monitor adherence to the standards," Brück explained in a DW interview. "Attached to this is a guaranteed minimum price for the producers, and bonuses for social and environmental standards, sustainable development, eco-friendly cultivation and no unlawful child labor." The standards are developed by Fairtrade International. Around the world, 1.2 million small farmers and workers benefit from the advantages of fair trading. If their family members are also included, six million people are the beneficiaries of fair trading, according to the German Fair Trade Forum.

Supermarket trolley on Fairtrade aisle (TransFair)
Fairtrade is now in supermarkets - but potentials remain untappedImage: TransFair e.V.

The price is right

A large proportion of Fairtrade products in Germany are sold by the roughly 800 "One World Stores" offering groceries, textiles and crafts exclusively from developing countries. But conventional stores are also stocking a growing range of Fairtrade goods. However, the criteria used to decide whether to stock sustainable groceries are the same as for all other merchandise, explains Peter Haferkamp, Category Manager at Tengelmann, one of Germany's largest retailers: "We look at the range and consider exactly where we can best position ourselves with Fairtrade products. A product is only added to our range if it will have enough turnover." According to Haferkamp, the highest sales of Fairtrade goods are in items such as chocolate, coffee and tea.

But in a European context, Fairtrade in Germany is in its early days. In Switzerland, almost half the bananas sold are sourced from Fairtrade-certified production, while in Germany the market share is under 1 percent. And only 2 percent of coffee is sourced from Fairtrade producers - in the United Kingdom the market share is ten times higher. "The German market is very focused on price. We spend only 11 percent of our income on groceries. The consumer is fixated with cheap prices," Brück said. "Our model, that we need adequate prices for producers at the beginning of the value chain, is contrary to the dynamic of the grocery trade."

Haferkamp remains realistic in his assessment of the Fairtrade market: "I see opportunities for further development in the future. In the last three years we have had very good growth rates in double digits. But it will always be a niche."

The threat of instability

Significant price fluctuations on the global market at ever shorter intervals are a major concern for Fairtrade organizations. "Bottom prices are always difficult because then the price of the Fairtrade product compared to a conventional product seems very high," Brück said. "But rising prices are likewise problematic for our cooperatives. If the real price rises, the sale of the farmers' products means a higher income. But more commonly it is the stock market commodity price that shoots upwards. Then it is difficult because the money does not reach the producers. The downside of the price rise is that the costs of production increase as well," Brück said. The Fair Trade Forum is therefore advocating tougher regulation of raw material markets to prevent extreme price instability.

Woman at Fairtrade flower farm in Tanzania (TransFair)
Flowers can meet Fairtrade specifications, too - like these in TanzaniaImage: TransFair e.V.

The "Fair Weeks" are taking place in Germany until the end of September. There will be thousands of events all over Germany with topics such as sustainable consumption and fairer production conditions. That should pique the interest of shoppers like Julian Müller. "I will use this opportunity to learn more and maybe to discover some new Fairtrade products," he said.

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