Letter to the Clerk of the Committee from
David Croft, Head of Quality & Consumer Care, Co-operative
Retail
As you may be aware, the Co-operative Group
has been instrumental in developing effective and sustainable
supply chains with producers in developing countries through the
work that we have done to build a range of Fairtrade products,
including wine, chocolate fruit and coffee. Working alongside
the Fairtrade Foundation and in partnership with key suppliers
has enabled product and supplier development, and contributed
to significant growth in the sales of Fairtrade products. At the
same time we have been working within our broader supply chain
to develop relationships with suppliers, and in particular with
primary producers, to help deliver appropriate product and supply
chain standards. Within this activity, a number of issues have
been raised that pose barriers to trade, and which are summarised
below:
— Commodities traded on the international
exchange market generally lose any traceability to source, preventing
direct links to suppliers and effective product management whilst
being at odds with legislative expectations on the traceability
of product ingredients. More direct links with producers would
effectively shorten the supply chain, reducing cost and enabling
greater support to producers whilst enabling traceability to source
for the products involved.
— The current escalating tariff system
relating to non-processed products in comparison with processed
products places an increasing disadvantage on suppliers in developing
countries as result of the increased cost of import into the EU
of processed product. Various levels of tariff may be applied
to the same product, and the tariff costs make processing of commodities
in developing countries not generally viable for export to the
EU. This reduces the market potential and value in those countries
whilst resulting in a disproportionate amount of processing being
undertaken within the EU.
— In certain cases (product and/or
country specific) export is limited by restrictions based upon
risk of product contamination. Whilst a necessary control, where
such contamination is not present due to effective product management,
gaining clearance for export remains a bureaucratic and time consuming
process that may well prevent export to developed markets. One
such example relates to honey from Kenya where specific export
permission is required although sources may be organic and free
from any residues.
— Lack of transport infrastructure
in developing countries frequently prevents market access by small
primary producers. Improved access to local markets, either individually
or through producer generated marketing co-operatives would enable
greater competition with established exporters whilst also supporting
greater volume of supply that is usually required for export needs.
— A lack of understanding of the export
market and of relevant and required product safety or quality
standards may prevent greater sourcing of products from developing
countries, or focus that trade upon larger, potentially internationally-based,
suppliers. Direct involvement with primary producers, including
training and awareness building activities, has proved valuable
in developing our own supply chain, and was well-received by suppliers.
It may be particularly relevant where EU requirements and expectations
may be more restrictive than is the case locally, for example
in relation to food safety systems and controls or pesticide management
and use. This interaction can also build broader understanding
of the product needs of customer organisations, and of the wider
EU consumer base. Such understanding is frequently lacking and
enables greater product development activity to be initiated with
associated generation business potential for the future.
— Standard application of control requirements
to developing countries and in particular to smaller suppliers
may place a disproportionate burden upon those suppliers' resources
either in financial or resource terms. This may be especially
true of customer-driven standards that, whilst they ensure safety
and legality are not compromised, frequently address broader issues
and can add cost and create barriers for smaller suppliers in
particular. Such standards require appropriate application to
enable growth of developing supply chains and access to markets.
I hope that these points are of interest and
helpful to the Committee's work. Please let me know if we can
be of further assistance or expand upon them further.
David Croft
Head of Quality & Consumer Care
Co-operative Retail
February 2003
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