Memorandum submitted by Tesco Stores Ltd
FAIR TRADE AND DEVELOPMENT
1. TESCO AND
FAIRTRADE
1.1 Tesco are pleased to support Fairtrade
and to offer the largest range of Fairtrade products of any of
the major supermarkets.
1.2 We recognise the important role that
Fairtrade can play in bringing stability to many suppliers in
developing countries, and the role that we can play in providing
access to Fairtrade goods to millions of customers.
1.3 We currently stock 137 Fairtrade lines
of which 30 are Tesco own label products. Our range includes own-brand
roses, mangoes, avocados, citrus fruit and cookies and is one
of the largest in the UK.
1.4 We continue to work with the Fairtrade
Foundation to bring new own-brand and branded products to our
customers. We were delighted to be the first UK retailer to offer
Fairtrade basmati rice, brazil nuts and mixed peanuts and raisins.
Recent additions to our range include new varieties in existing
categories, such as teas and coffees, cashew nuts and own label
honey, as well as products in new categories, such as cotton wool,
rice cakes, spices and ice cream.
1.5 We are also launching an exclusive line
of Katherine Hamnett organic and fair trade clothing. The "Choose
Love" collection will initially launch with 18 organic and
fair trade lines available for men, women and children but we
hope to see it grow further. This premium brand reflects the quality
of Katharine Hamnett's design but will retail at affordable prices
and will represent a significant step towards bringing ethical
clothing into the mainstream.
1.6 We are currently running an eight week
promotion offering double Clubcard points on all Fairtrade products.
When we launched "Green" Clubcard points to encourage
customers to reuse their carrier bags we had a fantastic customer
response—with 300 million fewer bags being given away since
August last year. We hope that this promotion will have a similar
impact, encouraging our customers to try more Fairtrade products.
1.7 To coincide with Fairtrade Fortnight
this year we are offering 25% off a range of Fairtrade products
and dedicated special promotional space at the end of aisles in
around 100 of our largest stores. We have also been offering customers
the opportunity to sample Fairtrade products such as chocolate
and nuts in our large stores, as well as offering vouchers to
Fairtrade groups to hold tasting sessions.
1.8 To help raise customer awareness, we
are sending out a Clubcard mailing, including vouchers for Fairtrade,
to 50,000 customers. We have also included a feature on Fairtrade
in our Tesco Magazine, which has a readership of 4.5 million,
profiling some of the suppliers of our Fairtrade products.
2. OUR CUSTOMERS
2.1 Customers are increasingly passionate
about the personal steps they can take to help ordinary people
around the world, and they expect our help.
2.2 Since the introduction of our own-brand
Fairtrade range in 2004, we have seen large increases in sales
of Fairtrade products.
2.3 Over 4.7 million customers shopped for
Fairtrade products at Tesco over the last year.
2.4 Around 37,000 customers try Fairtrade
for the first time every week in Tesco and in Fairtrade Fortnight
last year, this rose to almost 57,000 new customers per week.
3. SUPPLIERS
3.1 We believe that international trade
is the key to helping hundreds of millions of ordinary people
escape poverty and build better lives for their families. Tesco
has strong employment and environmental standards and we are confident
that trading with us can be an important force for good anywhere
in the world.
3.2 Although we have a major economic impact,
we cannot alone change the political and social conditions of
the countries where we do business. What we can and must do, however,
is ensure that everyone involved in our supply chain—and
the communities they live in—truly benefits from their relationship
with Tesco.
3.3 We help suppliers grow by providing
a direct route to millions of customers, and we help them understand
new trends, develop new products, and invest in technology and
facilities. It is crucial for suppliers to know our commitment
to be with them over the long-term, to give them a framework that
allows them to invest. In fact, half of our suppliers (and 80%
of our food suppliers) having worked with us for over five years.
Continuity and long-term partnerships also enable our suppliers
to invest in community créches, schooling and sanitation.
3.4 By setting clear standards, auditing
them to ensure they are complied with and supporting producers
to invest to meet them, we can help raise the bar in developing
countries; delivering safe working conditions, fair wages, reasonable
working hours, and the right to join a trade union—often
for the first time. We can see these improvements creating a ripple
effect, with our suppliers also adopting high standards for other
production.
3.5 We aim to act reasonably and responsibly
in all our commercial and trading activities. As founder members
of the Ethical Trading Initiative (ETI) we use their base code
as our standard. The ETI Base Code covers the labour standards
outlined in the ILO Convention, it states that employment is freely
chosen, that freedom of association and the right to collective
bargaining be respected, working conditions are safe and hygienic
and that child labour shall not be used. It also details that
living wages are paid, working hours are not excessive, no discrimination
is practised, regular employment is provided and no harsh or inhumane
treatment is allowed. We take the application and implementation
of the code very seriously.
3.6 We were influential in establishing
Sedex (Supplier Ethical Data Exchange), a web-based system that
encourages businesses to share data on labour standards at production
sites. This avoids duplication of assessments and allows inspection
resources to be better targeted, reducing unnecessary costs for
suppliers.
4. CASE STUDIES
Fair Trade Alliance Kerala
4.1 Fair Trade Alliance Kerala (FTAK) is
located in Kerala, a state in south west India, with its members
spread across six hilly districts mostly in the northern regions
of Kasargode and Kannur.
4.2 FTAK was set up in January 2006 by three
organisations: Malabar which is a farmer support organisation
which mobilises the growers; INFACT which is an NGO working on
development programmes which provides co-ordination and works
with Fairtrade Labelling Organizations International; and Elements
a company involved in the production and marketing of organic
products in Kerala, which oversees processing and marketing.
4.3 Within FTAK representatives of Panchayats
(village councils) are elected on to one of three district committees—a
third of those elected must be women. Representatives of the district
committees are then voted on to the FTAK Regional Committee. The
main board of FTAK comprises eight farmers plus one representative
from each of the three founding organisations.
4.4 The farmers have received training in
product quality, Fairtrade, and capacity building from Twin Trading
and Equal Exchange representatives from the UK.
4.5 Tesco has recently started selling packs
of Fairtrade natural cashew nuts, bringing vital income to these
farmers.
COINACAPA Brazil Nut Gatherers, Bolivia
4.6 Cooperativa Integral Agroextractivista
Campesinos del Pando (COINACAPA) was founded in 1998 on the initiative
of an Italian NGO based in La Paz the Asociacio«n de Cooperacio«n
Rural Africa Y América Latina. Based in Pando, a very poor
region in Bolivia, COINCAPA's brazil nut gathering enterprise
started with 15 families from three different communities and
now has 308 families from 33 communities.
4.7 In five years COINACAPA grew its business
from selling 16,000kg of processed nuts—or one container—to
126,000 kg. In 2006 the aim was to double this, working with Equal
Exchange and Twin Trading. This has been achieved thanks to the
huge success of the nuts as an own label Fairtrade product available
in more than 600 Tesco stores.
4.8 The gatherers used their first premium
money to gain access to basic health care for all 308 families.
They decided to use the money to pay for a private insurance to
enable them to use good doctors and services for the first time
in their lives. This included 70% cover for major surgery. Premium
money has also been used for the construction of payoles—places
to keep nuts safe from water, animals, petrol, chemical contamination
to ensure the quality of the nuts is maintained. Here they can
be safely stores, cleaned and selected for export.
Fairtrade Bananas, Dominica, The Windward Islands
4.9 The Windward Islands Farmers' Association
began working with Fairtrade in the 1990s. They set up Fairtrade
Groups on each island and began shipping Fairtrade bananas to
the UK in July 2000.
4.10 In 2001, the first full year of Fairtrade
sales, the Windwards shipped 4,700 tonnes of Fairtrade bananas
to the UK, with an estimated retail value of £7 million.
By 2005, this had grown to 25,500 tonnes worth £26 million.
The percentage of Windward Islands bananas sold to the Fairtrade
market has grown from 30% in 2004 to over 80% in 2006, with Dominica
now selling 90% of its bananas to Fairtrade.
4.11 The total social premium generated
by Tesco through the sales of Fairtrade bananas from Dominica
was US$883,400 in 2005 and approximately US$322,500 for the period
January to July 2006. Some of the community projects undertaken
in 2005-06 include a Medical Store at the Princess Margaret Hospital
in Roseau, a school bus for Calibishie and a new pre-school in
Bense in the north of Dominica.
Case Study 4: MASFA Groundnut Co-Operative, Malawi
4.12 The Mchinji Area Smallholder Farmers
Association (MASFA) was formed by 206 farmers groups in 2001.
MASFA is part of the National Association of Smallholder Farmers
in Malawi (NASFAM), which acts as an umbrella organisation for
smallholder farmer groups.
4.13 In 2002, MASFA started to sell groundnuts
through NASFAM, thus revitalizing groundnut production in central
western Malawi. In 2005, MASFA was Fairtrade certified and its
first Fairtrade groundnuts were exported to Europe via Twin Trading.
MASFA is made up from village based groups or "clubs",
normally of 10 to 15 farmers. These clubs deliver their produce
to 50 Marketing or Group Action Centres for MASFA to sell.
4.14 Until the Fairtrade peanuts sales started
in 2005, there were no peanuts exported directly from smallholders
in Malawi. However, thanks to the beginnings of a Fairtrade peanut
market, Malawi has seen a renewed interest in peanut growing.
Seed demand has increased hugely by 68% in 2006-07 at the prospect
of a new export business.
4.15 Thanks to sales of Fairtrade peanuts
in the UK, life for villagers in Mchinji, Malawi, is also improving
for the better. Boreholes are being dug, giving them access to
fresh, clean water and making a huge difference to the lives of
the women in the village. They no longer have to walk 5km a day
to draw water, on top of working in the fields, preparing meals
and caring for their families. The Fairtrade premium has had this
almost immediate beneficial effect. This is on top of the fair
price to farmers guaranteed by the Fairtrade Mark.
4.16 These nuts are being included in Tesco's
own label packs of Fairtrade peanuts and raisins and its new Fairtrade
peanut, cashew and dried mango mix.
March 2007
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