APPENDIX 4
COFFEE PRICES (1989-2006)
February 2007
Supplementary memorandum submitted by
the Fairtrade Foundation
1. FLO GEOGRAPHICAL
SCOPE
FLO defines the countries in which it certifies
producer organizations as those countries of low and medium human
development as defined by the United Nations Human Development
Index (HDI), plus those countries with extreme differences between
the poorest and the richest, as defined by the United Nations
Richest 10% to Poorest 10% (R10% to P10%). Consequently, regarding
disadvantaged producers and workers, FLO's geographical scope
encompasses almost all countries in Africa, Asia and Latin America,
and the poorest countries in Central Asia.
The term "disadvantaged people", generally
speaking, implies people in countries with a lower general level
of development. That is, countries where the general level of
income is low and countries that as a whole don't have sufficient
resources to sustainably improve the disadvantaged situation of
producers or workers. Thus, countries with high GDP where producers/workers
are in bad shape because of unfair distribution of resources,
and not because the country as a whole is poor, are excluded.
For example, the situation of migrant workers in USA may be worse
than that of workers in Latin American countries. Yet this is
generally not due to lack of national economic resources, but
rather to domestic policy.
FLO's country policy is the result of a study
which analyses six widely known and widely accepted indicators
of human development: The OECD's DAC list of Aid Recipients; The
United Nations Human Development Index (HDI); The United Nations
Human Poverty Index for Developing Countries (HPI); The United
Nations Gender Related Development Index (GDI); The United Nations
"Richest 10% of the population in relation to the poorest
10% of the population"—ratio (R10% to P10%).
Three indicators are especially relevant for
the focus of FLO. These are the HDI; The HPI and the R10% to P10%.
When determining which countries FLO works with, the following
procedure was undertaken: First, all the countries that are listed
as Medium or Low development in the HDI were put on the FLO country
policy list. Thereafter, the HPI was compared to this list, and
the countries that the HPI lists as being deprived of the indicators
that the Human Development Index lists as having achieved were
added. Thereafter, countries that according to the R10% to P10%
ratio have an extremely uneven income distribution (20% or more)
were also added.
In order to ensure an easier and more logic
approach for reviewing the geographical scope in the future, FLO
is currently investigating whether the OECD's DAC list of Aid
Recipients could serve as a basis for FLO's geographical scope.
|
| AFRICA | |
| | |
|
| Eastern Africa | Middle Farica
| Northern Africa |
Southern Africa | Western Africa
|
| Burundi | Angola
| Algeria | Botswana
| Benin |
| Comoros | Cameroon
| Egypt | Lesotho
| Burkina Faso |
| Djibouti | Central Africa Republic
| Libyan Arab Jamahiriya |
Namibia | Cape Verde
|
| Eritrea | Chad
| Morocco | South Africa
| Cote d'Ivoire |
| Ethiopia | Congo
| Sudan | Swaziland
| Gambia |
| Kenya | Congo, Democratic Republic
| Tunisia |
| Ghana |
| Madagascar | Equatorial Guinea
| | | Guinea
|
| Malawi | Gabon
| | | Guinea-Bissau
|
| Mauritius | Sao Tome and Principe
| | | Liberia
|
| Mozambique | |
| | Mali |
| Rwanda | |
| | Mauritania
|
| Somalia | |
| | Niger |
| Uganda | |
| | Nigeria
|
| United Republic of Tanzania |
| | | Senegal
|
| Zambia | |
| | Sierra Leone
|
| Zimbabwe | |
| | Togo |
|
|
| AMERICAS (Latin America and the Caribbean)
| |
| Caribbean | Central America
| South America |
|
| Antigua and Barbuda | Belize
| Argentina |
| Cuba | Costa Rica
| Bolivia |
| Dominica | El Salvador
| Brazil |
| Dominican Republic | Guatemala
| Chile |
| Grenada | Honduras
| Colombia |
| Haiti | Mexico
| Ecuador |
| Jamaica | Micaragua
| Guyana |
| Saint Lucia | Panama
| Paraguay |
| Saint Vincent and the Grenadines |
| Peru |
| Trinidad and Tobago | |
Suriname |
| | Uruguay
|
| | Venezuela (Bolivian Republic of)
|
|
|
| ASIA | |
| | |
| Central Asia | Eastern Asia
| Southern Asia |
South-Eastern Asia |
Western Asia |
|
| Kazakhstan | China
| Afghanistan | Cambodia
| Armenia |
| Kyrgyzstan | Mongolia
| Bangladesh | Indonesia
| Azerbaijan |
| Tajikistan | | Bhutan
| Lao People's Democratic Republic
| Georgia |
| Turkmenistan | | India
| Malaysia | Iraq
|
| Uzbekistan | | Iran, Islamic Republic of
| Myanmar | Lebanon
|
| | Maldives
| Phillippines | Occupied Palestinian Territory
|
| | Nepal
| Thailand | Oman
|
| | Pakistan
| Timor-Leste | Qatar
|
| | |
Viet Nam | Saudia Arabia
|
| | |
| Syrian Arab Republic
|
| | |
| Yemen |
|
|
| OCEANIA | |
|
|
| Melanesia | Micronesia
| Polynesia |
| Fiji | Kiribati
| Cook Islands |
| Papua New Guinea | Palau
| Samoa |
| Solomon Islands | | Tonga
|
| Vanuatu | | Tuvalu
|
|
2. FLO/FAIRTRADE FOUNDATION
POLICY ON
CHINA
Currently, FLO does not certify hired labour organisations
in China and the Fairtrade Foundation policy is to not work with
supply chains which involve manufacturing in China. This is because
of the current restrictions in China on freedom of association,
a lack of transparency and independence within Chinese trade unions
and the inability of FLO Cert to audit allegations of non-compliance
in a factory setting due to legal restrictions. We do not believe
that it is credible to try and certify such organisations when
we are unable to ensure that they are working to the rigorous
standards required by Fairtrade certification. The Fairtrade movement
is open to working with operators and licensees to develop and
define rules that may enable Fairtrade to genuinely engage with
workers in China in the longer term, but a solution is unlikely
in the foreseeable future.
The FLO system does however certify small producers in China.
There are currently five FLO-certified tea farmers' associations
in China, two of which supply into the UK market. In the case
of small producers in China the concerns described above do not
apply and so we are able to undertake our usual certification
and audit procedure and so feel able certify organisations under
the FLO small farmer standard.
3. FLO PRICE SETTING
PROCEDURE
FLO develops generic Standards for different categories of
suppliers of Fairtrade products (referred to as "Producers"),
as well as product Standards. These Fairtrade Standards ("Standards")
are the collective requirements that producers and traders must
meet as applicable to be certified as Fairtrade. The Fairtrade
minimum price forms part of the product Standards. This is
the minimum price that must be paid to Fairtrade producers for
their goods. This minimum price is intended to cover the average
producers' costs of sustainable production ("COSP")
per product. Where possible global or regional minimum prices
are set, otherwise national prices are set. At times when the
market price is higher than the Fairtrade minimum price, the market
price must be paid.
Producers or workers (in the case of hired labour situations)
of Fairtrade products also receive a Fairtrade premium in
addition to the Fairtrade minimum price which will usually be
between 5 and 30% of the FOB or "farm gate" price. The
Fairtrade Premium is intended for investment in the producers'
business (only for small farmers not in a hired labour set up)
and/or community for social development projects. Decisions about
the allocation of the Fairtrade premium must be taken democratically
by either the elected Farmers' Committee or, in the case of hired
labour, by an employee-elected "Joint Body" which brings
together workers and managers with workers in the majority.
4. FAIRTRADE CERTIFIED
COTTON
Fairtrade certified cotton is cotton which has met the international
Fairtrade standard for production of seed cotton[32]
and is therefore eligible to carry the FAIRTRADE Mark. The Mark
is an independent product certification label which guarantees
that cotton farmers are getting a better deal—receiving
a fair and stable Fairtrade price and Fairtrade premium, receiving
pre-financing where requested and benefiting from longer-term,
more direct trading relationships.
Fairtrade cotton, like all Fairtrade certified products,
comes through fully registered and transparent supply chains.
The Fairtrade trading standard requires all operators that handle
Fairtrade cotton throughout the supply chain from ginner, spinner,
knitter, weaver, dyer, garment factory, including any subcontractor,
to submit independent verification which documents their efforts
to meet recognised labour standards. Updated evidence must be
submitted every two years. The monitoring of labour conditions
is an incredibly complex issue. Organisations such as the Ethical
Trading Initiative, the Fair Wear Foundation and Social Accountability
International have made enormous efforts to improve working conditions
in the garment industry and our efforts are intended to complement
this work. While there is still a long way to go, the requirement
for all operators to submit independent verification demonstrates
how Fairtrade certification of cotton can be a way of leveraging
change and improvements for workers throughout the entire supply
chain.
Fairtrade certification is a development tool which primarily
focuses on and addresses the problems faced by vulnerable producers
of agricultural commodities such as coffee and bananas. Fairtrade
certification of cotton aims to improve the situation of the cotton
farmers at the very bottom of supply chains, recognising that
they are at the sharp end of exploitation and injustice in international
trade in the same way as many other producers of agricultural
commodities. We also recognise that there are other vulnerable
people further along the supply chain who could, in theory, benefit
from Fairtrade certification. That is why we are currently exploring
whether and how we can develop a standard which would extend the
benefits of Fairtrade further along the supply chain to those
involved in cotton garment and textile manufacturing.
32
Seed cotton is the content of the cotton boll which consists
of the seeds with the fibre attached as harvested from the cotton
plant. Following the ginning process the seed cotton is separated
into the cotton fibre (or lint) and seeds. Back
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