Wednesday, May 25, 2011

From Principles to Practices - Part I

Whether a Fair Trade Organization works directly with a producer group; supports the group through capacity building and skills training; links a producer group to local, national, regional or international markets; or if they trade directly with the producer group, it is good to have a clear contract outlining the specifics. Not just a contract for a particular order or period of time, but a contract regarding the code of business conduct.

Over the past few weeks I have been in Hanoi, Vietnam, to do just that - I have been contributing to improve and to simplify the Code of Business and the questionnaire of Helvetas Fair Trade Shop. The contract between Helvetas, a Fair Trade buyer, and their producers is a simple 1 1/2 pages and the language not so complex to be easily translated. The core of the contract is in the annex which breaks down the principles to practices. As I have exposed in past blog posts and to paraphrase Paul Hawken, a principle is something you can betray, but a practice is something you can always improve. Along with the Code of Business Conduct, I also designed a training program introducing Fair Trade principles based on their experiences with Helvetas. I and Ms. Nguyen Bao Thoa, the General Director of the Vietnam Handicraft Research and Promotion Center, will conduct the training program the end of this week. Afterwards we will make our recommendations and from there, Helvetas has plans to implement the business contract and training program globally with their existing trade partners.

It is an exciting time to be involved in Fair Trade. The world is becoming more aware of the multifaceted movement that addresses global trade injustices and at the same time presents local, realistic and direct approaches connecting producers to markets.

More importantly, there is a shift within Fair Trade as well. Fair Trade was originally set up along the lines of being charitable, but this has been fading to the background as the movement has evolved and begun to integrate Rights-Based Approaches in their work with producer groups. Stated succinctly, Fair Trade is opportunity for empowering disadvantaged and marginalized producers.

"Give a man a fish and you feed him for a day. 
     Teach a man to fish and you feed him for a lifetime." 

But in Fair Trade, 
     This is just the beginning! 

When Fair Trade Organizations speak about utilizing a Rights-Based Approach it is about empowerment. Empowerment includes the capacity to sustainably manage the proverbial fishing grounds by not overfishing or using techniques that inadvertently kill or harm other marine life and life support systems; protecting the environment in and around the fishing grounds; ensuring that women have equal access to the same opportunities as men for the same pay by overcoming artificial gender barriers that have traditionally prohibited women's access to training and fishing; ensuring that their children are in school and receiving a basic education; ensuring access to local and area markets cutting out the middlemen who have often reaped the benefits of the fisher's labors; and that the community as a whole is benefiting in the fishing venture through the creation of cooperatives, unions or community associations.

The Basic Question I sought to answer in creating a contract between Helvetas and their producers was: 

How to break down principles to practices while maintaining a fair disposition that equalizes the traditional imbalances between producers and buyer? 

To do this I first reflected on my experiences with what I would say is an existing system that has much to improve upon.

When I was in Aceh, I wrote a blog post noting how a FLO-Cert audit pushed the cooperatives far outside their comfort zone. Why an audit has this effect was due to the scrutiny involved in the 4-5 day assessment which included detailing practices derived from principles. Although this is important for the consumer to be assured that their purchase is genuinely accountable, the FLO system as it is remains terribly unbalanced. The focus is all on the producer group. The producer is held accountable to the buyer, but the buyer is not accountable to the producer. In a system that refuses to hold buyers equally accountable, there is room for the exploitation (read: Coffee Part I - "You can Betray a Principle")

In Coffee Part II - "It's not my Problem" I reveal what occurs when there is a lack of accountability of a Fair Trade certified buyer from the USA. It exposed a systematic failure in keeping Fair Trade fair. Much to their credit and a very positive reflection of Fairtrade International, Communications Officer, Reykia Fick did reply to that blog post stating:

"Thanks for your commitment. You’ll be happy to know Fairtrade has initiatives in place to deal with the issues brought up in this blog:

In March Fairtrade International (FLO) announced new trade standards for coffee to encourage fairer negotiations, clarify the role of price fixing, and reduce speculation. We are also facilitating training for producers and traders on contracts, price fixation and risk management strategies. We have set up a new mediation process in case a producer and trader have a contract dispute. (For details:[pointer]=1)

Fairtrade International’s Global Producer Finance Unit was set up two years ago to facilitate financing opportunities for producers. They are working to secure more and better opportunities for all types of financing including pre-financing, credit, insurance, etc.

The Fairtrade certifier FLO-CERT conducts detailed audits for traders against all requirements in the Fairtrade Generic Trade Standard. The standard says Fairtrade traders must provide pre-financing when producers request it. It has a complaints procedure for specific grievances (for details: Some traders are audited by the national labelling initiative for their country instead of FLO-CERT."

Although it is good to hear of the advances in Fairtrade International, my concern is that what is stated here is well intentioned, but may be inadequate. Firstly, it largely puts the onus on producer groups when the onus really belongs on the certifying organization to ensure Fair Trade throughout the process to include standardized procedures for dealing with buyers. In the April blog post I provided specific recommendations to do exactly that.

Meeting the growers of Organic Fair Trade Arabica coffee
in Aceh, Indonesia in April, 2011

Secondly, there is a strong sense that we are once again hiding behind principles when citing "The standard says Fairtrade traders must provide pre-financing when producers request it." Much to the contrary, my findings have shown that a prepayment is not a common practice when requested, and in actuality it is rarely provided. Again, the onus wrongly placed on the producers when the onus of providing a prepayment needs to be on the buyer as a standard operating procedure. 

Thirdly, with the onus on producer groups as it is set up now, there is even greater potential for failure. Let's peel back a few of the running assumptions which contribute to systematic failures:

To have access to the complaint process there needs to be a) an existing infrastructure providing electricity to a rural community where the cooperative exists, or in a nearby location where they can access it; b) an existing infrastructure providing dependable internet access for the cooperative; c) a computer to access the internet with someone knowledgeable on how to operate a computer and utilize the internet; d) a cooperative that is knowledge of the complaints procedure for specific grievances; and e) sufficient knowledge of a foreign language such as English to fill out forms. If any one of these five components are missing there is a systematic failure leaving the most vulnerable Fair Trade producers subject to the whims of an unscrupulous importer of the likes of Mr. "It's not my Problem".  
Another area that needs to be addressed in it's current system is Fairtrade International's inability to seriously address "culturally sensitive issues" such as gender, thus leaving the farmer cooperatives unaccountable to 50% of the population in their communities. Yes, the gender imbalance and inequality was noted in the FLO-Cert audits, but the cooperatives could hide behind their definition of local "culture" thus prohibiting women from advancement such as "realizing political or social ambitions". However, that can be remedied (Read Gender and  Cultural Relativity). When I conducted a meeting with the management of three cooperatives in Aceh (Read Coffee Part III - Empowering Communities through Action), I broke the ice and approached the existing gender imbalance from the very start. I was encouraged by their openness to the topic and found the management was very receptive. It is HOW you approach these sensitive issues that matters most. 

So when I say the system I reviewed is imbalanced, firstly it means that the buyer is not accountable to the producer which leads to systematic failures as I discussed in previous posts. Secondly, the cooperatives themselves were not being held accountable to 50% of the local community. This was due to the tendency of declaring gender a "sensitive issue" only addressed in audits, thus perpetuating existing inequalities rather than addressed with training programs on gender and women's rights which includes local men followed by establishing Gender Mainstreaming Action Plans with time tables.

These issues can be addressed. Future posts will examine the importance of contracting with producers; how to keep both buyers and producers accountable to one another; and examine ways to introduce Fair Trade principles to producer groups. 

I would like to add a special thanks to Helvetas Vietnam ( for permitting me to write of our work together to make the world a better place. Also, I would like to add a note on my partner Chou, who is currently in Ho Chi Minh City (Saigon), patiently awaiting my return where we can begin working on the book of our Journey for Fair Trade. 

Chou and I at Mt. Bromo, Java, Indonesia

Thank you for joining me and Chou on this journey. If you have any comments, suggestions or ideas, I welcome all and invite you to comment below or catch me on facebook

Mitch Teberg, MA