It’s easy to see that things need to change on the ground, that farmers need to receive a higher price for their green leaves, and that tea farming as a dignified profession is slowly disappearing. While realizing this is simple, initiating change – not so much.
Back in the comforts of Europe, 10.000 km away sipping our treasures from East Africa, it is surprisingly easy to forget the hundred different shades of green and the morning mist over the mountain top. What I cannot forget though, are the genuine smiles of the people we met on our tea journey.
Yet, one becomes rapidly consumed by the wave of miniscule tasks surrounding the establishment of a functioning business model, the starting point of any (social) enterprise. One of the main challenges facing not just FRANK, but most enterprises aiming to conduct business in a socially-conscious way:
How to ensure things are done ethically thousands of miles away, without being able to monitor the well-being of the stakeholders (i.e. our tea farmers) personally every day?
One ‘solution’ implemented by many is certification; such as working with fair-trade certified farmers’ co-operatives and buying exclusively from them. By putting a fair trade label on products, companies hope to make your purchase seem a little more ‘fair’, as farmers under the certification scheme are supposed to receive a price premium on top of the world market price.
To illustrate using numbers, I will use the Tony’s Chocolonely case as an example.*
Hey, don’t get me wrong, I love Tony’s (especially their sea salt/caramel flavoured chocolate), but sometimes it helps to put things into perspective. Besides using fair trade certification, the company is said to invest in the farming communities through the Chocolonely Foundation, which receives 10% of the annual net profit of Tony’s Chocolonely, but that is besides the point here.
In Ghana, Tony’s pays a price premium of 25%, of which around 12.5% is fair trade premium, which amounts to ~€0.15 on top of a market price of ~€1.20 in Western Africa.
‘’To get a certificate, both the (cooperatives of) farmers and the consumer goods companies pay an annual fee to the certification organization. In return, the farmer receives the price premium and the brander can carry the certification logo on their packaging.’’
The premium is paid into a savings account of the cooperative, and technically all members should democratically decide how the premium is invested, i.e. building of a new school in the community. In reality, the cooperative’s senior management often decides single-handedly without informing their members and farmers are often not even aware that they are indirectly paying for being fair-trade certified in the first place.
The license fee to be paid to the fair trade organization, by both the farmer cooperative and Tony’s, is the real pain. 2% of Tony’s product cost per chocolate bar goes towards the license fee (vs 1% of the costs being the fair trade premium). See below (in Dutch)
In 2012 for instance, Tony’s had to pay a total of 82.971 EUR to the Dutch fair trade organization Max Havelaar (part of Fairtrade International), double the price premium paid to the farmers cooperative. One can’t help but wonder whether that money could be better spent otherwise.. Unfortunately, the case study did not include numbers on the fee the farmers’ cooperative had to pay to Max Havelaar on top of the license fee Tony’s paid for selling fair trade certified chocolate.
While fair trade could be considered a good ‘starting point’, as Tony’s Chocolonely puts it, the actual impact of the certification is fairly limited on the ground. In reality, fair trade entails horrendous amounts of paperwork, high administration fees and expensive audits. The Fair Trade certificate, among other certification schemes (i.e. Utz, rainforest alliance), is often presented as a viable way to improve farmer’s livelihood, albeit a costly one for both the farmer and the buyer. Interestingly enough, many factories in Rwanda are already Fair Trade certified. If we wanted to put a fair trade stamp onto FRANK, we could, if the farmers and FRANK were to pay up.
Paying a price premium for the benefit of the farmers- we would be happy to do so. Paying a much higher licence fee to the certification body in the West, not so cool. Additionally, the price premium paid for by the buyers often disappears within the high administration and overhead costs of the farmers’ cooperative, without ever reaching the individual members of the cooperative.
For these reasons and others, we have decided against the usage of certification. Without drifting off into an idealistic rant, let’s just say putting a fair trade stamp on our tea is not going to solve the issues we’ve witnessed on the ground, and well it’s not very FRANK style either.
What then, is?
That is what we are busy finding out. Local value addition, direct trade (no auction) and avoiding all middle men, investing straight into the community, transparency, long-term relationships…are some of the alternatives to certification.
We are on it. It’s a journey, that’s for sure.
A journey that starts with the realization that being fair isn’t about putting a fair trade label on our tea.
Keep it FRANK,
Valerie & David
*(figures exerted from the case study found on the following link: http://www.social-enterprise.nl/files/1814/4198/0581/Tonys_Chocolonely_Teaching_Case_Version_Beta.pdf)