As the "Fair Trade Week" approaches in Belgium, from October 4th to 14th, we invite you to dive into the world of the Fairtrade label. Within our portfolio of sustainable agriculture, 62% of our partners are certified fair trade.
What concrete results stem from this for these partners and their producers and ultimate beneficiaries? How does fairtrade tangibly help them escape poverty? And what trends are emerging in the Belgian market, as well as in consumption habits in Belgium and elsewhere?
We have invited Philippe Weiler, CEO of Fairtrade Belgium, to address these questions.
It all started with a product: Lidl's "Coconut & Pecan" dark chocolate. Let's first go back a few years to understand how I got to this point.
During my studies in bioengineering, I did an internship at Traffic International, a subsidiary of WWF. My job was to investigate the illegal trade of hippopotamus ivory. This mission was successful, as my research led to the hippopotamus being listed as an endangered species by the CITES Convention. At that moment, I thought to myself, "Wow. Even at 20 or 22 years old, even during an internship, I was able to have a global impact."
That was my first pivotal moment. The moment I realized that making an impact was what I wanted to do above all else. To have an impact that goes far beyond my books, small room, or house. And that has been the guiding principle of my entire life, up to now.
Now, back to my chocolate.
After my time at WWF, I joined Lidl Belgium to develop their sustainability strategy, which covered areas such as chocolate, coffee, climate change, diversity, human resources, packaging, and combating food waste. During this time, spurred on by the CEO of Tony Chocolonely, I realized there was still progress to be made in the realm of fair trade. Despite labels like UTZ and Rainforest Alliance being very good and having robust criteria, much work still needs to be completed.
So, I organized meetings and brainstorming sessions with Fairtrade and Rikolto to deepen my understanding of fair trade and the differences between certifications. After six months of hard work, we launched the "Coconut & Pecan" dark chocolate in the "Way to Go" product range at Lidl, inspired and validated by Tony Chocolonely.
Although initially designed for Lidl Belgium, the "Way to Go" chocolate was later expanded to 30 countries, underscoring the resounding success of this operation and development. This experience marked my second pivotal moment, a realization that further strengthened my commitment. After my time at Lidl, I decided that if I could contribute to fair trade, I would wholeheartedly seize it.
Much like the hippopotamus project 25 years ago, the "Way To Go" initiative had humble beginnings. The hippopotamus project started modestly with basic statistics, unaware of its future trajectory. Similarly, the "Way To Go" project began with a single innovative product for the Belgian market, intending to assist 50 farmers.
However, both projects exceeded expectations and had a much greater impact than anticipated.
In a nutshell, fair trade emerged in 1988 in the Netherlands when two individuals, collaborating with an NGO called Solidaridad, observed the unjustly low prices paid to a Mexican coffee cooperative. Inspired by this realization, they decided to create a range of coffee with a guaranteed minimum price and a specific premium for this cooperative. This initiative was named Max Havelaar, after the protagonist of a book by Multatuli from the 1800s, who advocated for better working conditions for Indonesian farmers under colonial rule.
Despite initial skepticism, the model gained recognition and expanded to other countries, including Belgium, in 1990. Initially, fair trade was associated with niche products with limited visibility. However, in 1997, the movement took a significant step forward by establishing a framework organization to bring together a series of similar initiatives in various "consumer" countries.
This framework organization continues to shape the landscape of fair trade today under the name Fairtrade International, which replaced the Max Havelaar name.
Firstly, there are global issues related to our growth-oriented business model, such as climate change, biodiversity loss, and so forth. This model, which prioritizes economic growth, applies even to values-driven companies and leads to a desire to minimize external costs, both social and environmental. This is a problematic practice.
The second challenge concerns consumers. While interest in sustainability and responsibility is rising, purchasing decisions are still primarily influenced by price rather than sustainability. The crux of the issue lies in effective communication with consumers. This requires collaboration with business partners to disseminate clear messages. As seen with social media, for example, information overload and media noise complicate the distinction between authentic standards and products on one hand and deceptive tactics and "greenwashing" on the other.
The Fairtrade label remains essential today due to the impact of contemporary global issues, including climate change and child labor. At Fairtrade, we firmly believe that these issues stem from a single underlying cause: poverty.
Around 80% of producers, workers, and farmers live in poverty, earning barely a few dollars a day. As long as poverty persists in their households, these individuals are often forced to rely on their children to meet their needs instead of sending them to school. In some cases, they may feel compelled to expand their land by clearing some trees, for example. All of these consequences are linked to this singular underlying problem: poverty. Addressing this fundamental cause could trigger a chain reaction of positive changes.
When I discuss these issues with our partners, I find that some invest significant sums in projects like reforestation or school construction. These are fantastic initiatives, but the fundamental problem remains: until they are willing to pay a fair price...
Exactly. That's precisely the message we aim to convey in our discussions with business partners and distribution companies. We explain that the Fairtrade label is slightly more expensive than others, but this is due to its two fundamental components: the guaranteed minimum price and the Fairtrade premium.
The minimum price provides farmers financial stability by guaranteeing a fixed income independent of market fluctuations. Additionally, the Fairtrade premium, paid by purchasing companies directly to the cooperative, allows the cooperative to decide how to use the funds based on its specific needs.
For example, it can be used to build schools in areas where there are none, thus encouraging parents to stop employing their children. Or it can be invested in community projects, such as coffee bean drying facilities.
So, even if Fairtrade involves additional costs, even if they are minimal, these investments are worthwhile.
Before addressing this point, it's essential to understand the context by highlighting key figures. The Fairtrade system includes approximately 2,000 certified cooperatives for various commodities. For instance, in coffee production, where global output reaches around 10 million tonnes, only 9% is certified fair trade (about 900,000 tonnes), and only 20% of this production carries the Fairtrade label.
Indeed, the mere certification of a cooperative as "fair trade" doesn't automatically guarantee sufficient demand from other countries, especially "consumer" countries. However, this demand is crucial for selling coffee under the Fairtrade label and receiving the premium. As a result, it's common to encounter Fairtrade-certified cooperatives that can only sell a tiny fraction, sometimes less than 1%, of their total volume at the Fairtrade rate. The real challenge lies in finding markets for fair trade products.
To achieve this, raising consumer awareness and stimulating demand is imperative, particularly in countries like Belgium. And this is where I come into play. My role is to expand the market for fair trade products in Belgium. I do this by actively engaging with businesses and retailers and advocating for fair trade.
I strive to convince consumers that their choices matter. When they choose a Fairtrade banana, for example, they positively impact the workers at the end of the supply chain.
Regarding certain products, there are notable changes to highlight. Chocolate and bananas have transitioned from being "niche products" to each holding a 20% market share in Belgium. These products are now accessible to the general public, not just to sustainability advocates or highly committed consumers. It's no longer reserved for the convinced but for the general public.
However, when it comes to fair trade coffee, while it is growing, it currently represents only 4.7% of the market. This indicates that we still have a way to go, as only one out of every 20 cups of coffee is fair trade today.
Encouragingly, even large companies, including discounters and major retailers, recognize the importance of fair trade. This goes beyond values-driven businesses. Companies increasingly understand that integrating sustainability into their strategy is essential for survival in the competitive retail landscape. This trend reflects the growing awareness that companies must incorporate environmental and social governance into their business strategies in alignment with legislation, reputation, and consumer expectations.
Overall, our success in Belgium is reflected in a significant increase in sales of certified products, transforming niche products into mainstream options. Furthermore, we observe that businesses of all sizes increasingly integrate sustainability into their strategy, which is a significant positive development.
In Europe and Belgium, governments have a crucial role to play through legislation to promote fair trade and environmental responsibility. There are several options to consider. For example, we have strong legal frameworks such as the European Green Deal, which covers areas like human rights, environmental due diligence, and regulations against the illegal importation of products. These legal frameworks are almost ready to be signed, approved, and implemented, particularly concerning the required due diligence.
So, essentially, governments in so-called "consumer" countries can play a crucial role by enacting laws that support fair trade, human rights, and environmental responsibility. These frameworks are already in place in countries like Germany and France and should also be implemented here.
These regulations are truly necessary and will benefit organizations like Fairtrade and everyone involved in social or ethical trade. Why? Because they hold companies accountable for their impact throughout their supply chain. It's not just about what happens with their main or first-tier suppliers; it extends throughout the entire supply chain, down to the farmers. Companies will need to take action to address issues within their supply chain. This is where the choice of Fairtrade or similar instruments comes into play. By using these tools, companies can already ensure that many issues within their supply chain are addressed, whether through existing legislation or voluntary initiatives.
Speaking of voluntary initiatives, there are sector-specific efforts such as Beyond Chocolate and similar initiatives in the banana industry. These are voluntary programs where sectors, like the chocolate industry in Belgium, have collectively decided to improve their standards collectively. It's a response to the need for more sustainable practices. However, it's important to note that it is still voluntary. This is where the role of government comes in. Alexander de Croo played a key role in promoting Beyond Chocolate. Now, we see similar discussions emerging in sectors like coffee, bananas, and other commodities at the national and international levels.
In Belgium, concerning legislation and government involvement, there is another layer where tremendous opportunities exist: local communities. These local entities represent the smallest administrative units in direct contact with their citizens and consumers. Therefore, communities have a vital role in integrating ethical trade and fair trade principles into their procurement policies.
Allow me to share two examples, one on a global scale and the other specific to Belgium.
On a global level, one of the successes is the Women's School of Leadership program. This is a school where women receive comprehensive leadership training, providing them with the tools to become leaders within their communities. This is crucial because in underserved countries, women often perform 80% of the work but only have access to 20% of the resources, funding, land, and decision-making power.
If we want to make agriculture more sustainable, empowering women is essential. The program has been a true success with an impact that extends far beyond supporting and empowering the cooperatives.
In Belgium, fair trade is thriving despite economic and logistical challenges and obstacles. Sales volume has increased, as well as the volume of premiums granted to cooperatives, demonstrating the positive effect of our work.
Their contribution is closely linked to what we discussed earlier in our conversation. They have contributed significantly to professionalizing agricultural cooperatives, improving product quality, expanding the product range, and ensuring long-term production.
Their crucial role involved providing vital initial funding for the successful launch of projects while strengthening the professionalism of cooperatives and structures, making them more attractive for subsequent financing.
This shift in financing, from initial trade to long-term investments in larger facilities, has had a significant impact. Additionally, investors like Alterfin have paid particular attention to technical assistance, providing cooperatives with the necessary support to increase their efficiency and sustainability.
Overall, I want to emphasize the crucial importance of organizations like yours in this transition. Thanks to your efforts, we have witnessed significant expansion in the fair trade sector and a growing recognition of product quality, immensely stimulating consumer demand.
What more could we ask for?