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The Minister of State, Cabinet Office (Mrs. Barbara Roche): It is always a pleasure to follow the hon. Member for Chesham and Amersham (Mrs. Gillan). We have crossed swords on a number of occasions, and it is good to be opposite her again today. I want to say to her—in the gentlest possible way, of course—that I do not remember there being any debates on these issues in Government time during the Conservative years.

Mrs. Gillan: The hon. Lady is mistaken. I led a debate held on international women's day, in Government time, when I was the Minister for Women.

Mrs. Roche: Very many congratulations to the hon. Lady. Of course, if that is the case, I can only congratulate her on holding such a debate once in 18 years. Absolutely fantastic! What a wonderful achievement.

A number of themes have run through the debate today, and I shall try to deal with them as quickly as I can. I apologise if I do not get to every point that was raised. The gender pay gap was mentioned by a number of hon. Members, including my hon. Friends the Members for Slough (Fiona Mactaggart) and for Cardiff, North (Julie Morgan), and the hon. Members for Meriden (Mrs. Spelman), for Romsey (Sandra Gidley) and for South-West Bedfordshire (Andrew Selous). As part of my research, I have been looking to the past to see how far back the gender pay gap goes. In fact, I turned to Leviticus—the Old Testament is compulsory reading for me—in which Moses was told that a man of working age was worth 50 silver shekels, while a woman was worth only 30. So the gap goes right back to the beginning.

The hon. Member for Meriden was right to concentrate on the international issues. She put them into context well; it is important to talk about the work that has been undertaken by my right hon. Friend the Secretary of State for International Development. A number of hon. Members, including the hon. Members for Meriden and for East Devon (Mr. Swire), spoke about the dangers of placing new burdens on employers as a result of the Employment Bill. Our economy needs an increasingly high level of labour participation, involving both men and women. About one third of new mothers do not return to work. If just 10 per cent. of those mothers changed their mind as a result of the provisions in the Employment Bill, the total benefit to employers, through reduced recruitment costs, could be as much as £30 million. Of course, these measures are about social justice, but they are also about productivity and the health of our economy.

The hon. Member for Meriden and my hon. Friend the Member for Calder Valley (Chris McCafferty) rightly spoke of the evils of trafficking, particularly trafficking of women and children. I take a great interest in that subject, and the United Kingdom is at the forefront of efforts to tackle the problem. We were one of the first countries to sign the United Nations protocol on the prevention and suppression of trafficking. Indeed, I had the great pleasure of signing it myself. We ought to encourage as many countries as possible to sign, and to act against this evil trade.

The hon. Member for Chesham and Amersham rightly paid tribute to my hon. Friend the Member for Keighley (Mrs. Cryer) for all her work in relation to forced marriages. What the Government are now doing reflects the strength of her campaign.

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My hon. Friend the Member for Crawley (Laura Moffatt) spoke of the international dimension, referring to Afghanistan and other countries. We are very encouraged by the involvement of women in the Afghan Interim Administration. Many Members mentioned the past role of women in the highest ranks of Government in Afghanistan, and we should bear that in mind.

My hon. Friend the Member for Slough referred to career opportunities in public service for such people as teaching assistants and auxiliaries. We are committed to considering how we can further such opportunities. My excellent officials in the women and equality unit have produced a document called "Better Services, Better Working Lives", which gives practical advice in that regard.

The hon. Member for Romsey mentioned public appointments, which were also mentioned by my hon. Friend the Member for Ilford, North (Linda Perham). I am conducting a series of regional seminars on the subject. We are working towards 50:50, and we expect women to hold 45 to 50 per cent. of jobs sponsored by most Departments by 2005. We have a great deal of work to do, but the House should be left in no doubt about our commitment to the eventual achievement of 50:50—and I should like to achieve it sooner rather than later.

Mr. Joyce: Do not women from ethnic minority backgrounds suffer from double discrimination? When considering the position of women in public life, should we not take account of both those dimensions?

Mrs. Roche: Absolutely. That is why we have been directing some of our efforts towards black and other ethnic minority women. I have had an excellent meeting with a number of such women, who hold some local public appointments but would like national careers.

Ms Dari Taylor (Stockton, South): Will the Minister say something about blue collar work? Women in blue collar employment, including middle class women, often feel very excluded.

Mrs. Roche: I agree. We should ensure that there is a cross-section.

I accept the apology given by the hon. Member for North Dorset (Mr. Walter), but may I correct him in one respect? I did not ask him to withdraw his Bill. We discussed together how it might be handled, as he had said that a member of his party might object to it. We support the Bill in principle, and I was delighted that the House of Lords gave the legislation a Second Reading. I am sure that the business managers will have noted the strength of feeling.

We have had a very good debate covering a number of issues. I strongly believe that equality is not merely an add-on. It is time for it to become mainstream, as was said by the hon. Member for Romsey. Effective legislation to prevent discrimination on grounds of race, age, sexual orientation or belief is absolutely necessary, and we will therefore be implementing directives on race and employment.

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If we want a modern Britain that is inclusive, we must have diversity. That is why equality is so important for social justice and productivity.

It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.

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Fair Trade

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pearson.]

7 pm

Ann McKechin (Glasgow, Maryhill): I welcome the opportunity to speak about international fair trade, especially as last week I had the honour to host the launch in the House of the annual Fairtrade fortnight. Although the concept of fair trade has been around for some time—and Fairtrade products are a familiar sight in the catering facilities of the House of Commons—it is recognised as crucial to the long sought aim of eradicating world poverty.

Let me give two quotations to support that argument. Mario Perez, a coffee grower from a Nicaraguan farmers' co-operative, said:

Iddi Simba, Tanzania's Trade Minister commented at the World Trade Organisation talks last November on the unfair trading system that allows Governments in the north to continue subsidising their farmers while countries in the south have been forced to dismantle protective measures and open up their markets to cheap northern imports. He said:

Fairtrade started as a concept 13 years ago with coffee and has developed to include tea, cocoa, sugar, honey, chocolate, mangoes, orange juice and bananas. By re-connecting consumers with producers, it ensures that farmers get a fair price for their crops and the chance of a sustainable future. It provides dignity, not desperation; fair trade rather than exploitation. From humble beginnings in charity shops, it has now entered the mainstream retail trade with a sales growth of 40 per cent. in the last financial year. Fairtrade ground coffee has more than 7 per cent. of the United Kingdom ground coffee market, and the sale of Fairtrade products in the UK benefits at least 120,000 farmers and workers throughout the third world. The staff, business associates and volunteers who support the movement deserve enormous credit for successfully expanding within a competitive market and for providing hope for so many.

As yet Fairtrade is unfortunately only a small part of the answer, but it highlights the growing gulf between the rich and poor in our international trade systems. For many developing countries, coffee is the second most valuable commodity after oil and the most valuable agricultural commodity in world trade. The final price of a cup of cappuccino in a London coffee shop absorbs the costs of insurance, taxes, transportation, processing, packaging, marketing, storage and much more. However, of the £1.75 that might be charged, the grower will be lucky to receive the equivalent of just 5p.

Hidden behind that long and complicated journey is the collapse of coffee prices on the world market and the impact of that on both ends of the trade. Between 1994 and the end of 2001, the price of robusta coffee beans, which are used mainly in instant coffee, plummeted from around 180 cents a pound to just 17 cents, a 30-year low. Although it is estimated that the world coffee trade

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generates $60 billion in revenue, which is double the amount in the 1980s, the producing countries have retained only 10 per cent. of that compared with 30 per cent. in the 1980s. When the world price falls, it is the growers who suffer an immediate reduction in income, yet there has been no noticeable reduction in supermarket prices for coffee in the UK.

A recent Nestlé report confirmed the sunny trading situation by stating:

For many farmers, however, the collapse in prices means that they have failed to recover their production costs for several years running. That has had a devastating impact on an already precarious existence. Some have abandoned their land, and for those who opt to stay at home the lack of labour for crop maintenance reduces the quality and value of the coffee product, further depressing returns. So the vicious circle is complete.

The price is mainly set in the international coffee exchanges in New York and London, where future contracts are traded. Although the futures market is an important tool to protect traders from price changes and currency movements, the increasing importance of speculation means that the tail now wags the dog. Paper deals make up about 90 per cent. of the coffee trade, while only 10 per cent. is based on the sale of physical coffee.

The increasing concentration of the market means fewer bigger actors are now able strongly to influence the market. In short, the benefits of the market accrue to the traders in the north, while the costs fall in the main on the producers in the south.

For small farmers in the third world, the price of beans on our markets is only one of the factors undermining their ability to make a reasonable living. Whereas farmers in the European Union, Japan or north America are beneficiaries of Government subsidy schemes worth around $300 billion a year, developing countries have been forced to dismantle state-controlled agricultural support programmes as conditions of loans from financial and international institutions. To add to that huge imbalance, agricultural imports from the richer countries are often cheaper, because of these subsidies, than the same product grown locally. At one stroke, farmers in developing countries are deprived of the ability to compete effectively in their home or foreign markets.

Without the means to process or transport the crop to market, limited knowledge of the frequently changing world price and a debt-driven necessity to sell the coffee the moment it is ripe—when prices are at their lowest—small independent farmers find themselves in a very weak negotiating position. With only one major harvest a year, farmers are desperate for cash by the time the crop is ripe, and they are keen to sell at any price they can get.

Over the past 20 years, more coffee has been grown as countries have been advised to expand production, clear their debts and increase export returns. Private and World Bank incentives exist for new or expanded production, yet existing farmers need better prices or, at the very least, some stability so that they can plan. Alternatively, they could diversify into other crops, but growers are understandably averse to investing in crops for which no clear market exists, especially when it can take several years to generate an income. Coffee, for all its faults,

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is widely traded, and the local infrastructure exists to market the crop. Most other options are fraught with greater risks for very poor farmers.

In the past 15 years, the global coffee trade has been radically reshaped. The tearing up of international quota agreements and the advent of Vietnam as a major producer has led to a market awash with coffee. In the face of oversupply, the buyer became king and prices plummeted. Among the manufacturers in the UK, Nestlé and Kraft Jacobs dominate the instant coffee market, taking 50 per cent. and 21 per cent. respectively, with the supermarkets' own brands coming a close third.

Three key developments have created that situation. First, following pressure from the United States Administration to liberalise trade, the international coffee agreement was abandoned in 1989. The pact between the coffee producing and consuming nations had in the past regulated the supply of beans via a quota system to the market, keeping prices relatively stable. Since then, it has been every man and woman for themselves, a situation that penalises the weakest. With little or no resources, poor producers need to sell their crop as soon as possible, just when the price is lowest. All efforts to re-establish price control have failed.

Secondly, the unprecedented rise of Vietnam as a coffee producer in the world market has turned a difficult situation into a crisis. Government investment and World Bank loans enabled it to triple its output between 1995 and 2000 to become the world's biggest producer of low-quality robusta beans, second only in overall volume to Brazil. Vietnam now accounts for 10 per cent. of total global coffee output.

Thirdly, encouraged by the World Bank and partner institutions to restructure their economies, producer nations disbanded national coffee policy organisations which had helped to plan production and acted as intermediaries between small farmers and the market. Subsidies for coffee production and agricultural services were reduced and private exporters took on the main role in a trading market. In many instances, taxes on coffee exports were cut. Initially, some farmers received more of the export price for their beans, but such gains soon disappeared as market prices collapsed. Coffee growers, large and small, were left exposed to the vagaries of the international market and its sudden price fluctuations.

Coffee has appeared to offer hard-pressed Governments a relatively easy means of generating hard currency, but over the past decade production has increased at twice the rate of consumption. Coffee faces competition from other drinks and, despite the recent successes of coffee shops in the United Kingdom, Europe and north America, demand looks unlikely to increase substantially.

Ultimately, large corporate consumers are the only ones to benefit from that oversupply. Since the 1980s, fewer players have taken a larger share of the business. Four multinational companies that account for 40 per cent. of worldwide retail sales dominate the sales. Similarly, six multinational export firms control 40 per cent. of the world's coffee market.

Lack of access to credit has become one of the key factors undermining the position of small farmers. Without loans at a low rate of interest, it is impossible for farmers to ensure adequate care of their crops, or to look after their families before the harvest. After harvest, the need to clear punitive debts leads them to sell their crop

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quickly and prices are at their lowest. Lack of market knowledge and finance conspire to reduce the quantity and quality of the crop. As the biggest traders recognise, without a market that delivers a decent life to producers, they cannot deliver a quality product to the market.

For farmers to benefit consistently from the sale of coffee, the buyer needs to pay a price that covers the cost of production and allows for investment. For a commercial roaster on the world market trying to compete with other companies paying low prices, offering a higher price is only possible if the consumer is prepared to pay more. So, the idea of a consumer label was born. If consumers wanted to be sure that farmers had received a fair deal for their coffee, they were invited to buy coffee—and later other products—that was guaranteed to meet criteria for terms of trade and price. The Fairtrade mark has been that guarantee.

Sadly, coffee farmers have now experienced several years of real suffering and hardship. Many are fighting for their survival. The vast majority are peasants in some of the world's poorest countries.

I take this opportunity to congratulate the Government on their commitment in recent years to consider the social impact of business in developing countries and their own substantial backing for Fairtrade. The Prime Minister's recent visit to Ghana and his statements supporting Fairtrade were an important signal of that.

Fairtrade is now calling on local authorities throughout the UK to promote its products in their departments and within local communities. A growing list of towns and cities is participating in the project. I hope that the Government will also use their resources to strengthen their support by promoting the concept among their Departments and in their contacts with our society. I am pleased to note that the Minister's Department has arranged a conference later this month to discuss the development of Fairtrade products in the Caribbean islands and the export potential.

Clearly, it is vital that the Government should also use their influence in multilateral organisations—the European Union, the World Trade Organisation, the International Coffee Organisation, the United Nations conference on trade and development—to promote solutions that involve all the parties.

It is essential to stress the priority of eradicating poverty in line with the recognised international targets. It is also very important that the impact of the decisions and policies of those organisations is properly assessed to ensure that they act in such a manner as to reduce the gap between the richest and poorest in our world.

The role of the World Bank and the International Monetary Fund in policy making needs to be reviewed to ensure that it does not run counter to our development objectives. Too often, the implementation of structural adjustment and promotion of new coffee production in producer countries has been pursued without consideration of the costs in-country or elsewhere in the developing world. In particular, where analysis shows that it would exacerbate global oversupply, the Government should challenge investment in new coffee production, whether that originates from the World Bank, international development organisations or multinational companies.

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I ask the Government to encourage the few companies that dominate the trade to take a far more active role in recognising their social responsibilities and to formulate a sustainable response to the problems within the industry. Seeking to stabilise the market and improve returns for farmers is in their own interests, not only as good corporate citizens, but also to ensure the future of good quality supplies. Producer countries also need to work to increase domestic and regional consumption, decreasing their dependency on export sales.

The ICO, Oxfam and other organisations support plans to restore the balance in supply and demand, including the destruction of 5 per cent. of low quality coffee stocks. That badly needed short-term strategy would need to go hand in hand with compensation payments to farmers and assistance in developing alternative income-generating activities. That could be financed by the World Bank and multinational coffee companies. However, such programmes would require agreement between, and political commitment from, producer countries to ensure the maintenance of supply-control measures.

I urge the Government in their negotiations with the EU and the WTO to end immediately the escalating tariff systems that allow green coffee beans to enter Europe duty free, but slap tariffs on processed coffee. That prevents major players from adding value to their coffee, leaving them with little choice but to increase exports to balance their trade. Without tariff escalators, coffee producing countries could develop their processing industries. For too long, the countries of the north have hidden behind a wall of protectionism, and their undertakings to tackle that at the WTO conference last year were hardly watertight or reassuring to the countries of the south.

The Fairtrade Foundation has set a good example to our society of how we should work for a world in which every person, through their work, can sustain their family and community with dignity. The challenge is for the world's nations and the multinational companies to support this cause—not just with words but with action.

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