TECHNICAL UPDATE - FAIR TRADE

 Fair Trade for the Textile Sector

A business model finding much preference world over is Fair Trade. Together with organic, eco-friendly, sustainable, Reach certification, GOTS…..are important in the world of trade. Fair Trade which in its simplest sense means the trade is fair to the producer groups.  One of the first areas where Fair Trade has been implemented was in the procurement of food products especially coffee, cocoa. Fairtrade marks a host of products many covering food, beauty essentials but for the textile industry, Fair Trade cottons is what is relevant. Fair Trade cotton products covers the entire spectrum of home furnishings, men’s wear, women’s wear, chidren’s clothes, toys…..With cotton being emphasized the world over, for the textile sector, using Fair Trade cotton in production of garments or being certified as Fair Trade producer of it is beneficial to garner greater business. 

The concept of Fair Trade

The earlier era where NGOs and Co-operatives ruled has slowly given way to for profit enterprise but those which still lays an emphasis on principles of fairness in trade where no producer group is exploited. There is no legal or explicit definition. The most comprehensive and well known is the definition adopted by FINE an informal association of the four Fair Trade Organisations namely Fair trade Labelling Organisations International (FLO), World Fair Trade Organisation (WFTO), Network of European Worldshops (NEWS!) and European Fair Trade Association (EFTA). 

According to it, “Fair Trade is 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. Fair Trade organisations (backed by consumers) are engaged actively in supporting producers, awareness raising, and in campaigning for changes in the rules and practice of conventional international trade.” The first letters of each of the four organization was used to form the word FINE. Each of the four organization contributes significantly in spreading awareness, to see the producer groups are not exploited by middle men and above all certifies products with the Fair Trade label an indication of the ethical standards adhered to. Most are present in over 70 countries.

Of these Fair trade Organisations, FLO and WFTO came out in Jan 2009 with a charter to define principles of Fair trade called Charter of Fair Trade Principles.  The Fair trade certification is implemented via two routes – Product certification Fair trade route where the product is certified as fair trade – this is applied to agricultural commodities including cotton. The product uses the Fairtrade product label. And Fair trade certification of the organization, this is called integrated Fair Trade supply chain route – which certifies the organization involved as one adhering to Fair trade principles.  Of course like all standards there has been some dilution and a lot of work gets described as Fair Trade but the above is the guidelines laid down by the charter. The Fairtrade label currently in force are the International Fair Trade Certification Mark, Fair Trade Certified Mark and WFTO Fair Trade Organisation Mark.

The exception is for cotton in India and Pakistan where the producers are scattered and not organized. So joining Fairtrade is allowed through a Promoting Body which can be either an NGO, processing company, private enterprise through which the producers enter into contract…..each of the body should be able and willing to contribute to socio-economic development of the producers.

Economics of Fair Trade

Fair trade figures for the year 2008 were approximately 2.9 billion euros and has been growing at an approximate 22% per annum. And the figure is growing. Fairtrade represents the certification mark given to product. A Fairtrade certificate mark does not mean that the product is organic though organic products also have the Fairtrade certification mark. The main markets for Fairtrade certified or labeled products are countries where the Fairtrade Labelling Initiative is in place or there is an Associate Members. The countries where this system is increasingly popular are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, UK, USA…. 

The biggest benefit of such a certification for the product is that it enjoys the patronage of consumers. Consumers are increasingly drawn towards eco-friendly organic products, it projects a brand image of the product being ethical. Also a portion of the price is set aside for community developments, socio-economic benefits a major plus today. It reiterates the products sustainability and environment consciousness. Another progress is the combining of fair-trade with organic to give it a further boost. 

Does the mark help it does? For example a company like Ethical Threads clearly mention that the products sold by them are sourced from manufacturers adhering to the core ILO (International Labour Organisation) conventions.  The cotton used is Fair Trade certified or Organically grown. Each which enhances the appeal of the organization. As a brand, the label helps in attracting genuine buyers with concern over exploitation. The movement has gained roots in Europe and UK.

The organizations also lay down standards for cotton. India has plenty of players who are certified operators in seed cottons and this includes Agrocel Industries Ltd., Abhishek Industries Ltd., Madura Garments Exports Ltd., JCT, Nahar Group of Companies…..

Fair trade in silk is very popular in Thailand and it is sold as organic fair trade silk both as products and as material for further use.

(Some useful websites

http://www.flo-cert.net

www.fairtrade.org.uk

www.fairtradefederation.org

www.fairtradeforum.org.in