1 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Consultation Results Synopsis
Information to Stakeholders on the Outcome of the
Draft Standard Consultation
Review of the Trade Standard 2nd Consultation Round
To All stakeholders
Consultation Period 15.07.2014 – 22.08.2014
Standards Committee Meeting for Decision 26.11. 2014
Project Managers Contact Details Ruth Fernandez Audera, Senior Consultant on
Standards, Fabienne Yver, project manager,
TABLE OF CONTENT
PART 1 Introduction 2
1.1. General Introduction 2
1.2. Background and objectives 2
1.3. Methodology and participation 3
1.4. Executive summary of consultation results 4
1.5. Project timelines and way forward 6
1.6. Abbreviations 6
PART 2 Draft Standards Consultation - Outcome 8
2.1. Section 1 – new model 8
2.2. Section 2 – Labour 12
2.3. Section 3 – Environment 15
2.4. Section 4 – Fairtrade Payer and Fairtrade eligible 17
2.5. Section 5 – Advanced Payment and access to finance 21
2.6. Section 6 – Sourcing plan and market information 25
2.7. Section 7 – Sharing risks 27
2.8. Section 8 – Support to producers 30
2.9. Section 9 – Trading with integrity 32
2.10. Section 10 – other comments 34
ANNEXE 1: final Standard Committee decisions after consultation 36
2 Standards Consultation Results Synopsis Trade Standard 03.09.2014
PART 1 Introduction and executive summary
1.1. General Introduction
Fairtrade International’s Standards & Pricing would like to thank all stakeholders for the time and effort
they have put into participating in the consultation on the review of the Fairtrade Trade Standard. The
consultation concluded on the deadline for submission with a total of approximately 400 participating
stakeholders who gave Fairtrade International’s Standards & Pricing their views and perspectives.
Thanks to these replies, Standards & Pricing has gained a good understanding of critical issues and
concerns including potential solutions. Together with the results of the research carried out by
Standards & Pricing, this information provides the basis for our recommendation to the Standards
Committee. The Standards Committee’s decision on the final standards will be taken in full knowledge
of stakeholders’ comments.
Should you have any queries or remarks concerning this report, please contact the project manager:
Fabienne Yver, Project Manager, at [email protected]
1.2. Background and objectives
The background of the Fairtrade Trade Standard Review:
The review of the Trade Standard started in 2012, with pre-consultations of selected stakeholders. It
led to a proposal of a Core (compulsory) and Advanced (voluntary) sections, which was consulted
upon in the summer of 2013. However, the feedback was mixed and inconclusive, so the team had to
conduct further research, and come up with a revised proposal.
This led to a second round of consultation, which ran from July 15th to August 22
nd, 2014.
This synopsis paper presents the outcome of the 2nd
consultation round.
The objectives of the Fairtrade Trade Standard Review are to:
Solve technical problems that have been identified during the monitoring period;
Ensure that the Standard is clearer and easier to understand;
Promote increased communication, collaboration and trust between operators and producers to
enable producers to better plan their production and to better estimate their volumes of Fairtrade
sales;
Encourage operators to go beyond a minimum compliance to create even fairer trading conditions,
to deliver enhanced development assistance to producers, and to further improve operators’ own
business practices; and
Create fairer competition among all types of Fairtrade operators.
The project scope of the Fairtrade Trade Standard Review:
The project covers all regions and all products.
3 Standards Consultation Results Synopsis Trade Standard 03.09.2014
The Trade Standard review applies mainly to the Fairtrade price and Premium Payer (in general the
first or second buyer) and the Conveyor, but some proposed new requirements are also targeted at
other actors in the supply chain.
The review focuses on chapters which deal with benefits to producers, i.e.: ‘contracts’, ‘sourcing
plans (sustaining trade)’, ‘pre-finance’, ‘pricing’ and ‘payment terms’. Minor amendments are
proposed in the chapters related to the integrity of the label, i.e.: ‘certification’, ‘use of the Fairtrade
Trademark’, ‘traceability’ and ‘product composition’.
This second consultation round mainly focuses on the topics that were not conclusive in the first
round, and where new proposals were formulated after a second research phase, i.e. Certification
model, Labour, Environment, Eligibility and contracts, Advanced payments, Sourcing plans and
market information, Sharing risks, Producer support and Trading with integrity.
1.3. Methodology and participation
More than 4,000 stakeholders received the public consultation document on the second round of
Trade Standard review which was published in four languages, English, Spanish, French and
Portuguese. During the consultation period, approximately 400 (10%) responded to the questions
via the questionnaire online or in PDF format or through other means such as workshop minutes,
emails and calls. Responses mainly came from producers, traders, NGOs, national Fairtrade
organizations, Fairtrade International and FLO-CERT. In total, we have received 323 individual
complete questionnaire responses worldwide plus six regional workshop reports which gathered
more than 80 producers and internal stakeholders. The workshops took place in six different
countries: Guatemala, Honduras, Mexico, Peru, Colombia and Costa Rica with Panama.
Overall more than 400 stakeholders participated in the consultation. 113 producers, 173 traders and
37 other (Fairtrade internal staff or other NGOs) responded to the questionnaire. Additional
feedback from producers came in the form of workshop reports. These were taken into account in
the analysis, but are not included in the graphs presented in this paper.
Some of the respondents have several functions in the supply chain, as shown in the graph below.
The responses come from all continents, more than 66% of responses are from Europe, Latin America
and Caribbean followed by Africa, Middle East and Asia.
4 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Amongst products, banana, cane sugar, cocoa and coffee accounts for nearly 40% of responses, with
each of the remaining products supplying ≤ 5% of responses.
Not all stakeholders responded to each question, so that the number of responses may vary from
one question to the other.
1.4. Executive summary of consultation results
The 2nd
round of consultation in July-August 2014 led to a very satisfactory rate of response, despite taking place during the holiday period in Europe: around 400 stakeholders participated in the consultation, representing about 10% of all stakeholders. Overall, the feedback was very positive; the proposals are supported by the vast majority of operators. However, in the narrative feedback, stakeholders raised very pertinent comments. Below is a summary of the feedback topic by topic.
1a. Model with aspirational requirements: There is a clear support for the proposed new model
though with a recurrent concern about added costs.
1b. Publication of audit results: In sum there was support to some form of publication in the interest
of the objectives of the proposal as explained in the consultation paper, however divided between the
degree of disclosure preferred, but also a relevant number of voices against it concerned mostly about
confidentiality and a possible risk to Fairtrade’s image.
5 Standards Consultation Results Synopsis Trade Standard 03.09.2014
2. Labour section: There is overall strong support to go ahead with including labour requirements for
processors although there is a concern about the increased costs this would bring and the potential
effect as an access barrier to producers who depend on independent processors. It was suggested by
some to only apply it to the global South in order to: not deviate from Fairtrade’s objectives; focus on
producers and workers’ rights in the South; and in order to address unfair competition arising from
compliance with different requirements for producer-owned and non-producer owned processing
facilities in the South.
3. Environment section: the consultation feedback showed strong support to the proposal to include
environmental requirements for traders but also important concerns, especially about costs and
deviation from Fairtrade’ priorities.
4. Fairtrade Payer and Fairtrade Eligible:
There is overall agreement with the proposal and the majority of the stakeholders see the need for
clarification of the distribution of roles in the value chain. On section A: although there is overall
agreement with the proposal, many product specific risks have been identified by different
stakeholders. On section B, the over 30% disagreement with the proposal demonstrates the many
concerns with it, for opposite reasons. The risks mentioned are mainly regarding the integrity of
Fairtrade and the percentage chosen.
5.1. Pre-finance / Advanced Payment: A majority of the respondents sees pre-finance as an integral
part of Fairtrade that should be reinforced. On the other hand, a large number of traders do not
provide pre-finance, and argue they cannot do it. The main argument being the risk involved, or that it
is not the traders' role. In that sense, they welcome the option of facilitating access to pre-finance via a
3rd party lender. However, there is still the question what happens in case the 3rd party lender does
not provide pre-finance, which may happen if the producer does not have sufficient financial systems
in place. There are a lot of concerns regarding the lack of know-how on paying in advance.
5.2. Other forms of financial support: The survey concluded that as long as this requirement
remains aspirational / voluntary, there is no important opposition. However, it was also highlighted that
it may not have much impact on trader practices, and there was concern expressed about generating
dependencies.
6. Sourcing plans and market information: There is overall agreement on this topic. Most producers
are generally very supportive as it is considered a valuable tool. The critical comments, however, point
out that several traders depend on receiving the retailer/processor’s own forecast to be able to provide
an adequate one, which, even if encouraged by the new aspirational requirement, will not be
guaranteed.
7. Sharing risks: In general, the section receives strong support, many express positive comments on
the general idea of risk-sharing. But, the comments made on the requirements themselves
demonstrated some concerns and criticisms. Overall, there is support for improving rules around
quality claims, but there are concerns about the idea of quality control before export. Price risk
management and price volatility are seen mainly as coffee-specific issues while the topic of the
country of jurisdiction is criticised as not being realistic. Some agree with the proposed requirements
as long as they remain aspirational. On all topics, there is a recommendation to focus on capacity
building through guidelines and training.
8. Producer support: The consultation feedback on this section was in vast majority supportive of this
proposal, even if some did not see this as the role of the traders.
6 Standards Consultation Results Synopsis Trade Standard 03.09.2014
9. Trading with integrity: the consultation feedback showed there was very strong support (over 90%
of respondents) for the proposed requirements, but some concerns about the implementation and a
request for clarification and more detail on the requirements.
Based on this feedback, the TS team revised the proposals, and submitted them to the Standards
Committee for final decision in November 2014. More information about the decisions taken on each
of the topics is provided in Annex 1.
1.5. Project timelines
The timelines of the Fairtrade Trade Standard Review:
March – July 2012 Research
Sept. 2012 – Mar. 2013 Pre-consultation, engagement with selected stakeholders, research.
July – Oct 2013 Public consultation on the Core and the Advanced sections, and regional
workshops with producers.
Sept. – Dec. 2013 Analysis of consultation results
Jan. – June 2014 Further research, engagement with key stakeholders, and revision and
proposal
July – August 2014 2nd round of Public Consultation on the revised proposal
August – Sept. 2014 Analysis and presentation of results of the 2nd round of consultation to
the Standards Committee and partial approval
November 2014 Ratification of final text of Trade standard by the Standards Committee
January-July 2015 Preparation for implementation
Sept. 2015 Validity date of the new Standard (except for labour and environment
sections)
Jan 2017 Validity date of the labour and environment sections
1.6. Abbreviations
List and explanation of all abbreviations used in this document
CP
Contract Production
FOB
Free On Board
FSP
Fairtrade Sourcing Program
FTMP
Fairtrade Minimum Price
7 Standards Consultation Results Synopsis Trade Standard 03.09.2014
FTO
Fair Trade Organizations
GMO
Genetically Modified Organism
HL
Hired Labour
ILO
International Labour Organization
NFO
National Fairtrade Organization
PML
Prohibited Material List
PN
Producer Network
S&P
Standards and Pricing
SC
Standards Committee
SPO
Small Producer Organization
TS
Trade Standard
WRAC
the Workers Rights Advisory Committee to Fairtrade
8 Standards Consultation Results Synopsis Trade Standard 03.09.2014
PART 2 Draft Standards Consultation - Outcome
Please find below:
The proposals and questions as presented in the consultation documents
A numeric analysis and the responses
A detailed summary of the feedback received from stakeholders
The order of the sections follows the structure of the consultation document.
Section 1. New model
Proposal presented during the consultation
a) Structure of the standard:
- One single standard with mandatory Core and non-mandatory Aspirational requirements.
- Current existing topics of the Trade Standard will be maintained as Core, with amendments
and additions.
- New Aspirational requirements that reflect steps beyond minimum compliance are added, both
in existing and new topics.
b) Certification and scoring system:
- A scoring mechanism for auditing consistency is introduced. This is similar to the approach
used in Fairtrade Standards for producers.
- Certification is achieved and maintained only when each Core requirement is fulfilled.
- Aspirational requirements are not mandatory, but are nevertheless audited in all cases, and an
informative score of audit results is calculated.
c) Motivation towards best practices:
- The standard and the audit can be considered an awareness-raising/engagement mechanism
in itself for traders. Best practices will be reflected in the standard
Additional elements:
- Potentially, operator scores can be made public to promote a race to the top among traders.
Alternatively, they could be internally used by NFOs to support best-in-class operators to find new
business.
- The model can be linked to other projects, using the score as a validation tool to access
special programmes, for example traders with good scores could benefit from specific partnerships
with Fairtrade (for instance special communication or marketing partnerships).
9 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Question 1.2. Do you agree with the model as presented?
Feedback received
Around 80% of the respondents agreed or mostly agreed with the new model. 11% of the answers
disagreed fully or mostly with the new model proposed.
The group of producers was more supportive (90%) than the group of traders (73%)
Rationale Those who agreed supported the rationale explained in the consultation paper: they welcome the
consistency that a scoring system will bring, the aspirational requirements will raise awareness and
will promote continuous improvement. There were several comments specifying that they agreed with
aspirational requirements as long as they remained non mandatory.
One of the arguments for disagreeing refers to the assurance mechanism of the aspirational
requirements, arguing that if they are not mandatory they do not belong in the standard. Others are
also concerned of the added time and costs that auditing new aspirational requirements would bring,
which may drive traders out of the Fairtrade system, or drive audit time away from core principles (this
concern about cost was also raised by several respondents who agreed with the proposal). It was
30%
51%
11%
4% 4%
Q1.1. Do you agree with the new model as explained above?
Yes, I completely agree
Yes, I mostly agree
I dont know, I don’t agree or disagree
No, I mostly disagree
No, I completely disagree
38%
21%
46%
54%
52%
35%
4%
15%
11%
3%
4%
8%
1%
7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Producer
Trader
Other
1.1
Yes, I completely agree Yes, I mostly agree
I don’t know, I don’t agree or disagree No, I mostly disagree
No, I completely disagree
10 Standards Consultation Results Synopsis Trade Standard 03.09.2014
suggested by some to use other type of mechanisms rather than the standard to reach the same
objectives.
A few respondents questioned the value, and the incentives, that the aspiration requirements would
bring, provided there is no differentiation given to those with better practices. Particularly highlighted
were the cases of intermediaries and processors on whom the producers rely.
Two respondents disagreed with aspirational requirements for not being strong enough and they
would like to see them mandatory as in the case of other Fairtrade standards.
It was also mentioned that aspirational requirements is not an appropriate name for their stated
purpose, as they should not be referred to as requirements if they are not mandatory, and aspirational
has the connotation of impossible to achieve. Alterative terms, such as additional voluntary practices,
are suggested.
Conclusions There is a clear support for the proposed new model though with a recurrent concern about added
costs.
Question 1.2. Do you want to make the results public?
Feedback received
19% of the respondents to the questionnaire considered that the results should be made visible to the
general public and 33% that they should be visible only for certified producers and traders. In total
52% asked for some form of disclosure of the information. 31% were against any kind of external
communication and 17% were unsure.
22%
36%
27%
15%
Q1.2. Do you want to make the results public?
Yes, to the general public
Yes, but only to othercertified organizations(producers and traders)
No, the results must not bemade public
I don’t know
11 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Traders were less supportive (around 50%) than producers (around 70%)
Rationale
The reasons provided by those who supported external communication were: transparency that it will
build trust in the standard, confidence in the Fairtrade system and an incentive for improvement. It was
argued that once we have decided to implement a scoring system it seems rational to make use of it,
but with a positive message, praising those who do extra rather than shaming those who stick to the
minimum.
Those who preferred that the results are shared only with certified producers and traders:
Considered the mechanism to be a good incentive for continuous improvement, but that
sharing the results with a wider audience, outside of Fairtrade, would not be relevant, as the
system is quite complex and only those involved would be interested and would understand
it.
It was considered positive that producers have a better understanding of their trading
counterparts, and a few suggested that producer’s results could also be published.
Additionally, some who supported these ideas would like to see it restricted only to the
relevant supply chain of each operator, rather than visible to all certified operators.
On the other hand those unsure or against the publications:
Were generally concerned about confidentiality of information and a possible risk to
Fairtrade’s public image by publishing bad results that would only confuse audiences.
The added value of the measure was also questioned by some, but with less frequency than
the other two arguments.
A particular argument of this group was that comparing different products with different standards and
realities may be misleading. Also, publishing results rather than promoting the best performers would
diminish the value of complying with core requirements, which may affect the smaller licensees with
less capacity to invest. It was also highlighted that the public scores would not be a complete picture
of a company’s ethical performance, as other activities (positive or negative) outside Fairtrade will not
24%
18%
30%
44%
33%
30%
19%
32%
27%
13%
18%
14%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Producer
Trader
Other
1.2
Yes, to the general public
Yes, but only to other certified organizations (producers and traders)
No, the results must not be made public
I don’t know
12 Standards Consultation Results Synopsis Trade Standard 03.09.2014
be covered by the score. The necessary operational changes to make publication of results possible,
such as modifying contracts with all operators, was also flagged as a potential problem.
The respondents presented a number of alternative ideas, such as:
delaying publication until the system is fully tested, making it first available only for Fairtrade
system staff and then making publication a choice of each operator;
calculating and publishing average scores so each operator can compare itself against the
average and the public can compare those who decide to publish their data against the
average;
or that only outstanding results are made public.
Conclusions:
In sum there was support to some form of publication in the interest of the objectives of the proposal
as explained in the consultation paper, however divided between the degree of disclosure preferred,
but also a relevant number of voices against it concerned mostly about confidentiality and a possible
risk to Fairtrade’s image.
Section 2. Labour requirements
Proposal presented during the consultation
The proposal is to include a number of labour requirements for processors, in order to be in line with
Fairtrade ambition to empower producers and workers, to respond to consumer expectation around
Fairtrade, and to put traders and producers on the same level in terms of compliance regarding
workers’ labour conditions.
1) Requirements covering the following issues:
a. No discrimination, abuse or sexual harassment
b. No forced labour
c. No child labour, and remediation and prevention where necessary.
d. Respect freedom of association and collective bargaining
e. Respect legal conditions of work
f. Provide healthy and safe working environments:
2) Applicable to certified operators that transform Fairtrade products only (i.e. all processors
and manufacturers).
3) All requirements are mandatory (core).
4) Application 2 years after the publication of the new standard to allow operators to invest
in compliance if necessary and allow Fairtrade to make the necessary changes for
implementation.
5) Audit frequency based on a risk assessment that takes into account the number of
workers, location, industry and specific type of operation, existence of other relevant
certifications and results from previous audits.
13 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Feedback received
91% of the participants agreed or mostly agreed with the proposal to add labour requirements to the
Trade Standard. Amongst all stakeholder categories this percentage was highest among retailers
(100%) and lowest amongst processors/manufacturers in the South (86%).
It is important to note that the degree of appetence is equally high amongst producers and amongst
traders.
Rationale The majority of the respondents that provided comments highlighted that:
Guaranteeing compliance with international labour conventions was expected from Fairtrade
and that it was important to have the same rules applying to all operators in the certified
chain.
58%
34%
4%
2% 2%
Q2.1. Do you agree with including labour requirements in the Fairtrade Trade Standard as explained above?
Yes, I completely agree
Yes, I mostly agree
I dont know, I don’t agree or disagree
No, I mostly disagree
No, I completely disagree
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Producer
Trader
Other
2.1
Yes, I completely agree Yes, I mostly agree
I don’t know, I don’t agree or disagree No, I mostly disagree
No, I completely disagree
14 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Additionally, these were seen as basic requirements that many are already complying with
and that this addition will allow the protection and empowerment of workers.
It should be noted that the reference to the implementation period was addressed by only 4
respondents, 2 who mentioned that the 2 year period was excessive, one agreed and one suggested
that the auditor should have discretion to grant an additional time period. Two participants suggested
to include (even if not binding) a reference to living wages.
In spite of the very clear support to the inclusion of the labour requirements, several participants raised
their concerns about the increased costs for operators that these additional requirements would bring.
Some even highlighted that it may put that some producers at risk of finding processors who may
leave the system in view of the increased compliance and/or certification costs, particularly in the
sugar sector. These comments were echoed by the participants who responded negatively to these
requirements. Another argument opposed to the inclusion of labour requirements was the need for
Fairtrade to focus in origin countries, and existing legislation was seen as an alternative option for
addressing labour issues in processing and manufacturing activities. The assurance method of this
new section was also questioned, whether audits is the best way to prove this and how not to
duplicate existing social audits. In total 4% mostly or completely disagreed, the highest percentage of
disagreement (8%) was found amongst processors/manufacturers in the North.
It is worth to mention that members of the WRAC, the Workers Rights Advisory Committee to
Fairtrade, also supported the inclusion of labour requirements in the Standard and made several
comments about key topics that may be added in alignment with the recent Fairtrade Hired Labour
Strategy such as living wages and grievance procedure, and references that should be taken into
account for this section. The relevance to apply this section to the North was also questioned by some
of its members due to the fact that Fairtrade’s objective is to improve lives of producers and workers in
the South therefore applying and checking these requirements in the North would be a deviation of
resources from Fairtrade’s purpose. The timelines for implementation was also questioned by the
WRAC and a shorter one was suggested.
It is also worth mentioning the support to this proposal from the Producer Networks as well as the fact
that introducing labour requirements for non producer owned processor in the South has been
identified as a key aspect for fair competition by the working group that has been assigned that task.
Conclusions
There is overall strong support to go ahead with including labour requirements for processors although
there is a concern about the increased costs this would bring and the potential effect as an access
barrier to producers who depend on independent processors. It was suggested by some to only apply
it to the global South in order to: not deviate from Fairtrade’s objectives; focus on producers and
workers’ rights in the South; and in order to address unfair competition arising from compliance with
different requirements for producer-owned and non-producer owned processing facilities in the South.
15 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Section 3 Environment
Proposal presented during the consultation
To introduce requirements related to the environment, as traders in the supply chain can have a
positive impact in the environment, and match the efforts that producers make in this area.
New Core requirements, with a transition time for implementation of two years:
Comply with local and national law regarding environment
New Aspirational (non-mandatory) requirements, that cover the following topics:
Assess environmental impacts of operations and minimize the negative impacts
Act to minimize environmental challenges in the supply chain
Use recyclable or biodegradable packaging
Use sea transport
Reduce carbon footprint
Feedback received
88% of the respondents completely or partly agreed with this proposal, while 6% disagreed with it
either fully or partly.
48%
40%
6% 4%
2%
Q.3.1. Do you agree with including environmental requirements in the Fairtrade Trade Standard as explained above?
Yes, I completely agree
Yes, I mostly agree
I dont know, I don’t agree or disagree
No, I mostly disagree
No, I completely disagree
16 Standards Consultation Results Synopsis Trade Standard 03.09.2014
The rate of acceptance if very high in both producers and traders, although there are more
respondents that “completely agreed” amongst producers than amongst traders.
Rationale Amongst those who agreed, the arguments used were that the environment was everyone’s
responsibility and should therefore be shared; that it would be consistent with producer standards,
making the Trade standard more equitable and which is something expected from a sustainable
product.
There were two suggestions to add two additional requirements in line with producer standards:
banning the use of materials in Fairtrade Prohibited Materials List and banning the use of any GMO
ingredient.
Amongst those who disagreed mostly or entirely, and echoed also by those who otherwise agreed
with the addition, there were strong concerns about the costs that this would represent and added
complexity with no direct impact on producers and workers which should be Fairtrade focus, and the
addition would possibly impact smallest companies negatively. Duplication of efforts with other
environmental standards was also raised as a concern.
Regarding the proposed requirements the following specific concerns were expressed:
Comply with local and national law regarding environment: seen as too vague and would
require a specific audit in itself, with important costs.
Asses environmental impacts of operations and minimize the negative impacts: considered
to unclear what is actually expected to be consider compliant.
Act to minimize environmental challenges in the supply chain: also too unclear and virtually
impossible to comply for those organisations that buy several products and from different
organisations (particularly FTOs)
Use recyclable or biodegradable packaging: not possible when the company does not
choose the material
Use sea transport: non applicable to several products (flowers, blueberries, gold as an
example) and overlapping with the next point
Reduce carbon footprint: it was mentioned that there was an overlap with the previous
requirement as the use of sea transport would reduce carbon footprint.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Producer
Trader
Other
3.1
Yes, I completely agree Yes, I mostly agree
I don’t know, I don’t agree or disagree No, I mostly disagree
No, I completely disagree
17 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Conclusion Strong support to the proposal to include environmental requirements for traders but also important
concerns, especially about costs and deviation from Fairtrade’ priorities.
Section 4. Fairtrade payer and Fairtrade eligible
Proposal presented during the consultation
In order to clarify the role and responsibilities of exporters, we have made a proposal with 2
complementary sections:
Section A:
Not allow Fairtrade eligible as a general practice. The contract with producers always needs to
declare if the product is Fairtrade or not and pay the Fairtrade price and Premium.
The purchase contract must be signed between the producer and the Fairtrade payer, or between the
producer, a conveyer and the Fairtrade payer (in a tripartite contract).
The Fairtrade payer is the party responsible for paying the Fairtrade price and Premium. The
Fairtrade payer is the first company who buys from producers (an exporter or an importer),
regardless of where the price level is set, unless this first company is considered a conveyer. A
conveyer acts as intermediary in transactions with the real payers. If they want to act independently
then they would have to become a Fairtrade payer and declare the purchase as Fairtrade at the time
of purchasing from producers. In specific cases the party in charge of paying the Premium can be
different from the payer, as long as this is agreed in the contract.
Section B:
Allow the Fairtrade payer to buy Fairtrade in consignment only for a specific percentage (20%)
of each contract when they are not certain if they will be able to sell under Fairtrade terms. This
additional flexibility would not apply to bananas, cotton, tea, sugar or flowers as there are already
similar options in those current product standards.
Feedback received
Section A:
70% of the respondents were in agreement with the proposal for at least one of the products. The 12%
that are against the proposal were mainly traders.
18 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Some respondents gave answers on several products. Therefore the overall results per product can
be higher than per stakeholder group, as shown below.
Section B:
46% of the respondents were in favor of the proposal and over 30% of the respondents are against
the proposal for at least one of the products. This counts as well for Traders as for Producers.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Producer
Trader
Other
4.1
Yes, I completely agree Yes, I mostly agree I don’t know
No, I mostly disagree No, I completely disagree
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Banana
Coffee
Cocoa
Sugar
Seed Cotton
Flowers and Plants
Tea
Other
4.1
Yes, I completely agree Yes, I mostly agree
I dont know, I don’t agree or disagre No, I mostly disagree
No, I completely disagree
19 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Some respondents gave answers on several products. Therefore the overall results per product can
be higher than per stakeholder group.
Rationale
Section A:
The main arguments in favour were that:
This clarification enables a change in the power structure in favour of producers if the
conveyor by definition is accountable to the producer
It reduces loopholes where producers do not know what happens with their products
It brings producers and markets closer together and may lead to business opportunities for
producers
The transparency of the margin of the conveyor should increase
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Producer
Trader
Other
4.2
Yes, I completely agree Yes, I mostly agree I don’t know
No, I mostly disagree No, I completely disagree
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Banana
Coffee
Cocoa
Sugar
Seed Cotton
Flowers and Plants
Tea
Other
4.2
Yes, I completely agree Yes, I mostly agree
I dont know, I don’t agree or disagre No, I mostly disagree
No, I completely disagree
20 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Risks mentioned:
Less flexibility leads to more risk and less motivation to buy/sell Fairtrade products for the
exporters/conveyors and mills and therefore to less market development (mentioned
several times)
Exporters that are developing small producer organizations won’t be able to do so except if
they become a conveyor and the contract happens between the producer and the importer.
However, for weak producer organisations, handling of international contracts might prove
very difficult.
For sugar there seems to be complications, because the milling ratio is influencing the price
of the cane sugar but not of the sugar cane. Furthermore the fact, that the importer buys
sugar and the cooperative sells sugar cane hinders them of having a direct contract with the
importer. Similar problems were mentioned for tea and rice.
Tea and sugar: clarification needed on how this concept works with responsibilities on retro-
certification (which is driven by traders in consuming countries)
Banana: might add complexity for supply chains with exporters as price and Premium payer,
due to shortfalls in sales clause and quality claim procedures.
Coffee: might change competitive situation significantly in the favour of multinationals, as
their FOB pricing would be in direct competition with importers buying directly from
producers, and there should be clear a rule that those exporters need to comply with FTMP
as well when selling at FOB (NB: this requirement is actually proposed in the Trading with
Integrity Section).
Section B:
The main arguments in favour are that:
Make it easier for new traders to enter the Fairtrade system
Allows a certain flexibility to reduce risk for the traders
Open market opportunities for producers
Would increase flexibility for flowers (NB: they were not included in the proposal)
Risks mentioned:
20% seems an arbitrary level that bears no specific relation to the market reality of the
different products and value chains
Many traders asking for more flexibility (80-100%)
Dangerous in the long term for the legitimacy and accountability of Fairtrade
Exporters in coffee already have to be transparent. Providing they are transparent on their
costing and that there is clear traceability when they sell coffee as Fairtrade certified then
there should be no need for the above.
Keeping track of the transactions and the traceability will become even more difficult and
fraud risk will be higher
In flowers (and other products labelled in the South) the risk of fraud would be even higher
as the label is already on the product when it leaves the producing country.
Further comments:
There was a comment suggestion to integrate all product categories in the 20% approach and lift all
the product specific rules such as retro-certification. There were other suggestions to include all rules
like this in the product standards, rather than the generic ones, and look for product specific solutions.
21 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Conclusions There is overall agreement with the proposal and the majority of the stakeholders see the need for
clarification of the distribution of roles in the value chain.
Section A:
Although there is overall agreement with the proposal, many product specific risks have been
identified by different stakeholders.
Section B:
The over 30% disagreement with the proposal demonstrates the many concerns with it. The risks
mentioned are mainly regarding the integrity of Fairtrade and the percentage chosen.
Section 5.1. Core requirements on advanced payment
Proposal presented during the consultation
Clarified and modified core requirements:
1. Rename pre-finance as advanced payment of a contract (change)
2. Advanced payment requirements apply to the first buyer (clarification)
3. Shift the responsibility: buyers must offer advanced payment rather than producers request
it (change)
4. Advance payment does not need to be provided if producers decline the offer or it implies a high
risk (no change
5. Advanced payment can be provided directly or facilitated via a 3rd
party lender (no change)
6. Specifying what buyers need to do if they choose to facilitate advance payment via a 3rd
party lender: introduce them, confirm to the lender that the contract can be used as collateral
and paying through the lender if requested. (change)
7. The current amount of payment to advance and the time in which to do it remains the same (no
change)
Feedback received
A majority of the respondents (60%) agree with the proposal. Many respondents did not know how to
respond to the question (20%). 15% are against the proposal.
22 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Some respondents gave answers on several products. Therefore the overall results per product can
be higher than per stakeholder group.
Rationale The main arguments in favour were that:
It will enable producer organisations to buy the product for their buyers on time from their
members
It will keep members of the producer organisations from selling to middlemen
Will reduce fees charged by lenders
Risks mentioned:
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Producer
Trader
Other
5.1
Yes, I completely agree Yes, I mostly agree I don’t know
No, I mostly disagree No, I completely disagree
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Banana
Coffee
Cocoa
Sugar
Seed Cotton
Flowers and Plants
Tea
Other
5.1
Yes, I completely agree Yes, I mostly agree
I dont know, I don’t agree or disagre No, I completely disagree
No, I mostly disagree
23 Standards Consultation Results Synopsis Trade Standard 03.09.2014
The fact that often the contract is being used as collateral for credit led to the conclusion that
the right timing of the contract is more important than the offer of pre-finance from the buyer.
For FTO’s that handle multiple supply chains this might become burdensome to manage
"High risk" is difficult to define
Advance payments reduce the pressure on the producer to supply on time and to the quality
agreed.
The relationship between the producers and the lenders are much more important than
between the buyers and the lenders. Not all buyers will be aware of the lenders.
Some lenders may already have reached their maximum number of clients/credit in the
respective country or product portfolios.
Producers may have poor accounts, in which case they won't receive finance from lenders.
Consequences when the producer organisation is a much bigger business than the trader.
The differentiation of excluding fresh fruits instead of year round crops was questioned
For wine it is complicated as the exporters buy the product and stock it for long time
For rice the risk of not getting the product seems to be high
In sugar the pressure will be on the mill that does not benefit from Fairtrade.
National law sometimes regulates payment intervals.
Conclusions
A majority of the respondents sees advance payment as an integral part of Fairtrade that should be
reinforced.
On the other hand, a large number of traders do not provide pre-finance, and argue they cannot do it.
The main argument being the risk involved, or that it is not the traders' role. In that sense, they
welcome the option of facilitating access to pre-finance via a 3rd party lender. However, there is still
the question what happens in case the 3rd party lender does not provide pre-finance, which may
happen if the producer does not have sufficient financial systems in place.
There are a lot of concerns regarding the lack of know-how on paying in advance.
Guidance of the right timing of contracts for efficient work with 3rd party lenders is important (country
and product specific).
The conditions for seasonal crops are not the same as for “all year” crops. Unfortunately the product
categories of the standards do not match this separation.
Section 5.2. Aspirational requirements on financial support
Proposal presented during the consultation
New aspirational requirement: Provide access, directly or through a 3
rd party, to credit for other
financial needs of the organization
Feedback received
A majority of the respondents (60%) agree with the proposal. Many respondents did not know how to
respond to the question or where neutral (24%). 14% are against the proposal, and many of those did
not understand that the criteria is aspirational.
24 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Some respondents gave answers on several products. Therefore the overall results per product can
be higher than per stakeholder group.
Rationale The main argument in favour is that it could encourage traders to support producers.
Risks mentioned:
Aspirational may not be enough to encourage traders
Can lead to significant dependencies of producers on their buyer (in case credit is provided
by the buyer). Fairtrade as a system already provides support through the Fairtrade access
fund, which the respondent considers as the better way of supporting producer finance.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Producer
Trader
Other
5.2
Yes, I completely agree Yes, I mostly agree I don’t know
No, I mostly disagree No, I completely disagree
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Banana
Coffee
Cocoa
Sugar
Seed Cotton
Flowers and Plants
Tea
Other
5.2
Yes, I completely agree Yes, I mostly agree
I dont know, I don’t agree or disagre No, I mostly disagree
No, I completely disagree
25 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Conclusions The survey concluded that as long as it stays aspirational, there is no important opposition. However,
it was also highlighted that it may not change much, and there was concern expressed about
generating dependencies.
Section 6.1. Sourcing plans
Proposal presented during the consultation
Clarified Core requirements
1. Sourcing plan (an estimation of future Fairtrade purchases) to producers has to be provided by
price payer only (clarification).
New Aspirational requirements
1. For traders working directly with producers: provide regular additional relevant market information
to the producer, as a minimum including the following: final destination market and product form,
customer feedback of the product and market trends regarding quality specifications, or other market
information as requested by the producer
2. For traders not working directly with producers: also provide a sourcing plan to immediate supplier.
3. For all: you sign long-term contracts with producers or you have a long term commitment with your
suppliers so they can in turn have a long-term contract with producers. Guidance: in this context long
term means 2 years or more.
Feedback received
A large majority of the respondents (76%) agree with the proposal. Only 9% are against the proposal.
Some respondents gave answers on several products. Therefore the overall results per product can
be higher than per stakeholder group.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Producer
Trader
Other
6.1
Yes, I completely agree Yes, I mostly agree I don’t know
No, I mostly disagree No, I completely disagree
26 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Rationale
The main arguments in favour are that:
Brings clarity to the producer to plan investments and plantation.
Risks mentioned:
The requirement will not change anything. If it is already in practise they will continue and if
not the actors will just create a paper document that has no meaning (increase bureaucracy)
Depends on the end-buyer (retailer/roaster)
There is confusion about the wording in the proposal as it mentions the word contracts. It is
therefore unclear whether it is about a contract or about a (non-binding) agreement.
In some markets 2 years is a very long time to plan ahead
Further comments:
Clarify the term “modality”
Inclusion of a penalty scheme for traders if they do not comply with a part of their “promised”
volumes
Producer Organizations should confirm the supply plan volumes
Change “honest estimation of purchases” into “realistic estimation of purchases” as honest
has a moral connotation
Conclusions There is overall agreement with the proposal as many of the actors already have long-term
relationships with their producers. Most Producers are generally very supportive as it is considered a
valuable tool. The critical comments, however, point out that several traders depend on receiving the
retailer/processor’s own forecast to be able to provide an adequate one, which even if encouraged by
the new aspirational requirement will not be guaranteed.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Banana
Coffee
Cocoa
Sugar
Seed Cotton
Flowers and Plants
Tea
Other
6.1
Yes, I completely agree Yes, I mostly agree I dont know
No, I mostly disagree No, I completely disagree
27 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Section 7. Sharing risks:
Proposal presented during the consultation
New Aspirational requirements
1. Apply risk management tools to contracts with producers, on their behalf and with no costs
(when applicable)
2. Buyer checks quality before transport to reduce quality risks (if applicable)
3. Policy that explains that in the context of high price volatility with risk of losses for producers,
possible solutions are discussed with producers
4. Applicable jurisdiction for conflict resolution based in producing country
Feedback received
Overall, 71% of the respondents support the proposal on sharing risks (mostly or completely agree) for
one or more products, while 8% mostly or completely disagree with it. Producers are in vast majority
(90%) in favour. Among traders, opinions are more split, 57% mostly or completely agree, while 14%
disagree. A significant number (28%) do not know.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Producer
Trader
Other
7.1
Yes, I completely agree Yes, I mostly agree I don’t know
No, I mostly disagree No, I completely disagree
28 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Rationale
In general, those in favour (mainly producers) believe that sharing risks will create more transparency
and more trust between buyers and sellers, and that it will reduce risks for producers. Some point out
that it is important to share risks because producers are the most vulnerable part of the value chain,
and also face climatic risks.
Among traders, some agree with the proposed requirements as long as they remain aspirational.
Those against the proposed requirements argue that:
Fairtrade already regulates too much, and this makes things even worse. It becomes too
complicated.
There are already trade rules and practices defined in the conventional sector that regulate
the risk sharing between the various actors in the chain. No need for Fairtrade to intervene
or change that.
Any additional sharing of risks comes with additional costs.
One would need a very strong motivation to convince traders to comply with the
requirements.
There is a suggestion for clarity in contracts on risks of both parts and responsibilities.
In addition, some ask for more clarity on the requirements.
One respondent would prefer having clearly defined basic requirements, but no aspirational
requirements.
On the specific topics: As this section covers very different topics, the feedback differs much from one
requirement to the other, as follows:
Price risk management:
The specific comments given on this requirement are mainly negative:
First, respondents argue that any price risk management tool comes at a cost. Also, many point out
that this requirement is more relevant for coffee which is traded at open prices. Given that some
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Banana
Coffee
Cocoa
Sugar
Seed Cotton
Flowers and Plants
Tea
Other
7.1
Yes, I completely agree Yes, I mostly agree I dont know
No, I mostly disagree No, I completely disagree
29 Standards Consultation Results Synopsis Trade Standard 03.09.2014
requirements already exist for coffee, it is -according to them- now more a matter of closely auditing
the requirements, training producers and providing guidelines.
Quality:
Those in favour (mainly producers) argue that quality claims need to be regulated because there is
some abuse, and it leads to conflicts. A few traders mention that they already have quality control at
export level, but others argue that this would come at a cost. Some respondents point out that
checking quality before export in banana would not be feasible, because some quality problems
appear only once the fruit is ripened. Training and capacity building of producers is suggested as a
better way towards a more consistent and higher quality product. There are some requests for
increasing clarity of the requirements and one respondent suggests having more clarification on a
product basis.
Price volatility:
Very few commented specifically on this topic. Some agree with it as they recognize that otherwise
producers will run into problems in case of price volatility.
However, some traders complain about the imbalance in risk-sharing in favour of producers, especially
in coffee, some complain about “producers who sign contracts, but then do not deliver”.
One NFO gave very detailed feedback and made an alternative proposal for wording, namely a
compulsory requirement requiring a clause in the contract defining mechanisms for adjusting agreed
prices in case of high price volatility (upwards or downwards).
Country of jurisdiction:
Comments made specifically on this topic are mainly negative, because of the justice system in many
countries in the South is perceived as weak and other alternative mechanisms perceived as lacking
expertise. The costs involved are also an argument against. Suggestions are around either, using
existing contracts and authorities operating in the industry, helping producers be better represented
there or setting up alternative arbitration mechanism for Fairtrade. Providing guidance and detailed
information on this is also recommended.
Producers were particularly asked about additional risk-sharing mechanisms for them and the
following was mentioned:
Some risks mentioned by respondents are already covered by existing requirements (quality claims)
or by the proposal (price volatility, exchange rate fluctuation risk). Other risks were mentioned, but it is
difficult to define standard requirements to share such risks. These are: climatic risks and diseases
affecting the production, reduction in Fairtrade sales volumes or lack of sales after investment in
production, theft on farm or during transport.
Some banana producers suggest setting up an independent quality control mechanism at port of
destination. Another operator suggests an insurance cover.
Conclusions
In general, the section receives strong support, many express positive comments on the general idea
of risk-sharing. But, the comments made on the requirements themselves demonstrated some
concerns and criticisms.
30 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Overall, there is support for improving rules around quality claims, but there are concerns about the
idea of quality control before export. Price risk management and price volatility are seen mainly as
coffee-specific issues while the topic of the country of jurisdiction is criticised as not being realistic.
Some agree with the proposed requirements as long as they remain aspirational.
On all topics, there is a recommendation to focus on capacity building through guidelines and training.
Section 8. Producer support:
Proposal presented during the consultation
New Aspirational requirements: to encourage supply chain operators to support producers in
building their operational capacities or advancing their social goals.
1. For all traders: supporting producers’ or workers’ Fairtrade development plan or Premium plan,
or provide other operational, production or social capacity-building support that producers or workers
choose. This can also be paying a higher Premium. But this cannot be paid out of the Fairtrade
Premium.
2. For all traders: Sourcing from producers with limited market access (Least Developed Countries
or land-locked countries, post-conflict areas, women or minorities-owned organizations, or that have
never sold to the export market before).
3. For all traders: Acting as market liaison: sponsor producer participation in trade fairs or put them
in contact with other buyers
Feedback received
The vast majority of respondents (74%) are in favour of this requirement, especially producers.
Approximately a third of the respondents did not respond or did not know. Only 7% mentioned they
mostly or completely disagree with the proposed requirements.
40%
35%
18%
5%
2%
Q8.1. Do you agree with the proposal for producer support?
Yes, I completely agree
Yes, I mostly agree
I dont know
No, I mostly disagree
No, I completely disagree
31 Standards Consultation Results Synopsis Trade Standard 03.09.2014
Rationale
The main arguments in favour are that:
It will enable producers to build up their capacity, improve their production to get better
market access.
It will improve producers’ conditions of living
It will promote closer collaboration between producer and buyer.
Some appreciated that the requirement insists on “producers’ choice”, as it is important to ensure the
independence of the producer.
Also, many (mainly traders) support the requirement as long as it remains aspirational. They see it as
a “nice to have”.
Those against the proposal had the following main arguments:
This should not be in the Standard because:
o It is not needed. Those who do it, do it anyway, because of their motivation.
o The audits should focus on the Core.
It is not the role of the traders:
o There is a risk of bias if training is provided by the trader. Producers get confused
when they get support from many organisations.
o It should be Fairtrade International’s role to provide producer support and to invite to
trade fairs.
o Some traders do not have the capacity to provide producer support, especially if
they are not based in the country or if they have limited financial capacity and/or
tight margins.
It will not be possible to audit against these requirements if the support is not documented in
writing (one comment).
On the access to markets (2 respondents), it is difficult to comply if the quality provided by
producers does not match the customer’s expectations.
On the invitation to fairs, two said it is not possible to put producers in contact with other
buyers or with customers, because it would be direct competition.
69%
51%
76%
26%
36%
17%
4%
9%
3%
1%
3%
3%
1%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Producer
Trader
Other
8.1
Yes, I completely agree Yes, I mostly agree
I don’t know, I don’t agree or disagree No, I mostly disagree
No, I completely disagree
32 Standards Consultation Results Synopsis Trade Standard 03.09.2014
One participant noted that the capacity to comply with this requirement will depend on the
type of operator. According to this answer, multinationals have more capacity to provide
producer support, while FTOs are likely to comply since they already implement many of
these activities.
FTOs who participated in the survey completely agreed with the proposal.
The following suggestions/comments were made:
Add “workers” to the beneficiary group
Link to the “needs”, to be defined by producers
How are we going to define the list of “vulnerable producers”?
We should rephrase into “co-investment” from producer and trader, and possibly 3rd party
The trader should be allowed to monitor implementation to ensure his support has impact
The support to producers should be coordinated.
On the access to markets, we should add those who sell little volume under Fairtrade terms.
Conclusions
Overall, this requirement is strongly supported by stakeholders. Since it is “only” an aspirational
requirement, there is in any case limited risk for traders whom it would apply to.
Section 9. Trading with Integrity
Proposal presented during the consultation
New Core requirement for all traders, to avoid unsound trading practices:
You do not engage in unsound practices that clearly damage producers’ or other operators’ capacity
to compete and you must not impose trading conditions on your suppliers that will make it difficult for
them to comply with Fairtrade standards. Such as:
1. bonded contracts
2. exclusivity contracts
3. selling/buying below Fairtrade price
4. selling below costs (dumping)
5. poaching members from producer organisations or otherwise attempting to weaken existing
organisations
6. pushing prices down in such a way that the supplier cannot comply with the Fairtrade Minimum
Price, Premium and/or other Fairtrade requirements
7. other clearly unsound practices
Feedback received
This requirement is in overwhelming majority (90%) supported by stakeholders. Only 3% are against,
while 7% do not know.
33 Standards Consultation Results Synopsis Trade Standard 03.09.2014
The support is strongest among producers (96%), but traders are also strongly in favour (87%
completely or mostly agree).
Rationale Most stakeholders welcome the requirement in principle, because it will prevent unfair competition
and unsound practices, it is in line with what Fairtrade stands for and will maintain Fairtrade’s
credibility. It will provide greater transparency in commercial relations and more security to producers.
Some welcome that this is finally proposed, as they have noticed that such unsound practices do take
place at present and are very detrimental.
However, many note the challenge in the implementation: they are concerned about how these
requirements will be audited.
60%
30%
7%
2% 1%
Q9.1. Do you agree with the proposal for trading with integrity?
Yes, I completely agree
Yes, I mostly agree
I dont know, I don’t agree or disagree
No, I mostly disagree
No, I completely disagree
69%
51%
76%
26%
36%
17%
4%
9%
3%
1%
3%
3%
1%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Producer
Trader
Other
9.1
Yes, I completely agree Yes, I mostly agree
I don’t know, I don’t agree or disagree No, I mostly disagree
No, I completely disagree
34 Standards Consultation Results Synopsis Trade Standard 03.09.2014
They suggest the following:
examples need to be defined carefully, more specific wording is required
the compliance criteria need to be measurable and auditable
preventive an corrective measures must be defined, the risks of non-compliance need to be
clear
Producers need also to be checked (by accepting such practices, they indirectly force others
to do the same).
Legal implications need to be looked at (especially because of the reference to pricing)
On the specific examples, the following is mentioned:
“other unsound practices” needs to be deleted because it is dangerously unclear
“Selling below costs” might be the only solution when market is falling; How to identify
whether prices have been pushed down in bad faith or because of market falling
“Poaching members” should be made more clear, is it poaching when weak co-ops lose
their members?
“Exclusivity contracts” can be beneficial to producers and should not be mentioned here.
One should rather promote long-term relationships
One respondent, considering that the real possibility to audit needs to improve because it is a Core
requirement, requires more explicit descriptions, and proposes the following for specific requirements:
1. Bonded contracts: suggested that in order to reduced the risk of bonded contracts Fairtrade
transactions are only allowed between trade partners who also trade at conventional terms,
when the value of their conventional trade is smaller than that the value of their Fairtrade
2. Selling below costs: submitting standardized costs sheets to the certifier that publishes
mean values of these cost sheets among all stakeholders, and audits major variations.
3. That for major products, contracts in any part of the value chain can only be cancelled with
written approval of certifier.
The respondents also mentioned other practices that they considered unfair and could be included in
the requirement, however most are covered by existing standards already therefore the importance of
continued strengthening of the standards assurance process is highlighted. Other practices referred to
producer organizations rather than to traders for Fairtrade’s consideration in next review of producer
standards.
Conclusions Overall, there is strong support for the proposed requirements, but some concerns about the
implementation and a request for clarification and more detail on the requirements. Because it is
presented as a Core requirement, operators are concerned about the risk of non-conformity, so they
want full clarity on what they are allowed and not allowed to do.
Section 10. Other comments
Out of the 323 complete responses received, 60 respondents provided additional comments. In
addition to expressing appreciation for the opportunity to participate and praising the proposal put
forward there was a wide array of comments on diverse issues. The most common were the need to
35 Standards Consultation Results Synopsis Trade Standard 03.09.2014
expand markets and find buyers for Fairtrade certified products and to access market data per country
as well as the need of closer surveillance to all actors in the supply chain and not only producers.
The following needs were also mentioned: to revise minimum prices and Premium ( mentioned
through individual responses and workshops), to strengthen the traceability requirements including a
platform that in real time that would give information about transactions, to train traders and producers
to facilitate the application of this Standard.
Additionally, in written feedback an NFO highlighted the dilemma the revision of the Trade Standard
faces as it aims to set rules to mainstream actors in the market at the same time as it aims to set rules
to “alternative supply chains”. In their opinion the mainstreaming of an alternative model is only
possible beyond a specific market segment through lowering the standards. According to the
respondent, two different models should be developed: one that focuses on payment of price and
Premium and another one that regulates the trading relations along the supply chain setting the bar
higher than what has been proposed during the consultation. A lack of strategic framework as a
necessary previous step before standard development was also raised by a member of the MEP team.
Finally, several stakeholders mentioned that it was unfortunate that the consultation period overlapped
with the summer break in Europe, as this reduced the opportunity to provide more and perhaps better
feedback to the questions raised.
36 Standards Consultation Results Synopsis Trade Standard 03.09.2014
ANNEX 1: Final Standard Committee decisions:
In view of cthe consultation feedback described in this document, the TS team revised the proposals and presented them to the Standards Committee, on September 16
th, 2014 to get their feedback, and
on November 26th, for approval of the final version.
The final decisions on the Trade Standard topics included in the 2nd
consultation round are as follows:
1a. Model with aspirational requirements: the SC approved the model consisting in Core mandatory (core) requirements and aspirational (voluntary) requirements, describing best practice. The aspirational requirements will be audited, but compliance will be voluntary, and will lead to a score. The term aspirational requirement was also changed to “voluntary best practice”.
1b. Publication of audit results: the consultation revealed some concerns about confidentiality. The final decision is to keep audit results internal to Fairtrade staff, and only publish average anonymous aggregated results, at least in the first 2 years, and then to reevaluate.
2. Labour section: the consultation results showed over 90% support to the idea of labour requirements. However, the issue of additional costs was raised. As a result, the team submitted a revised proposal, which the Standards Committee approved in its November session:
a) a core requirement that all operators are aware of the applicable labour laws in their country and of the fundamental ILO conventions and that there are no indications that they violate any of them. We will apply a reactive assurance approach (meaning: audits will be carried out on a reactive basis) based on allegations and on a risk assessment).
Guidance: ILO fundamental conventions cover freedom of association, forced labour, child labour and non-discrimination.
The SC agreed to have a transition period to prepare for the implementation of the labour
requirements. So they will only be applicable from 2017 on.
3. Environment section: the consultation feedback showed strong support to the proposal to include
environmental requirements for traders but also important concerns, especially about costs and
deviation from Fairtrade’ priorities. Therefore, the TS team revised the proposal, which the Standards
Committee approved.
a) Core requirement regarding compliance with regulations, with a reactive assurance approach,
focusing only on clear indication of non compliances such as allegation and on a demonstration
that the company is aware of laws, which in terms of auditing and certification will not be
intensive and will limit costs.
b) Core requirement forbidding the use of chemicals in the PML list on Fairtrade products. Despite
not being consulted upon, this was proposed by some respondents to the consultation, and it is
considered key for a consistent message, coherent with the consultation results and supportive
of fair competition between producers and traders.
c) Aspirational requirements regarding environmental impact evaluation, use of biodegradable
packing and efforts to reduce carbon footprint.
A more in-depth review of the PML list for traders will be done within the framework of the PML review
in 2015.
4. Fairtrade Payer and Fairtrade Eligible: the consultation feedback on this proposal showed a lack of stakeholder consensus, for opposite reasons, and also highlighted that trader roles and responsibilities vary a lot from one product sector to the other. Therefore the TS team presented a
37 Standards Consultation Results Synopsis Trade Standard 03.09.2014
revised proposal, aiming at regulating better the role of conceyors, to ensure greater benefits to producers, and greater transparency of Fairtrade transactions. Regarding Fairtrade eligible, the final decision is to adopt a product by product approach and to define for each product category who is payer and who is conveyor, and in which cases Fairtrade eligible sales may be allowed. This will be done progressively, within the framework of the product standard reviews. 5.1. Pre-finance / Advanced Payment: this topic is seen as a key component of Fairtrade, but there are challenges in the implementation. The SC approved the proposal, which requires the first buyer to facilitate access to prefinance. The TS team also pointed out that improving access to finance cannot only be enforced via a Standard, other measures beyond standards need to be taken. 5.2. Other forms of financial support: stakeholders were in favour of this aspirational requirement.
The SC approved it, with instructions to ensure that it is not imposed on producers, and fits their
financial needs.
6. Sourcing plans and market information: There is overall agreement on this topic. Most producers
are generally very supportive as it is considered a valuable tool. The critical comments, however, point
out that several traders depend on receiving the retailer/processor’s own forecast to be able to provide
an adequate one, which, even if encouraged by the new aspirational requirement, will not be
guaranteed. But this issue is beyond the scope of the Trade Standard Review. The SC approved the
proposed requirements.
7. Sharing risks: In general, the section received strong support, but the feedback differed from one
requirement to the other: Some agree with the proposed requirements as long as they remain
aspirational. In many instances, there was a recommendation to focus on capacity building through
guidelines and training. The SC therefore approved to maintain (and enforce) the existing requirement
related to documentation of quality claims.
8. Producer support: The consultation feedback on this section was in vast majority supportive of this
proposal, even if some did not see this as the role of the traders. The SC approved the section.
9. Trading with integrity: the consultation feedback showed there was very strong support (over 90%
of respondents) for the proposed requirements, but some concerns about the implementation and a
request for clarification and more detail on the requirements.
The team revised refined the definition of the requirement, taking into account the EC definition of
unfair trading practices, which the SC approved.
SC endorsed the team’s proposal that audits will focus on checking there are no clear indications of
breach of the requirement, such as allegations.
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