Memorandum submitted by Twin/Twin Trading
1. TWIN
Twin/Twin Trading is a leading producer-driven
Fair Trade organisation, which works with over 350,000 smallholder
producers in Africa, India and Latin America, to facilitate access
to Northern markets. Twin's activities focus on strengthening
producer organisations (eg democratic governance, product quality,
business efficiency, ability to influence policy) through its
Producer Partnership Programme and on creating market access for
smallholders through Twin Trading. Twin also has an impressive
track record of helping to capture greater value for producers
primarily through the development of producer owned brands, eg
Cafédirect and Divine Chocolate, AgroFair and most recently
the Ethical Nut Company.
2. DFID SUPPORT
TO TWIN/TWIN
TRADING
DFID ongoing support to Twin includes:
(a) AG 3822 Fairtrade Chocolate Monitoring
and Evaluation Programme, £67,300, made to assess the impact
of Day Chocolate and Kuapa Kokoo on farmers' livelihoods (This
grant was made in conjunction with a loan guarantee to The Day
Chocolate Company in 2000, to enable Day Chocolate to access start-up
finance and develop a relationship and track record with a conventional
commercial bank).
(b) Regional Trade Facilitation Programme,
£145,230, strengthening nuts producers in Southern Africa
and the establishment of the Ethical Nuts Company.
(c) Regional Standards Program application
no 7620/006, £17,860.
(d) CN 055 Travelling Fair: Developing and
Marketing Tourism ventures with Southern communities in Peru and
Tanzania, £317,200.
3. WHAT HAS
BEEN THE
IMPACT OF
DONOR FUNDING
FOR FAIR
TRADE?
While not huge in scale this support has been
strategically important in capturing greater value for producers
in the south in the following ways (references to specific programmes
are included in brackets):
— Through supporting the work of Twin
and its brand partners, DFID has contributed to significantly
increasing financial returns to farmers through the Fairtrade
minimum price, as well as additional premiums paid by our brand
partners (often 10% above the Fairtrade minimum price) and enhanced
quality premiums (b, c).
— Capacity development support: all
of Twin's brands invest a significant proportion of their profits
back into the Producer Partnership Programme. Amongst other
things this has helped to strengthen democratic and participative
governance structures. This strengthening of civil society can
feed directly into macro governance initiatives (b, c).
— This empowerment at a local level
is complemented by the fact that our brands all have elements
of producer ownership. Producers not only share in decision making,
are represented directly on Boards and have the ability to hold
northern based companies to account they are now beginning to
see a financial return from their ownership. In the last two years,
both Cafe[acute]direct and Divine Chocolate have established a
market value turning the producers' shareholding into a valuable
asset and they have also seen the payment of dividends. DFID support
to the creation of Divine Chocolate and now the Ethical Nut Company
(through funds secured through the RTFP and RSP programmes) has
clearly helped in this (a, b).
— Despite these significant impacts
perhaps the biggest impact has been on conventional trade. Whilst
few attempt the transformation in trading relationships summarised
above the dramatic increase in consumer awareness and the response
to this has demanded from the conventional sector has been significant.
Twin and its brand partners, with the support of DFID, have been
significant catalysts for change (a, b, c).
— Promoting diversification: to reduce
market vulnerability of producer organisations by diversifying
their areas of expertise and potential income streams (d).
4. MEETING THE
CHALLENGES FACED
BY SMALL
PRODUCERS
There is much more to do be done: 80% of small
farmers remain unorganised and increasingly powerful (often multinational)
intermediaries threaten established producer organizations. The
entrance of new players (eg supermarkets and new labeling schemes)
has created pressure on existing marks/schemes to alter their
focus (often to the detriment of small producers) and is in danger
of confusing the consumer.
It is even more important now that Twin/Twin
Trading and its brand partners remain innovative and continue
to set the standard by which trade is carried out.
5. DFID SUPPORT
IN THE
FUTURE
DFID has a potentially significant role in this.
It is important that it recognises the differences within the
ethical and fair trade movements and that it supports in particular
those organisations that seek to actively promote development
though trade and secure greater resources and power for producers
in the value chain. In particular:
— Support from DFID of a capital nature
would help to develop and establish producer-owned brands or marketing
initiatives more effectively and efficiently).
— Our partners remain weak and vulnerable
in a rapidly changing world. Twin plays a unique role in working
with the producers to deal with change as and when it occurs.
Twin's unique relationship with producers makes it ideally placed
to deal proactively with changes in the political and commercial
environments.
— Our partners often struggle to find
trade finance at reasonable rates. Interest rates at +20% make
their organisations extremely vulnerable to unfavourable trading
condition or externalities beyond their control. DFID could help
to facilitate access to multi-donor trade finance.
— Interpretation of EU procurement
legislation in the UK makes it difficult for public sector bodies
to favour organisations committed to producer empowerment in their
procurement policies; we see that DFID has a role in advocating
that this be changed.
— Ensure that macro-level policy discussions
consider small farmers. Twin can facilitate participation of producer
partners in a range of fora and sees that DFID has the ability
to facilitate key linkages to enable producers' voices to be heard.
— We believe that south-south exchange
can add significant value to small holder producer organisations.
Helping facilitate and promote these in existing or new programmes
would be a significant contribution.
6. CONCLUSION
DFID's support to Twin and its Fair Trade partners
has had a real and demonstrable benefit to producers in developing
countries. We urge DFID to continue this support and seek to particularly
strategically support those organisation who aim to change the
way in which trade is conducted and act as catalysts or champions
for change within the commercial world.
February 2007
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