Memorandum submitted by People Tree[33]
1. INTRODUCTION
1.1 There has been little donor support
of Fair Trade garment manufacturing. The textile industry is a
major employer of low paid workers in developing countries, probably
second only to the agricultural sector.
1.2 Encouraging Fair Trade manufacturing,
the use of Fairtrade certified cotton and creating the market
for them does much more than benefit the people[34]
directly involved in manufacturing, cotton farming and their communities.
The pioneers of Fair Trade Fashion, People Tree foremost among
them, have not only made the market for Fair Trade clothing but
also spearheaded consumer awareness of the ethics of the industry
and thus the development of a wider market for Fair Trade and
Ethical clothing. Consumer pressure has pushed conventional manufacturers
into improving their standards of corporate social responsible—in
an industry renowned for its abuse of health and safety standards,
poor working conditions, payments below national minimums, forced
overtime and trade terms and increasingly short lead times that
promote exploitation of people and the environment. So support
of Fair Trade fashion helps improve conditions for textile workers
in general.
1.3 This paper seeks to show donor support
might benefit organisations like People Tree and the communities
it supports; and how current funding policies do not recognise
the importance of capacity building, marketing and distribution
in the promotion of Fair Trade manufacturing.
1.4 In brief, we recommend that aid be given
in three areas:
(i) Loan guarantees—to help fund advance
payments to Fair Trade registered manufacturers and advance purchase
of cotton. These are costs borne by Fair Trade garment companies
but not conventional High Street retailers, generally pay on delivery
or after delivery.
(ii) Grants to support Fair Trade technical
support and organisational capacity building to improve the quality
of Fair Trade goods, produce high value-added products and help
promote sustainable livelihoods for marginalised people in the
developing world.
(iii) Campaigns to raise consumer awareness
of the impact of Fair Trade, and thus and put pressure on high
street retailers to adopt buying practice that ensures they go
beyond Social Compliance minimums (ILO Convention on labour rights
minimums) and meet government commitments to the Millennium Development
Goals.
1.5 It is also crucial that this aid is
available to social enterprises which are registered as companies,
and not just to NGOs.
2. PEOPLE TREE
2.1 People Tree was established to market
Fair Trade, handicrafts, clothing and food in Japan over 15 years
ago, by a Briton, Safia Minney. People Tree UK was set up about
five years ago and focuses on Fair Trade and organic clothing,
which is sold by mail order, though the internet, wholesale to
small shops and through a concession in Topshop. We are about
to launch of range of clothing under the label "People Tree
for Topshop".
2.2 Our mission is to create sustainable
livelihoods for poor and marginalized people around the world.
55 Fair Trade groups in 18 developing countries, about 10,000
people, benefit from the activities of People Tree worldwide largely
in South Asia, but also we work with projects in Peru, Africa
and SE Asia.
3. DONOR SUPPORT
FOR WORK
CREATION PROJECTS
3.1 There have been many work creation projects,
where NGOs have set up training schemes for producing handicrafts
and garments, and perhaps assisting with design and quality assurance
at the start. These organisations often run aground once the funding
finishes. If they do not have the support of an organisation to
market or help design their products, nor the own expertise to
continue to update their designs nor the wherewithal to keep in
contact with their markets in the West their ability to sell their
products will diminish, and they will fail financially. They also
need to be able to update both their technical capacity and develop
their management skills if they are to compete with the wider
market. They need an understanding of commercial realities and
barriers that need to be overcome for the longevity of orders.
3.2 Experience shows that producer organisations
can develop and scale-up most successfully when learning through
the Fair Trading process itself, working in partnership with Fair
Trade companies with experience of wholesale distribution and
retail.
4. THE NEED
FOR CAPACITY
DEVELOPMENT
4.1 Once we at People Tree, have established
relations with a group, like other Fair Trade organisations, we
give on-going support, and continue to develop capacity. So at
one end, we are trying to support new groups, but we also work
very hard with established organisations. Our principle jersey
cotton manufacturer in Southern India, set up to employ and train
young women from very poor backgrounds, some of whom are also
physically disabled, now employs 150 people. The quality of the
garments is good and able to compete with the high standards demanded
by the conventional high street. So we spend time, effort and
money training, running quality assurance workshops, developing
traditional skills, supporting environmentally friendly production
processes and infrastructural development. This is the first factory
to pioneer organic cotton clothing manufacture exclusively and
achieve Soil Association standards for a garment in the developing
world.
4.2 Also as these businesses grow, they
need organisational capacity building, marketing, financial management
and Fair Trade training and monitoring support.
5. DEVELOPING
THE SUPPLY
CHAIN
5.1 Many small producer groups need to work
together to purchase cotton. People Tree has developed a network
to supply organic cotton to hand-weaving projects in India and
Bangladesh, to promote livelihoods amongst a community of 500
hand weavers.
6. HOW MIGHT
FUNDING SUPPORT
SUPPLY CHAIN
DEVELOPMENT
6.1 Grant funding to develop the Fair Trade
clothing sector will achieve a scaling-up of social impact, environmental
protection and heightened consumer awareness. It can build up
Fair Trade production capacity, to the critical mass required
to meet quality standards expected from the market and thus create
decent and sustainable livelihoods for people in some of the poorest
communities in the world.
6.2 To achieve this, funding is required
for:
(i) The establishment of an organic cotton
project in Bangladesh (currently there are several organic cotton
producer organisations in India, but none in Bangladesh—although
there are many well established Fair Trade garment producers).
(ii) The set-up of a design and technical
service centre in London to promote Fair Trade technical services
to small-scale producers. (If you are to produce garments for
the UK, you need to respond to design trends and understand the
quality standards required by this market.)
(iii) Organisational capacity building services
to small-scale organisations. (One of the biggest barriers to
scaling up Fair Trade producer organisations is the lack of general
management and business skills.)
(iv) The set up a carbon credits trading
programme to benefit small-scale handicraft artisans and organic
farmers whose production methods and livelihood have the lowest
carbon footprint in the world.
6.3 Such support needs to be available to
social enterprises constituted as limited companies as well co-operatives
and NGOs. The Fair Trade producer groups need to run as sustainable
businesses, they need the support of other viable businesses and
contact with the culture and insight of business, and not just
that of grant based organisations.
7. ADVANCE PAYMENTS
AND COTTON
PURCHASE
7.1 Fair Trade businesses have two sets
of costs that conventional clothing companies do not have. We
work by the principles of the International Fair Trade Association,
IFAT (www.ifat.org). One of the criteria is that we pay up to
50% in advance for product orders. This gives the small enterprises
we work with cash flow to buy materials and pay people on time.
7.2 Another major cost is the purchase of
cotton fibre. 50% of our garments are made with organic cotton,
which is also Fairtrade certified. We use organic cotton not just
because it is more environmentally sustainable, but it has benefits
for economic sustainability as well.[35]
7.3 One of the principles of fair trade
is that you commit to buying from suppliers in the long term.
Moreover there is now a world shortage of Fair Trade organic cotton.
So to maintain our supplies, we have to buy at harvest time—February-March
in India—and this for cotton we may not be selling until
July-August 18 months later. Commitments for quantities are made
at the time of planting the seed.
7.4 This ties up a large of amount of capital.
Fair Trade businesses are set up to make a profit, but only a
small one. Profits, if there are any, are channelled back into
product development and campaigning, which in turn builds markets
for Fair Trade products. Moreover, Fair Trade clothing competes
in an unlevel playing field.
7.5 There are few social venture capitalists
and they currently are seeking unsustainable financial returns
on capital, (a level of returns that would make the price points
of goods too high to sell in the UK market, without seriously
compromising Fair Trade principles). People Tree is a pioneer
of Fair Trade fashion; our value in development terms is that
we are pushing boundaries, developing new models of business and
pushing standards forward.
7.6 Loan guarantees will help us borrow
at reasonable rates and would enable us to expand and to support
more people in more marginalized communities around the world.
This submission uses People Tree as a case study,
but this is not a plea for ourselves alone or even just the Fair
Trade Fashion sector. The broad principles outlined in this paper
apply across the Fair Trade manufacturing sector—and much
of the Fairtrade agricultural sector as well. This is because
making more value-added product maximises benefits to producers
and promotes livelihoods. Loan guarantees and grants for building
supply chains and producer capacity will benefit a very wide range
of organisations.
February 2007
People Tree works closely with organic cotton producers
and garment manufacturers at every stage of the production process
to avoid the destructive impact of conventional cotton production.
As well as protecting their health, avoiding the cycle of debt
involved in pesticide purchase, and increasing their yields in
some cases, organic farming also means that along with the Fairtrade
premium, farmers receive a 30% premium above conventional prices.
33 People Tree is a registered member of the International
Fair Trade Association (IFAT), Having joined in 1996. IFAT members
have the mission of Fair Trade at the heart of their activities
and at the core of all they do. IFAT is an internationally recognized
organization that aims to improve the livelihoods of disadvantaged
producers, by linking and promoting Fair Trade organizations and
speaking out for greater justice in World Trade. IFAT members
take part in regular reviews to ensure that they meet IFAT standards. Back
34
These benefits include securing incomes for highly marginalized
people between 30-100% higher than those they could otherwise
earn locally. Back
35
The World Health Organisation estimates that 20,000 people a
year die in developing countries from pesticide poisoning, and
a further three million people suffer chronic health problems.
Conventional cotton farming uses only 3% of total farmland, it
consumes 10% of chemical pesticides, and 22% of all insecticides.
Transition to IPM and organic cotton farming will benefit the
farmers and the environment significantly. Back
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