Topic: Fair Trade
Introduction
Fair Trade presents significant opportunities to enhance LED in South Africa. The concept of Fair Trade has evolved to afford small-scale and historically disadvantaged producers in developing countries, including South Africa, with access to niche high value markets, a guaranteed ‘fair' price for their products and a social premium to support community development. Fair Trade products are bought by ethical consumers; persons who seek to buy products that align with their social & environmental consciousness. Fair Trade targets historically marginalised, small scale producers, but also recognises genuine empowerment partnerships between agri-business, workers and the wider community. Fair Trade accredited status has enabled South African producers to improve their competitiveness in European and North-American markets, whilst simultaneously securing increased earnings for the workers and funds for investment in social infrastructure projects such as schools, clinics and sporting facilities. The Fair Trade concept has been applied to a range of agricultural products (including fruit, wine, tea, sugar and natural products), arts and handicrafts, jewellery and tourism. The main certification bodies for these different sectors are: agricultural products = the Fairtrade Labelling Organisations (FLO-Cert.), natural products = PhytoTrade Africa, craft = the Association for Fairness in Trade (AFIT), and tourism = Fair Trade in Tourism South Africa (FTTSA).
Definition
Fair trade is defined as a "trading partnership, based on dialogue, transparency and respect that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers - especially in the South" (F.I.N.E). Fair Trade has evolved into recognizable brands that are sold at a premium, in recognition of both the integrity within the supply chain from field to retail store shelf and also the ‘fair' price and trading conditions that Fair Traders are committed to uphold.
Key Issues
The main criteria to become a Fair Trade producer and access Fair Trade markets are:
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Fair Trade producers need to become certified as meeting specific product standards and generic labour as well as management standards.
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Adherence to these standards is audited on an annual basis and conformity with minimum benchmarks must be achieved before Fair Trade status is conveyed.
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FLO certified Fair Trade producers are entitled to attach the FLO mark to the branded product.
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The market access advantages of Fair Trade significantly out-weight the costs, which include the annual audit costs and costs associated with standards adherence and management time.
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Fair Trade markets have grown at roughly 50% per annum since 2000, with analysts predicting continued high demand in established and newly emerging markets sustaining this growth rate in the short-term.
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Fair Trade markets are niche markets and are thus be subject to oversupply and competition from other ethical labels.
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Fair Trade brands enable ethical consumers to identify with specific producers, such as the fruit growers in Limpopo, and by purchasing their products the consumer seek to support their development endeavours.
Critical Success Factors
- Fair Trade should not be seen as a panacea for development. It cannot address the marketing needs / constraints of marginalised small-scale producers who have yet to establish their products in mainstream local markets.
- In order to access Fair Trade markets, producers must be able to meet export quality standards and maintain a regular and reliable supply of products; producers that fail to meet quality benchmarks and the demands of global supply chains will not attract Fair Trade buyers, regardless of the social & environmental credentials of the organisation.
- Agri-business - worker partnerships in the wine and fruit sectors have developed a relatively successful Fair Trade model that twins the expertise of the private sector (and their experience in global markets) with the best interests of the workers and their base communities. The benefit to the workers from Fair Trade includes increased control and influence on management issues, a share of the dividend from the profits accruing through increased market access, and social infrastructure investment in health and education for the benefit of the broader community.
- In order to become Fair Trade certified, South African producers using hired labour must comply with the National legislation on Broad Based Black Economic and demonstrate their commitment to codes of good practice.
- Opportunities are emerging for Fair Trade producers to market their produce / goods in South Africa through labelling initiatives and the building of consumer awareness to support Fair Trade objectives.
