Fairtrade a key part of sustainability drive

By Sarah Hills

- Last updated on GMT

Related tags: Fair trade

The fairtrade phenomenon is benefiting from the trend for sustainability reporting as fairtrade foods as well as ingredients can boost corporate credentials, according to an analyst.

Fairtrade growers are given a fixed price to help them out of poverty and it encourages them to adopt ecological farming practices. This makes it intimately linked with sustainability, which is concerned with economic, social and environmental factors, said Amarjit Sahota, director of business research & consulting firm Organic Monitor.

He told FoodNavigator-USA.com: “Adopting fair trade practices shows that a company is a good corporate citizen as it treats its suppliers fairly and supports social communities in developing countries.

“We are therefore seeing more companies looking at sustainability, producing reports which talk about environmental and social initiatives. Organic and fairtrade are key parts of such initiatives.”

Fairtrade products are certified by TransFair USA, which is a member of Fairtrade Labelling Organisation (FLO). Only products that meet these standards are allowed to carry the Fair Trade Mark.

However, companies are also promoting fairtrade ingredients in their products.

Sahota said there are no fairtrade standards for olive oil, for example, so the products cannot carry the Fair Trade Mark. Yet some companies are stating their olive oil is fairtrade as they adhere to fairtrade principles and give the growers a 'fixed price'.

He added that many food products do not have product certification, so manufacturers state 'made with fair trade ingredients'​ on product labels and packaging.

Food prices

The gloomy economic climate is likely to hurt consumer expenditure but Sahota said that educated consumers are expected to continue to buy fair-trade. This is because it protects third world growers from fluctuations in commodity prices, so they receive a fair price even when food prices go down.

The US has the largest market for fairtrade products in the world and it was worth about $1bn in 2007. Growth last year was reported to be 72 percent and Organic Monitor projects US fairtrade revenues to double to $2 billion by 2011.

Sahota said the most popular fairtrade products have traditionally been beverages such as coffee and tea. However there are developments in other food products such as cocoa, juices, honey, rice and wine and fairtrade fruits, which are expected to overtake fairtrade beverage sales, as is already the case in Europe.

Market drivers

The major driver of market growth is the rise in ethical consumerism as shoppers become aware of fairtrade principles and buy fairtrade products to support growers in developing countries.

However, Organic Monitor said another group is emerging as consumers of organic foods are also buying fairtrade products because they care about sustainability.

This is highlighted by the growing number of organic food companies that are using fairtrade ingredients, or launching fairtrade products.

Meanwhile attempts are being made to achieve consistency in sustainability reporting. An example is Global Reporting Initiative's (GRI) Sustainability Reporting Framework - of which the Sustainability Reporting Guidelines are the cornerstone. This provides guidance for organizations to use as the basis for disclosure about their sustainability performance, and also provides stakeholders a universally-applicable, comparable framework in which to understand disclosed information.

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