Fair Trade certification demonstrates a company’s commitment to social responsibility and adds real value to the products that customers buy. Certification guarantees that money consumers spend will never contribute to the exploitation of workers or the environment. There is also real economic benefit to this seemingly altruistic move. Fair Trade builds stable, sustainable and robust supply chains and production systems. Adherence to the ethic of Fair Trade promotes dignified workplaces and stronger communities. Dignified workplaces and strong communities are essential to building robust and socially sustainable supply chains. Fair Trade compliance is actually able to stabilize—even reduce—costs in the long term. Customers place value on supporting an equitable market place, so they are often willing to pay a higher price for fair trade certified goods in exchange for the assurance that their spending choices comport with their own ethical standards.
Fair Trade certification is a valuable asset for producers of botanical materials at all levels of the supply chain. Consumers value knowing that their purchasing decisions contribute to the well being of workers and agriculturalists around the world, and in being assured that they do not support exploitative practices. This ethical and emotional value placed on Fair Trade certification adds value to a botanical material. This added value gives manufacturers a powerful tool to set them apart from competitors. Likewise, Fair Trade-certified botanical materials are desirable to finished goods producers; thus, certification confers marketing value to mid-stream processors, distributors and manufacturers, too. The value added to Fair Trade certified botanical products makes it possible for botantical producers to sell their products at a higher price. The additional cost paid by consumers for Fair Trade certified products is distributed evenly across the supply chain from farmers all the way to retailers.
How It Works
Certification of a company, product or supply chain as Fair Trade begins by contacting a third party certifying organization. These groups develop their own standards that largely overlap due to their mutual basis on international labor agreements and environmental standards. Which certifying organization is best for any individual operation may depend on the nature or location of that operation, but the real value of a certification comes from the level of familiarity and recognition that their name and logo possess with customers and consumers. Once a company seeking to be certified contacts a certifying organization, the next step is to prepare detailed accounts and descriptions of all levels of operation and conduct an “internal pre-audit” to assess where the operation stands in relation to the certifying organization’s requirements. This requires a significant commitment of time and resources to familiarize staff with the specific requirements of certification, conduct internal assessments and prepare documentation. During this segment of the process, the certifying organization will require a preliminary payment to enter into a contract and then schedule an onsite audit where all aspects of production, processing and handling are examined and confidential interviews are conducted with staff and management.
The company or organization seeking certification is responsible for paying all costs associated with certification including the cost of the audit and all changes that must be instated to comply with certification. Depending on the existing certification status and financial ability of up-stream elements in the supply chain, additional input and investment by mid-stream processors may be required to achieve certification for producers.
In the context of agricultural production, these investments may include working closely with primary producers by lending technical expertise, assisting with documentation and paying for auditor visits. Such investments are particularly necessary if farmers possess little financial capital to invest in certification, but considering the significant value added by certification, the costs of facilitation are often a beneficial investment for mid-stream processors. This cost should be anticipated and accounted for at the outset of the certification process, particularly when materials are sourced from small-holder farms. This expenditure is an investment rather than merely an exercise in charity because certification benefits the downstream processors and manufacturers, in addition to the farmers, by adding value to the product and strengthening the supply chain.
Typical Fair Trade requirements that must be met relating to farms include fair payment and labor practices on production facilities (including transparent organization and decision-making structures), non-discriminatory employment practices, no child labor and commitment to environmentally sustainable practices. Perhaps most importantly, the wage and pay of laborers employed on production facilities are regulated under Fair Trade requirements. The payment received by employees of farmers or agricultural consortiums must be an amount that is deemed to be a reasonable living wage in the location they are employed. This wage almost universally exceeds the legal minimum wage, whereas non-Fair Trade schemes often pay workers even less than their country’s legal minimum wage.
Processors who purchase raw materials from producers must fulfill a separate, but overlapping, set of responsibilities. Processors must provide working conditions that are safe and non-discriminatory with sufficiently transparent decision-making processes. Processors must encourage and facilitate employees’ ability to organize into self-representing bodies. Processors must provide their employees with fair and equitable conditions of employment including regular work hours, payment into social security and social benefit programs, and fair wages that, as in production facilities, provide for a reasonable standard of living. Fair trade standards run in parallel to standard conditions of employment in North America and Europe. Thus, Fair Trade principles ensure that production facilities are not located in developing markets in order to exploit weak labor laws, but because the product or commodity in question is linked to that location.
Tell the World
The last layer of conditions stipulated by Fair Trade certification pertain to the labeling of products as Fair Trade and the usage of the certifying agency’s logo. Products that are composed entirely of Fair Trade certified ingredients may be labeled as such and may display the corresponding logo so long as a documented chain of custody is established for all ingredients that verifies that all producers and handlers along the entire supply chain are also certified as Fair Trade by a legitimate certifying agency. All supply chain participants must ensure that Fair Trade goods are stored and handled separately from any products that are not Fair Trade certified.
The previous requirements must also be fulfilled for products that contain Fair Trade ingredients as well as other ingredients that are not with some extra stipulations. The formula must be composed of a minimum percentage of Fair Trade ingredients that is defined by the certifying organization. The Fair Trade logo may not appear on the principle display panel of the product, but may appear on other portions of packaging so long as the percentage ingredients that actually are Fair Trade is clearly displayed near the logo. Likewise specific ingredients that are Fair Trade can be noted in the product’s ingredient list. Products that contain a percentage of Fair Trade ingredients that do not reach the minimum threshold may still denote specific ingredients as being Fair Trade, but must make clear that the certification only applies to specified ingredients.
Individual companies have the ability to create a Fair Trade supply chain that is reliable, efficient and robust by becoming Fair Trade certified, and facilitating the certification of agricultural producers. These improvements are not in spite of Fair Trade certification, but because of it. Investment in, and sponsorship of, communities ensures higher skilled labor, stronger teamwork, and ultimately better products. Fair Trade supply chains also ensure a higher degree of stability and reliability in supply and pricing to customers and the market as a whole. The most important feature of the Fair Trade system though is that it provides customers with high quality products and connects them to the producers of goods in a way that builds a stronger and more equitable economy for all participants.
Concentrated Aloe Corporation
Scott Meadows is research and development coordinator at Concentrated Aloe Corporation. He earned his MA and BS degrees in botany from the University of Texas. More info: firstname.lastname@example.org; Tel: 386-316-5901.