Examination of Witnesses (Questions 1
- 19)
TUESDAY 27 FEBRUARY 2007
HON ROOSEVELT
SKERRIT AND
MS HARRIET
LAMB, CBE
Q1 Chairman: Good morning and welcome.
Thank you for coming to give evidence. This is the Committee's
first session of evidence in its inquiry into fair trade products,
and it is probably timely given that it is Fairtrade Fortnight.
We have two sets of witnesses this morning and each will give
evidence for about an hour. For the benefit of our witnesses,
first we will ask questions of Harriet Lamb and then we will put
questions to Roosevelt Skerrit. To begin with, perhaps Harriet
Lamb can spend a couple of minutes on the Fairtrade Foundation
and what it involves. Then I will ask Mr Skerrit to spend a couple
of minutes on himself and his engagement in fair trade issues.
Ms Lamb: I thank everybody very
much. We welcome this inquiry into fair trade and development.
The Fairtrade Foundation is a charity set up and now owned by
13 development NGOs. It was set up as a response to the commodity
crisis that is affecting millions of farmers and workers across
the developing world. For example, if one takes coffee, in 2001
prices reached their lowest level ever and that spelt catastrophe
for both farmers and whole nations such as Ethiopia which depend
on coffee exports. In response to that Fairtrade was established
as a way that organised farmers and workers could access markets,
earn a fair and stable price that covered the cost of sustainable
development with a premium to invest in the future and therefore
begin to build their businesses and invest in their communities.
The mechanism to make that work is the FAIRTRADE Mark as the independent
consumer label that the public recognises and is available on
products from a whole range of companies. We now work for 260
companies that offer 2,500 different products. The public can
show its support and that provides a mechanism by which companies
can engage in making trade fair. That is what we set out to do.
I think you can see the explosion of interest among the public
in Fairtrade and overwhelming support for it up and down the country.
I am sure that some Members of the Committee have Fairtrade towns
in their constituencies and that people have been knocking on
their doors and the doors of town halls, local shops and supermarkets
to encourage them to stock Fairtrade. That public support for
Fairtrade is working. More and more companies offer Fairtrade
products. Last year we saw rates of growth of 46% which means
that more and more farmers and workers in more countries can have
the benefits of Fairtrade.
Q2 Chairman: Where was it started?
Ms Lamb: It started in 1992 and
the first product with the FAIRTRADE Mark appeared in 1994.
Q3 Chairman: Was that in the UK?
Ms Lamb: Yes. Originally, it was
started by Mexican coffee farmers connecting with the Dutch equivalent
of the Fairtrade Foundation in response to the coffee crisis that
affected them at that time.
Q4 Chairman: I suppose that a question
which you have half-answered is: what do you believe Fairtrade
can do in terms of development? It is still a tiny proportion
of the commodities traded, and even of the commodities in the
fair trade package it is a very small proportion. What do you
believe is the contribution that Fairtrade can make to development
as opposed to what might be called niche markets? If you think
it makes a contribution how do you think it can be extended to
be a much more significant component of the current Fairtrade
markets and potentially new markets?
Ms Lamb: First, it matters greatly
to those five million farmers, workers and their families who
participate in Fairtrade now. For them it is not a niche but their
livelihood; it is their ability to stay on their land, build their
co-operatives and survive as farmers. We must take account of
that. What we can do here and now does really matter. It matters
because it is also sending wider signals to the market about the
potential to take this idea much further. It is supported by the
public and therefore it can work for companies as well. If we
take bananas as an example, by the end of this year we expect
20% of the UK market to be Fairtrade. At that point it is no longer
a niche; you are far from being so at that point. We have seen
initiatives such as Sainsbury's announcement that it is to switch
all its bananas to Fairtrade. Waitrose has followed and others
are lining up to do the same. That gives us an indication of where
we can take the idea. We have no doubt that there is a very long
way to go. As you have said, looking at global trade the percentages
are tiny, but that is why in a way we are putting before the Department
for International Development a request for major financial support.[1]
I believe that in the first 10 years—it is not a very long
time for a radical concept given what Fairtrade is asking for—we
have shown that the concept can work. It can work for the farmers
in development and it can work in the market. That gives us a
very strong base on which to build so we can scale it up to the
next level. To do that we need investment in our capacity to work
with farmers in developing countries so that more of them can
get organised and meet the Fairtrade standards and the very rigorous
standards of supermarkets and other companies that want to buy
their products. It can also enable us to invest in new product
development and have an innovation fund to tackle many other commodities
where farmers have not yet been able to access the Fairtrade market
because of the inability to establish standards. Examples might
be jute, soya, seafood or whole new sectors like mining or tourism.
It is to enable us to go into those new areas that we seek major
international donor finance.
Q5 Chairman: How do you respond to
the criticism that, first, the premium that attaches to Fairtrade
products may effectively depress the value of non-Fairtrade products;
and, second, that you have to be organised to be part of the Fairtrade
markets and so if you are a small producer living in a remote
area that is not organised you do not get the benefits of Fairtrade
and may even suffer a lower commodity price for your limited range
of products?
Ms Lamb: To take the first point—it
supposes a purely theoretical free market that bears no relationship
to the reality of Fairtrade, although that criticism has been
put forward there is no evidence to show that the success of Fairtrade
to date has had any impact in depressing prices within the wider
market for people who are not able to participate in Fairtrade.
Indeed, all the evidence we have suggests the exact opposite,
that because through Fairtrade farmers are organised and have
access to markets and begin to understand more about how international
commodity markets work and receive a fair price perhaps for some
of their coffee, both they and the neighbouring co-operatives
in the area are, if anything, able to push up the price of coffee
for everybody even in the conventional market as well. That is
very much the evidence we have seen to date. I believe that the
question of depressed prices would apply only in a situation where
perhaps everybody could automatically become Fairtrade-certified
and sell their products in that way. That is not the case. The
market is still very small and many producer groups are certified
only as there is increasing market access. Therefore, we bring
in more producers as there is more market for them to sell into,
so it is not that people grow more coffee on the speculative hope
that they will be able to sell it as Fairtrade. That is simply
not happening. I also believe that critics cannot have it both
ways. They cannot say that this is both a tiny and insignificant
niche and it is depressing markets. The two cannot go hand in
hand. The reality is that we are a small but growing percentage
of that trade and it shows that one can pay a fair price and still
succeed commercially. That then gives companies the space to pay
far more for the products that they buy.
Q6 Chairman: The point that we learnt
when we were in Ethiopia talking to the farmers' co-operative
was that the majority of coffee producers were not in the co-operative;
indeed, the co-operative was engaged with its own marketing organisation
in trying to sell the merits of being in the co-op as giving growers
access to better prices, but the majority did not join. There
was an argument that somehow or other one had to be organised;
if not, one would lose out.
Ms Lamb: I want to come to that
point. Organisation is at the heart of our system. We believe
that as long as people are individual farmers—I am selling
my coffee and you are selling your coffee—they cannot begin
to influence their position in the supply chain. They will always
remain very vulnerable and will have to sell their coffee as quickly
as they can to the first middle man who comes to their village.
They will not be able to access credit, for example, except by
going to a moneylender and paying extortionate interest rates
that puts them in hock to that individual. That is the vicious
cycle in which too many individual farmers are caught. That is
why organisation is at the heart of Fairtrade standards. When
farmers come together, form an organisation and are then able
perhaps to export their crop or move further up the chain, perhaps
doing their own coffee washing or whatever it might be, that puts
them in a position to obtain pre-finance and bank loans at much
more reasonable rates. They can understand the way that markets
work and therefore perhaps store their coffee until the price
is a bit higher or sell it direct to somebody and get a higher
price, or move into organic certification and get a higher price,
or move into premium coffee, or resort to different ways to add
value to their crop. One can do that only if one is organised.
I believe that for the public the first point of understanding
of Fairtrade is to do with the premium because it gives a direct
benefit; it builds schools and puts clean water into villages
that have had none. I think that is the most tangible part of
Fairtrade. But what the farmers very often say to us is the most
important part of Fairtrade is the organisation because that is
the basis of long-term sustainable change. Are there many farmers
out there who are not organised? Of course there are. There are
25 million smallholders just in coffee alone. Our hope is that
gradually as we grow the market more of those organised farmers
can access the market and benefit from it.
Q7 James Duddridge: On Monday morning
I went along to Shoebury High School in my constituency. It was
running an assembly based on fair trade. The first question was
whether anybody knew anything about fair trade. At least half
the hands shot up. There has been an enormous increase in the
awareness of Fairtrade and, following on from that, increasing
sales. What are the key factors to which you would attribute that
increase in awareness of fair trade?
Ms Lamb: I love it when I visit
kids who "get" fair trade because it just makes sense.
They cannot believe that not all trade is fair. I believe that
is an indication that the public as a whole has a natural sense
of common decency and therefore naturally warms to the idea of
Fairtrade. Our job in the early years has been to build awareness
that there is a problem in mainstream trade because obviously
people have been unaware of that. Once people understand the scandal
that we still have a world where the people who have grown the
world's best cocoa for 100 years do not have clean drinking water
they automatically want to do something about it and warm to the
idea. What is great about Fairtrade is that it is something very
pragmatic that you, I and everybody can do. As we rush round the
shops in a hurry with our kids screaming we can reach for products
with the FAIRTRADE Mark because we all buy coffee, tea, nuts and
orange juice. I believe the key to the success is that it is an
idea that appeals to the public and it is an easy and an accessible
way for everyone to play their part in tackling poverty. Our strategy
at the Fairtrade Foundation has been to work in collaboration
with other organisations, such as our owners and members, for
example the Women's Institute, Oxfam and the church movement,
to take the ideas out to the wider public and also to work in
co-operation with the companies that have been very much pioneers
in developing Fairtrade and working with their own promotions
to the public. I believe that the two coming together have enabled
us to reach a situation where now well over half the public recognise
the FAIRTRADE Mark and understand what it stands for. Eighty per
cent say that the independent guarantee of the FAIRTRADE Mark
is very important to them and that we are a charity and not a
company that claims it produces very nice coffee. It is an independent
organisation that says this is really fair and sets standards.
I believe that is very important for the public trust that is
fundamental to taking this forward. That is what then leads to
growth in sales. Because the public warm to the idea, support
it and buy it we are beginning to enter a virtuous circle. To
give just one example, last year Sainsbury switched all its kids
bananas to Fairtrade. When that happened sales increased by 30%.
That gave them the courage to say that they could take it right
across their entire range because it was clear that that was what
the public wanted and it supported the idea. They take the next
step and that gives others the possibility of coming in. We hope
that we can enter a virtuous circle. We are very proud of our
rates of growth to date—it is 46% a year over the past four
years—but we believe that we can achieve more than that
much quicker; we just need an injection of capital to give us
the capacity.
Q8 James Duddridge: What is success?
Is there a certain market share of Fairtrade products that you
are aiming at, or are you aiming at influencing the whole market
so that a supermarket will say that this is Fairtrade and something
else is not? Will the whole supermarket be subject to the same
standards that you have applied to your branding, even if they
do not carry that specific branding?
Ms Lamb: Our most ambitious aim
is to change the line of what is acceptable. Obviously, this year
as a nation we are commemorating 200 years since the first bill
to outlaw slavery. There was a point at which people were still
defending slavery; they said that it was critical to economic
success and the global trading system would fall apart without
it. We have reached a situation today where although some slavery
exists it is completely unacceptable. The norm has shifted. In
the end, I think that is what we want to do with trade. We want
to shift the norm so it is seen as completely unacceptable that
any farmer should get paid below what it costs to grow a crop,
or that any farmer who produces products that we in the rich world
can enjoy should be living below the poverty line. That is our
long-term aim. We hope to get there by showing, through the success
of Fairtrade, public support which therefore gives a mandate to
government to make the big and bold changes needed at the World
Trade Organisation, because we also need to reform world trade
rules if we are to make a difference. What do we ourselves want
from the FAIRTRADE Mark? We believe it is absolutely critical
that companies continue to use the FAIRTRADE Mark. That lies at
the heart of the success we have seen to date. Without that we
will have chaos with every company claiming its ethical credentials.
The consumer will become very cynical and confused and say, "Stuff
the lot of you! I'll go back to buying whatever is cheapest."
Q9 Mr Singh: First, if I buy something
which does not bear the FAIRTRADE Mark should I feel guilty? Is
it necessarily the case that products without that mark are the
result of unfair trade? Second, you have talked a good deal about
the UK. What about the international impact of Fairtrade?
Ms Lamb: It is our job to ensure
that the consumer is never in a position where he or she cannot
find Fairtrade products. Obviously, if you go into a little local
shop you may not find any Fairtrade products, so it is ridiculous
to make people feel guilty. I do not think that guilt is the way
to change the world; I think it is all to do with feeling good
about the positive things that you can do. We seek to make it
as easy as possible for as many people as possible to do the things
that will make them feel good. I believe that that is what Fairtrade
does and that is why people warm to it. Therefore, we want to
make sure that Fairtrade is as available as possible, but the
question is: what about the other products in those stores? The
problem is that you and I cannot know. How can we begin to tell?
There are thousands of different products in the different shops,
cafes, restaurants or different places where we consume these
products. How can we ever begin to find our way through the morass
of companies' claims, CSR[2]
reports and what might or might not be said on the web? Realistically,
we will never do that. Therefore, the only way we can have reassurance
that a product really is fair is if it carries the independent
FAIRTRADE Mark. I think you can compare the success we have had
to date with what happened a number of years ago, for example
the rush to be green. Everyone suddenly came out with green washing
powders. Everyone said that their washing powders were good for
the environment and there was an explosion of those products,
but, because there was no independent certification of them, within
a couple of years all of them shrunk to the one brand that was
there at the beginning. We do not want that to happen in Fairtrade.
What the public has driven forward is too precious to let it be
undermined by companies doing their own thing. That is why I come
back to the critical importance of the FAIRTRADE Mark and why
our ambition is to take it to very significant levels within the
core commodities and to expand the range all the time. To go back
to the international dimension, it is critical to our system that
it is not just UK-based but that Fairtrade is part of an international
system that operates across 80 different countries. There are
22 consumer markets across most of Europe, Australia, New Zealand,
Japan, the US and Canada. The newest member is Mexico, and just
this month a new initiative started in India. We also have an
interest in other developing countries, but we imagine that India
along with South Africa will be the next ones. That is where the
markets are. We are working with farmers' organisations in 58
different developing countries, so it is a truly global movement.
Again, that is critical to our success. The work required to develop
our standards in multi-stakeholder consultation with farmers,
workers, companies, traders and independent experts is incredibly
complex and difficult to get right. It would be worth it only
if it was an international system like this. That is what gives
us the ability to stay alive and have an impact on development
and to attack poverty, because this is not about farmers being
able to sell more cocoa or tea to the UK market alone but about
them being able to sell right round the world, and that is absolutely
critical to the potential market.
Q10 John Barrett: I should like to
explore the capacity for growth of Fairtrade consumption in the
UK. Can you outline the opportunities—you have touched on
some of them—and also the problems in the market? Are the
two key factors the price of the product and the quality of what
is being sold? Even though a large number of outlets may be moving
to Fairtrade products when the shopper is out there the two key
factors looked at are quality and price. I was reminded of what
happened when I was speaking to one of the largest egg producers
for Tesco. I said that I bought free range eggs from Tesco. He
said that I should keep doing that because he made more profit
on free range eggs than any other eggs. Is one of the ways to
promote Fairtrade products through these outlets to ensure that
those producing these products make more money out of them? There
is a premium and, if people are not otherwise prepared to pay
it, is this one of the ways to promote those products?
Ms Lamb: We argue that the quality
of Fairtrade products is second to none, but there is a range.
There are 2,500 products, some very much premium products and
some more everyday products, but I have seen banana growers select
the best bananas for their best customers. That is completely
logical, because you do not give people who pay you a fair price
your worst bananas; you keep those for the people who pay you
the lowest price. In addition, very often farmers use the premium
that they get through Fairtrade to invest in improved quality.
Indeed, the information and market access that they get means
they can learn about coffee-cupping and develop those skills so
they improve quality. We are very confident about the quality
of the Fairtrade products; indeed, sales would not be growing
so fast and people would not be buying them again and again if
they were not top quality. You can be sure that the public will
never compromise on that. As to price, we are beginning to see
a shift. As Fairtrade begins to scale up and become more mainstream
we can see the price differential for the customer narrowing.
It is critical that the price to the farmers' organisation remains
stable; that is what we guarantee, and that is never under threat
as it would be in conventional trade. But the price differential
that that translates into for the public is narrowing. For example,
when Marks & Spencer switched all its tea and coffee to Fairtrade
it did not increase the price; nor did Sainsbury when it switched
all its bananas to Fairtrade. Those are indications of where we
think it is going. Obviously, we want the products to sell and
the public to buy them, so in a way we have to find a balance
between protecting the price to the farmers' organisation while
obviously making it price competitive within that. It is not always
possible to get the price difference down that far. I challenge
you on one matter. Part of what we seek to do is to show that
price is not the only concern in the public's mind. The public
is concerned not just with the quality of the product but other
attributes of quality, and we believe that one of them is the
quality of life of the farmers and workers. I believe that is
overwhelmingly what the public has shown in its support for Fairtrade.
What we now begin to see is a shift whereby companies and retailers
can begin to compete less on price and perhaps more on their green
and Fairtrade credentials. To us that is absolutely critical if
we are to end the commodity crisis that has afflicted too many
developing countries. You asked about profitability. Obviously,
this is not about charity; it is about good business, but it must
be commercially viable and that is fundamental to everything one
does. We hope that in general, in relation to profit margins,
companies take the industry average; they are making what they
would normally make on a product that they are selling; otherwise,
they will not do it. If it will cost them too much they will not
stay with it. They need to make a profit and the public understands
that. We would be very concerned if anybody was profiteering,
but we believe that we are moving to the industry norm in terms
of the money that companies can make. A few companies are ready
to invest and make much less than that, so as long as we are at
the industry norm we think that is about right because that is
viable and it can gain the mainstream markets that we are talking
about. In terms of the opportunities, they are absolutely overwhelming.
If you talk to any of the companies that we work with at the Fairtrade
Foundation they will tell you that they are queuing up to offer
more Fairtrade products. If anything, the cork in the bottle is
our capacity to respond to their hunger to do Fairtrade. Companies
are queuing up; the public wants it; and clearly producers want
it. The question is: how can we scale it up so we can move more
quickly to enable more farmers and workers to come in?
Q11 John Barrett: Is the Department
for International Development playing any role in helping to scale
it up?
Ms Lamb: To date, the grants that
we have received from the Department for International Development
have been critical in raising awareness, particularly in the early
years, but even now we have a grant to work with schools. We could
not keep up with the interest in schools. It has also given us
a grant of £250,000 a year to take forward work on new product
development, because that is often where the block is. People
might say that they would like to sell Fairtrade grapes from India
and we need to work with them to see how we would set the price.
That is where we think increased government grants would enable
us to scale up to have more capacity to respond to the opportunities.
The problems lie in setting those standards and enabling disadvantaged
small farmers across the world to meet the standards of both supermarkets
and Fairtrade. I think we have to accept that that takes time
and investment; it needs groups that can accompany them and work
with them. What these groups do is incredible. To get organised
and democratically to decide how to spend the premium within their
community is an extraordinary achievement and a huge responsibility
for farmers. I have recently returned from the Windward Islands.
We visited farmers in St Lucia. Farmers who eight years ago were
not organised are now the most democratically organised people
I have ever met. They meet every week, and every month they hold
bigger meetings to talk about how to invest the premium in their
communities. They walk tall as farmers in their communities because
they are the people who have bought the sterilising equipment
in the hospital and the computers in the schools, but to get there
has taken them a long time. It is hard and difficult because one
is asking people to give up their time and energy to work to a
whole new set of standards. Therefore, we need the capacity to
accompany farmers in that process and provide assistance, for
example, to some of the very poor producers whom you probably
met in Ethiopia to produce products to the standards that the
market requires. That is one of the greatest problems that we
seek to overcome by looking for further investment.
Q12 Mr Bercow: Between 2002 and 2005
there was a very sharp increase from 42 to 137 in the number of
certified Fairtrade groups in Africa. It is perhaps at least as
striking a fact, however, that the biggest single increase in
the number of such groups has been in southern Africa. Presumably,
that is attributable to the fact that it has a relatively well-developed
supply side infrastructure. You have already talked about the
obstacles to and opportunities for the development of this market,
but I am particularly concerned at this point about the reality
that substantial numbers of poor African countries for a variety
of reasons, on which you may want further to elaborate, simply
do not participate in Fairtrade at all. In seeking to ensure that
they do, recognising the capacity constraints, would you be able
to say to the Department for International Development that, based
on some sort of quantitative or qualitative analysis, with additional
investment, given the track record that you have had elsewhere,
you could fairly confidently say that within y number of
years there would be z level of improvement which would
have x effect in terms of poverty reduction? In other words,
given that a politician is always conscious of the bottom line
in his department but also the opportunities for political boasting,
what can you say to Ministers will be the output, not input, for
a relatively modest additional investment by DFID?
Ms Lamb: What we can say is that
with the relatively small DFID grant our record in meeting key
performance indicators, if you like, has been second to none.
You mentioned the increase in the number of groups from Africa,
but we could also have regard to the fact that in 2003 there were
about 150 products with the FAIRTRADE Mark and there are now 2,500
products. That is a stunning rate of growth for a relatively small
amount of finance from DFID. We can absolutely develop those kinds
of indicators, about the number of groups and the countries in
which they are located, as part of the plan that we would like
to develop with DFID. Can we then quantify the number of people?
Yes. Can we quantify the impact in reducing poverty? I think that
begins to get harder. How does one measure it? If we are honest,
Fairtrade will provide a critical income for those people; it
will not be the sole determinant of their livelihoods. It depends
on many factors: the extent to which the government enters into
it and whether there is good education or healthcare. Fairtrade
can tackle those problems only bit by bit, but what we can certainly
come up with is a plan to look at the countries in which we would
particularly like to work. I agree with you that we are talking
about countries such as Mozambique, Malawi or Sierra Leone—some
of the poorest countries—where we would really like to be
able to work. That is exactly why we believe we need government
support to be able to do that. It is much harder to work there
and it will take much longer; otherwise, as you say, the danger
is that the groups that are already better organised and have
better access will get quicker access to Fairtrade markets. You
have seen that in South Africa. That will happen unless we are
able to make those kinds of strategic interventions and identify
those countries where we believe Fairtrade can make the greatest
difference. Which are the products on which most farmers depend
and, therefore, how can we focus on them? We can quantify the
number of farmers and the possible difference it will make to
their livelihoods in terms of income and perhaps take different
indicators like health and education. But I stress that a core
part of Fairtrade is about the democratic empowerment of farmers.
It is for them to decide whether their priority is education,
health or clean drinking water. We cannot second-guess sitting
here in London that there might be 25,000 more schools built because
they might decide that their priority lies somewhere else. But
I think we can arrive at a set of outcomes that we can agree upon.
Q13 Mr Bercow: In seeking to increase
not just the number and range but the penetration of Fairtrade
products in this country, do you see any scope in your own promotional
and marketing work for marrying the different objectives of helping
the world's poor on the one hand and enabling people to remain
healthy on the other? In other words, can you engender a sense
of double virtue in people in the sense that they are doing what
is right by the poor and also ensuring that in an ethical sense
they have their five portions of fruit and vegetables a day?
Ms Lamb: We cannot pretend that
through Fairtrade we can solve all the different issues before
us, but I think that is the good news. We are really keen that,
for example, schools can have Fairtrade bananas. Again, that is
a problem of logistics and scale that we want to track, but it
is absolutely right. There is a Fairtrade fruit basket containing
lots of lovely things like mangos. I do not know how popular they
are in schools, but for the purposes of five portions a day there
are mangos, coconuts, bananas, grapes, oranges, lemons, limes
and many more products that farmers would like to sell, and all
year round. Again, we come back to the question: do we have the
capacity to do that? I think you can bring the two together.
Q14 Mr Bercow: You must excuse my
extreme ignorance, but is there a Fairtrade smoothie?
Ms Lamb: I will make sure you
get one.
Q15 Mr Bercow: For which I will pay.
Ms Lamb: I did bring some Fairtrade
chocolate to sweeten the way. Am I allowed to give it out, or
not? Does that break parliamentary rules? You can declare it.
I am very pleased that there is a Fairtrade smoothie.
Q16 Mr Bercow: It is no bad thing
to have a bit of levity in these proceedings, but the underlying
point is a serious one. One wants to try to make it as easy as
possible for people to do the right thing.
Ms Lamb: Absolutely. There is
a double-whammy in the case of the fruit. They can get Fairtrade
fruit which is good for them and good for farmers.
Q17 John Battle: Whilst I accept
the terms of Fairtrade—that there is a fair price and terms
and conditions for farmers are right and we in the north act ethically—I
am concerned about the structural relationships between markets
north and south. In my own constituency an asbestos company that
caused pollution in the 1950s shut down because of laws in Britain
but opened up in India, and it is still operating there. People
in India remove asbestos with rubber gloves rather than proper
protection. I should like to ask you a question about the prospects
for markets in the south. We may clean up our markets in the north,
but the fastest growing markets will be in China, Brazil and India
hopefully. What prospects are there for the Fairtrade market to
grow in the south? What are the barriers to it growing in the
south? Will we be in a situation where Fairtrade will be dependent
in future on relationships with a handful of northern trans-national
retailer corporations and real market change will not happen internationally?
Ms Lamb: I think the good news
is that there is enormous interest in establishing Fairtrade markets
in the south. Mexico already has a national Fairtrade initiative
particularly in coffee. It is Mexican coffee sold to Mexican consumers
with the FAIRTRADE Mark. Obviously, it commands widespread support
among the public. But there is also a very strong interest in
Brazil, South Africa and India. I was in India in November and
I attended a meeting of many of the Fairtrade tea, rice and cotton
farmers who came together with some Indian businesses and NGOs
to look at the success of Fairtrade in the UK market and see how
they could take some lessons from that and replicate them in India.
I think that the middle-class in India is the size of the total
European population. Clearly, there is enormous potential there.
They absolutely want to develop Fairtrade for the rising aspirations
of the Indian middle-class who clearly have the financial resources
to buy Fairtrade. Again, it is also about strengthening their
capacity to sell internally and locally and not export everything.
They are setting up the initiative now and hope to get started
this year or next and sell the products. A similar thing has been
happening in South Africa. Again, it has a large middle-class
with sufficient capacity and a coming together of producer groups,
consumer groups and companies. The obstacles that they face are
essentially about building market demand. The problem that we
all face in that respect is that we have to do it with very few
resources. That is even more difficult in a country like India.
Britain is a relatively small country; it has relatively few media
outlets and it has easier ways to communicate with people; it
also has relatively few retail outlets. In all those respects
it is on a different scale in India. Should they start with the
seven major cities? What are the best ways they can get the concept
started? One of the biggest barriers to that is finance. As I
think we mentioned in our submission, for example in the UK a
company launching a new sub-brand, let us say a white version
of a chocolate already on the market, would expect to spend about
£10 million to £15 million. That is the scale of marketing
muscle that we are up against when trying to raise consumer awareness
of Fairtrade. We have had nothing like that over the entire course
of our time trying to raise awareness of Fairtrade. We have done
it primarily through the grass-roots social movement that we talked
about earlier: Fairtrade towns and schools. Fourteen per cent
of people who recognise the FAIRTRADE Mark say they heard about
it through word of mouth. That is a phenomenal achievement, but
even that takes some financial investment because you need the
capacity to talk to the networks and give them the material and
information to explain what Fairtrade is. That is why we believe
that for the market to grow in the south investment is required
at least to the level that we have had here to take Fairtrade
forward.
Q18 John Battle: If DFID gave you
the £50 million over five years that you have requested would
southern or northern markets be your priority for expanding market
share?
Ms Lamb: Our priority for market
share would be the southern market. Obviously, there is still
enormous potential in northern markets particularly for the new
EU Member States. We have lots of interest from the Czech Republic
and Estonia. I believe that at this stage it would be more important
to invest in new markets like that and in the developing world
than, for example, in the UK where the key obstacle to growth
is our capacity to work with farmers in the developing world,
not the market now. It is a very competitive world out there.
One has to go on talking about Fairtrade, raise awareness and
encourage more and more people to find out about it, but the biggest
obstacle in the UK as a whole is the capacity to work with farmers
and bring in new products. Therefore, I believe that the overwhelming
priority would be for new markets in the developing world, but
that would be only one part of it, if you like the market part
of the proposal. The other key parts are about our capacity to
work with producers and the ability to bring in products from
new areas so that new producers can access Fairtrade.
Q19 Chairman: Given the scale of
the products and the market growth, do you have the capacity to
do more of your own promotion from within the revenues that you
generate?
Ms Lamb: It is always a difficult
struggle. A minute ago we talked about schools. A few years ago
we made the strategic decision that we would not work with schools
because obviously we need special resources geared up to deal
with them. We simply could not cope with the interest from the
adult population. Having made that decision, every day we get
e-mails from schools. They send us poster competitions about Fairtrade
that they have designed; they send us little cartoons they have
done which they want to put on the web. In the end we thought
they were right; we had to be able to work with schools, and that
was why we applied to DFID for a grant to enable us to do that.
I am pleased that we have now been able to appoint a co-ordinator
who can work with schools. Obviously, there is no end to how much
more we could do. We honestly cannot keep up, not only with the
demand from companies and retailers but from the public. People
knock on our door all the time with new and exciting ideas about
how they want to take forward Fairtrade. We could always do more.
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