§ Motion made, and Question proposed, That this House do now adjourn.—[Jim Fitzpatrick.]
2.30 pm§ Mr. Eric Joyce (Falkirk, West)I want to take this opportunity to say a few words about the Fairtrade Foundation and the Fairtrade brand. I also intend to say a word or two about the Soil Association, an excellent organisation, and similar related organisations. Finally, I shall make a number of points about the interrelationship between what one might call the international development charities behind the Fairtrade Foundation and domestic agricultural interests, with particular emphasis on the possibility—in my view, ill advised—that the produce of developed economies such as the United Kingdom could in future receive a Fairtrade mark.
The Minister will be aware, having attended the recent seminar at Stonleigh park on 14 March, and no doubt through many other channels, that the Fairtrade Foundation and similar organisations are wholly independent of Government yet dependent at various levels on taxpayers' funding, irrespective of whether the direct source of grants to and agreements with the organisation is the European Union, the UK or a regional body. That means that the Government have an interest in monitoring whether money is being well spent and that recipient organisations are effective and fit for a purpose that is in itself useful. The Fairtrade Foundation appears to be on a firm footing in that respect.
Perhaps some information about Fairtrade is appropriate at this point. I have borrowed extensively from literature provided by the foundation and related organisations, since that seems to be the best way of putting on the record the organisation's description of itself and its objectives. The Fairtrade Foundation exists to ensure a better deal for marginalised and disadvantaged developing world producers. It was set up in the early 1990s by CAFOD, Christian Aid, New Consumer, Oxfam, Traidcraft and the World Development Movement. Its formation was a response to the collapse of world commodity prices in the early 1990s. The foundation awards a consumer label, the Fairtrade Mark, to products that meet internationally recognised standards of fair trade. In the foundation's own words, the brand challenges the conventional model of trade and offers a progressive alternative for a sustainable future. It also empowers consumers to take responsibility for the role that they play when they buy products from the developing world.
Crucially, in recent years Fairtrade has placed great stress on quality issues. That means that supply chain consistency issues must be in order and, fundamentally, that the stuff people buy off the shelves is edible and drinkable. I have to say that during the mid- to late 1990s my family had two or three packets of Fairtrade tea and coffee permanently in the cupboard. We would take it out of the cupboard and use it once so that it did not look as though we were wasting it, then it would stay in the cupboard to be replaced by a new one three or four weeks later. Although that practice, albeit inefficient, produced a passable turnover for Fairtrade branded products, the recent focus on quality has 1264 produced remarkable results, with sales now up 90 per cent. on previous years. Indeed, the House has Fairtrade products located in each dining and recreational area, and I understand that sales are brisk.
The foundation lays down five principles of fair trade. The first is to assist disadvantaged producers. That means developing access to markets in developed countries for producers who tend to be marginalised by conventional trading structures. There is a focus on smaller-scale producers, although that depends on the commodity in question. Coffee producers tend to be small and family owned, with production and marketing organised through co-operatives. Tea, on the other hand, is produced on estates where the focus of the Fairtrade brand is oriented on employment and environmental practices.
The second principle is direct trade—in other words, cutting out the middle person and buying direct from farmers' organisations at a guaranteed price. The world coffee market militates against many small producers, who may sometimes receive far less than a reasonable rate—even in local terms—for their labours. Often, production methods are not what consumers in developed countries would approve of, but consumers cannot know, in the usual run of things, that that is the case. In the Fairtrade Foundation's words,
By bypassing the international commodity market and buying direct from farmers' associations or co-operatives, Fairtrade enables farmers to get a greater share of the rewards for their labour.The third principle is a fair price. For most products. Fairtrade criteria establish a minimum guaranteed price that covers the cost of production and ensures a living wage for growers. The set Fairtrade price is always the minimum price paid, but it rises in line with market prices if they rise above the minimum Fairtrade price.The fourth principle is pre-finance. Some small producers find it difficult to obtain finance to make their products available for export. They often have to pay very high interest rates. Producers may therefore request part payment of orders in advance of delivery, for which a fair commercial cost should be passed on by the importer.
Finally, the fifth principle is that of a premium being payable by importers in addition to the purchase price. This payment is designated for social and economic development in the producing communities. The farmers and growers themselves decide how those funds are to be allocated. The money is normally used for improvements in health, education or other social facilities, although it is sometimes used to improve productivity or to reduce risk by introducing diversity into the product range of the producers.
In addition to these principles, the Fairtrade Foundation seeks to establish long-term trading relationships, with orders being placed early in order to enable longer-term economic planning in the areas of production. The Fairtrade Foundation lays down criteria for product and producer eligibility that extend from the principles that I have just described. These are oriented around ingredients, labour management, monitoring and inspection processes, and licensing. The foundation lays out the details of the Fairtrade supply chain, which covers producers, importers, licensees and retailers. The assumption in this description of the 1265 supply chain that importers will always play a key part is important. I will come back to that later in my remarks. For the moment, I will augment that comment with a quote from the Fairtrade Foundation literature.
The success of the Mark depends on consumer confidence in the guarantee it offers that third world producers receive a better deal.I agree wholeheartedly. In many ways, that is the nub both of this debate and early-day motion 865.Just to put a bit of flesh on the bones, it is worth mentioning some of the products and countries of origin. Typical products include—as I am sure that you and the Minister are aware, Madam Deputy Speaker—coffee, tea, bananas, chocolate, honey, mangoes, sugar and orange juice. The producers are based in countries such as Belize, Bolivia, Ghana, Cameroon, Haiti, Ecuador and the Windward Islands. There is no doubt that the Fairtrade brand, founded by international development organisations, is doing fine things for producers in the developing world. The Fairtrade brand is in the ascendant, with sales for 2002 exceeding £63 million in the UK. I understand that that is 90 per cent. up on the previous year.
I have already mentioned quality. Quality is vital when it comes to getting major retailers in the UK to take on Fairtrade products as a wholly viable commercial venture. The Co-op has now, for example, switched all its own-label chocolate bars to Fairtrade, and all filter coffee in the sandwich chain Prêt a Manger is now Fairtrade. That is commendable of both organisations, of course, but ultimately both require a solid rate of return, which means sales in volume. Quality lies at the heart of that.
Growth in sales is leading to an early form of mainstreaming of Fairtrade products, which in turn helps some of the world's poorest people. The Fairtrade Foundation locates its role not simply in helping countries in the developing world but in reforming international trade. That may orientate around what might be called the Fairtrade philosophy. We do not have time now to interrogate the philosophy, but there seems to be a significant gap between the philosophical aims of the Fairtrade Foundation and the reality that most people buy Fairtrade products to help the developing world rather than as a critique of the world farming economy per se. The important thing to note is that while most people would concede that there are maleffects on developing world producers as a result of the common agricultural policy and other aspects of production in the developed world, they do not necessarily extend that to a philosophy that includes producers in the developed world. Of course it is perfectly possible to argue rationally that producers in this country, such as small producers of organic products, could benefit in the same way as producers in the developing world, and for the same reasons under the fair trade banner, but there are usually a number of competing but equally rational lines of argument available in any situation. The question is which is the most appropriate and effective in the context in which it is presented.
The Fairtrade Foundation is at present conducting a study, in conjunction with the Soil Association, which could result in granting some United Kingdom 1266 producers the right to use the Fairtrade label. That is something with which I and many of my colleagues and our constituents disagree profoundly. The study will end in early 2004, at which point Fairtrade Labelling Organisations International will decide whether producers in the UK will qualify for the Fairtrade label. MPs and others have been asked to take part in the consultation phase, yet at one level that seems tokenistic, since it seems to me that the philosophy of the consultation, laid out in a number of Fairtrade Foundation documents, is already clear and mitigates in favour of so extending that label.
One release said:
The Fairtrade Foundation is investigating if and how the philosophy and principles of Fairtrade could be applied in the UK. We are doing this mainly because over the past two years, as the profile of Fairtrade has grown and as the situation facing many UK farmers has deteriorated, our supporters … have asked us to. There is a body of opinion who believe that extending the principle of Fairtrade could actually help build its constituency.The release says thatthe problems facing farmers in the developing world are not only due to trade rules. Equally problematic is the position of farmers as the weakest participant in a long supply chain onto whom all the risk and all the price reductions are always pushed … eleven UK farmers go out of business every day, their profits squeezed to non-existence.The same release notes:Enabling farmers to stay on their land and find sustainable livelihoods must be central to the agricultural and rural futures of this country.That release was issued after an excellent article by The Guardian journalist Charlotte Denny.It is perfectly logical and desirable that an organisation such as the Fairtrade Foundation should be based on a wider philosophy. Indeed, many hon. Members have been an integral part of the development of that philosophy, including my right hon. Friend the Secretary of State for International Development. I have no doubt that many hon. Members lent their support to the idea because they saw it fundamentally as something that aided the developing world, and if we introduce a new feature into the equation, which is essentially that it becomes an argument about world farming and therefore has significant implications for UK farmers per se, that becomes a rather different proposition from what I think hon. Members, and members of the public and consumers, have supported until now.
I happen to have a high regard for the Soil Association, which is the UK's leading organic organisation. I would say more about its merits, but I am constrained by time. Suffice it to say that the organic sector is a crucial part of the UK farming economy and the Government recognise that. I am sure that the Minister will say that in due course. However, if Fairtrade labels were to be extended to UK organic products, the same philosophy would have to be extended to UK non-organic products because Fairtrade products are not necessarily organic. Therefore one would effectively be extending the label possibly to a large number of producers in the developed economies. That would fundamentally damage the Fairtrade label. As early-day motion 865 says, many of my colleagues now believe that the extension of that label could be profoundly deleterious to the Fairtrade brand.
1267 I can only speculate as to the reasons why the Fairtrade Foundation has extended its underpinning philosophy to the conservation of UK farming. Although it is an argument that many well-known bodies put, it seems clear as day that it should not be a function of an organisation with a mission to help the developing world. However, if we were to speculate we might look closely at the influence of particular interest groups on the internal politics of the Fairtrade Foundation. That might include the excellent women's institutes or indeed the Soil Association or other farming interests. It is not to say anything negative about those organisations—quite the reverse. It is simply to say that where successful non-governmental bodies such as Fairtrade grow, their growth becomes central to their operations and people's careers come to depend on liaisons with other organisations, with perhaps overlapping but not necessarily exactly similar objectives.
I conclude by reiterating my belief, and that of many of my colleagues, that extending the Fairtrade brand to cover UK products would be seriously detrimental to that brand. I hope that the Minister will continue to engage with the concept of fair trade and encourage his colleagues in the Department of Trade and Industry and Department for International Development, to whom I will also write, to express their concern about what I regard as a worrying development.
§ The Minister for Rural Affairs and Urban Quality of Life (Alun Michael)I congratulate my hon. Friend the Member for Falkirk, West (Mr. Joyce) on securing this debate and on choosing such a fascinating subject. Organic farming and fair trade are two very important but, as he has indicated, distinct subjects. Nevertheless, it is important to try to wrestle with the principles to which he referred.
I have a long-standing interest in fair trade, both through the co-operative movement and through Traidcraft, which my wife promoted in our home town of Penarth for many years. I am not sure that it is an interest in the declarable sense, but it is certainly an enthusiasm, and it continues to occupy a considerable proportion of our cellar.
Individual consumers can exercise choice in their moral and purchasing decisions. Together we can make a difference and achieve a great deal, especially with the encouragement of the Government's engagement in these issues, and I join my hon. Friend in applauding the work of the Secretary of State for International Development. It is a matter of pride to me that the House can make a difference, and not only in the availability of tea and coffee—the point at which I thought we were getting the message across was when the Churchill Room's selected wine for the month turned out to be Traidcraft wine from a co-operative in South Africa.
I join my hon. Friend in applauding the efforts of the Fairtrade Foundation and others working in this field to promote equitable trading practices for producers in developing countries. The fair trade certification and labelling scheme responds to concerns, increasingly held by our society, about poverty and disadvantaged groups in developing countries whose living depends on fair 1268 prices and fair terms of trade. Such schemes also respond to the willingness, and indeed enthusiasm, of much of the business community to demonstrate concern for fair trading practices, reflecting the views of their customers.
The Government strongly support organic farming as a sustainable method of production that provides significant environmental benefits. I gave organic farming targeted support when I was Secretary of State for Wales, and the Department for Environment, Food and Rural Affairs strongly supports it. Last year, we developed our organic action plan for England with a wide range of stakeholders, and it is now being implemented. It concentrates on sustainable growth of the organic sector in this country. We are also very much alive to the potential of organic trade to help disadvantaged producers elsewhere in the world. We are, for example, supporting moves in the European Community to change the legislative requirements to facilitate trade from producer groups in developing countries, while maintaining the integrity of the organic certification system.
The initiative outlined by the Fairtrade Foundation and the Soil Association in January has promising aspects that may help to meet fair trade objectives while also achieving benefits for trade in organic products. Co-operation between the respective certification bodies is to be welcomed, and I particularly support the plan to identify more organic producers in developing countries who can be certified to fair trade standards. I do not think that my hon. Friend's concerns extend to those proposals.
The other stated objective of the initiative is to consider the introduction of fair trade certification—together, presumably, with labelling to inform consumers—for organic products from the UK. I understand that no decision has yet been taken by the sponsors of the project on the form that that could take. The Government do not necessarily have a role in the development of private certification schemes, where those are consistent with existing legislation. However, I recognise my hon. Friend's points about the confusion, and indeed harm, that could arise if fair trade labelling, in the form associated with products from developing countries, were to be applied to products from the UK and other developed countries.
The connection between the concerns of farmers in the United Kingdom and the challenges of helping farmers in third-world countries is interesting. When I first had agriculture responsibilities, particularly in Wales, I was struck by the continual wish for a fair return to the primary producer. In fair trade, much the same concept takes the form of encouraging people to seek an assurance that the primary producer is not being squeezed by those who process and trade commodities around the world.
In many ways, there is also an emphasis on the way in which farmers want to produce to a level of quality, to co-operate to ensure that they have some strength in the market place and to benefit from added value in products. That is very similar to the challenges of ensuring that such things can happen in other countries. Indeed, I have often underlined the importance of co-operation, and I am very pleased that the Curry commission's recommendations suggest that co-operation, quality and connection with the market can 1269 increase the returns to farmers in this country. At one level, there is a philosophical similarity between the wish to ensure a fair return to farmers, who have gone through extremely difficult times in recent years, and the concepts that underlie fairness in international trade.
As my hon. Friend said, I took part in a conference discussion at Stoneleigh park only last Friday that brought together those two issues. It was fascinating to attend a conference, promoted by organisations such as the National Farmers Union, Christian Aid, the co-operative movement and a variety of others, in which people referred to what can we learn from one another and what are the points of dialogue. Some people might have the concerns that my hon. Friend has expressed, but debating the issues is certainly well worth while.
As the later part of the discussion continued and as I was asked questions following my contribution, I was a little concerned about the extent to which people returned to speaking about the need to protect farming in this country or to have an international trade regime that protects the poorer producers in third-world countries and retreated from dialogue to emphasising their priorities. So bringing together the two issues is not easy, and I am certain that the Soil Association, the Fairtrade Foundation and the others who have become involved in that debate will find that some extremely difficult and challenging issues remain.
It is also worth underlining the fact that the Government strongly support world trade liberalisation under the Doha negotiations for agriculture. The Doha mandate makes a commitment to substantial reductions in subsidies and market protection and to special and differential treatment for developing countries. Our objectives in reforming the common agricultural policy are based on a market-led approach that will place the European Union on a stronger footing in the World Trade Organisation talks on trade liberalisation. All those issues are interrelated to a degree, and they are difficult to separate if we want to make sense of the world in which we live and if we believe in ensuring that fairness is achieved, as I know my hon. Friend does from his interest in this issue.
On the other half of the debate, the Government fully recognise that British farmers face very serious difficulties caused by many factors, including declining markets and poor returns. It is important to underline the fact that our strategy for sustainable farming and food, based on the work of Sir Don Curry and the policy commission on the future of farming and food, sets out the new approach that is needed for the future.
Our approach involves moving agriculture away from the constraints of production-related subsidies; reconnecting farmers with markets and strengthening the food chain; improving co-operation, performance and quality; enhancing training and opportunities to learn from best practice; and ensuring a secure basis for the future founded on the principle of sustainability, thus meeting economic, environmental and social objectives.
Many of those principles, particularly the principles of sustainable development, are relevant to producers in the third world and to those economies. In an age in which commodity prices on the international market 1270 can fluctuate rapidly, the need to find the right way forward, which is not protectionist and does not encourage the production of goods for which there is no market, is extremely important. Certainly, none of that is easy. A resonance exists in terms of ensuring that the primary producer receives a fair return, or the return from adding value, and is well connected to the market, in terms of what consumers wish to receive, and to the point of quality, to which my hon. Friend rightly referred. I endorse strongly, like him, the way in which fair trade products nowadays are of a high quality and are able to compete on those grounds. That is important if they are to have a long-term and sustainable future.
I note my hon. Friend's concerns, and Government colleagues will see what he has said. At the end of the day, however, it is for those who undertake this work to consider the pros and cons in relation to the launch of the consultation in January. I am certain that they will take to heart many of the points that he has raised. The House should consider the issue with care: we must take our decisions on purchasing not only as Members of Parliament but as individual consumers. The issue of how we best promote choice for consumers—whether choice of organic products or choice to purchase fairly traded products knowing that a reasonable return goes to people in those developing economies—are all things that are important for us as citizens and for the House as a whole.
§ Mr. JoyceDoes the Minister think that it might be appropriate to have a particular label, which the NFU or some other organisation might establish, which might have some function in this respect for UK produce that was distinct and different from the Fairtrade label? That would preserve the brand as things stand at the moment.
§ Alun MichaelMy hon. Friend makes an important point. The Government's approach to the matter is that assurance schemes, whether the Soil Association scheme, schemes that give assurances about the fat-free nature of products, the red tractor scheme or the Fairtrade label, are best dealt with primarily on a voluntary basis, with the encouragement of Government, rather than through a top-down approach. Having said that, my personal view as a consumer, more than as a Minister or Member of Parliament, is that a variety of labels can become very confusing. Often, people who are concerned about the quality and health benefits of the products that they buy are also the sort of people who would look for organic products and fairly traded products.
My hon. Friend has raised an extremely important issue, which poses a lot of challenges to which there is no easy answer. I hope, however, that the views that he has expressed will be taken into account by those who have the responsibility for responding to the consultation and discussion in January. I congratulate him on bringing such a big issue—it is not a small one—to the attention of the House in this Adjournment debate.
§ Question put and agreed to.
§ Adjourned accordingly at one minute to Three o'clock.