Fair Trade

Paper Boat is the first well-known Indian brand to launch a fair trade product. What is surprising about the recent launch of Paper Boat Chikki is that it is a fair trade product, the first recognisable Indian brand to do so.

Fair trade, a popular concept among consumers in western Europe and the US, ensures everyone involved in the making of a product is fairly paid; there is no child labour or forced labour; there is gender equality; and there are no damages to the environment. Standards for fair trade are laid down by not-for-profit organisations like Fairtrade International, World Fair Trade Organisation and Fair Trade USA. Paper Boat Chikki is Fairtrade-certified.

After Hector Beverages decided to launch a fair trade product, the key was to find a source for the product's main ingredient, peanuts. A farmers' collective near Rajkot in Gujarat, which had recently joined the Fairtrade network to sell cotton, some of the cotton farmers also grow sesame and groundnut. They sold 250 tonnes of peanuts to Paper Boat late last year at the Fairtrade minimum price of $670 per tonne.(The sugar and jaggery for the chikki come from north Karnataka.) In addition, they would get a Fairtrade premium of $110 per tonne, which goes into the common fund of the collective, called Rapar and Dhrangadhra Farmers' Producer Company, which is one of 200 such organisations part of the Fairtrade network in Asia-Pacific and 1,240 around the world.

Fairtrade producers, which include 1.6 million farmers and workers in 75 countries, earned premiums of 138 million, or over Rs.1,000 crore in today's terms, in 2015. Farmers linked to Fair Trade USA, which was till 2011 a member of Fairtrade International, earned $47.5 million (Rs.322 crore) in premiums in 2015. Around 7.3 billion worth of Fairtrade products were sold globally in 2015, with Indians spending well under a million euros.

Parvesh Debuka, marketing head of Hector Beverages, says it took the company over a year to launch the product. The company's objective is to make its drinks Fairtrade-certified too.

The fair trade movement has its origins in 1946, when Edna Ruth Byler, a volunteer for the Mennonite church in Pennsylvania, US, travelled to Puerto Rico with her husband and returned with needlework made by poor women in the La Plata valley. She sold this out of the trunk of her car, which then gave birth to Ten Thousand Villages, a retailer with $28 million in sales in 2014-15.

In Europe, Oxfam, a charity, started selling crafts made by Chinese refugees in the 1950s and the first fair trade organisation was formed in 1964. Nine years later, a fair trade body in the Netherlands imported the first fair trade coffee from farmers in Guatemala. The European Fair Trade Association was formed in 1987, followed by the WFTO in 1989. The fair trade movement got a leg up with the introduction in 1988 of the first fair trade label -Max Havelaar, the name of a protagonist in an eponymous Dutch novel critical of the Dutch colonisers' exploitation of farmers in present-day Indonesia. The label was used on coffee imported from Mexico. This led to the establishment of Fairtrade International's predecessor in 1997.

Coffee is by far the biggest fair trade product, with around half of Fairtrade farmers and workers growing it. Fairtrade is focused on smallholder farmers (owning less than five acres each) since nearly four-fifths of the world's coffee is grown by 25 million of them. Coffee farmers earned two-thirds of the total premiums paid to Fair Trade USA's farmers in 2015. Coffee chains like Starbucks and Peet's Coffee sell fair trade coffee. Other popular brands that have embraced fair trade include Twinings tea and retailers like Marks & Spencer.

Fair trade is not without its share of critics. A four-year study on coffee, tea and flower farms in Uganda and Ethiopia found that workers in Fairtrade-certified farms were not paid better than their non-Fairtrade counterparts and, in some cases, even paid less.Christopher Cramer, a professor at the School of Oriental and African Studies, University of London, and co-author of the study, finds Fairtrade's international audit system not very effective.

Arun Ambatipudi, cofounder of Chetna Organic, which has a network of 15,000 Fairtrade-certified cotton farmers in Telangana, Maharashtra and Odisha, says Fairtrade minimum prices for products should be revised more often and be in keeping with local conditions. Chetna, fully owned by the farmers, counts the UK supermarket chain Tesco and Columbia Sportswear among its customers.

Fairtrade, which had been helping Indian farmers exporting to Europe for two decades, began focusing on selling its products to Indian consumers in late 2013, but it has not been an easy ride as most of the brands are very niche, including No-Nasties tee shirts and Oothu tea from Wadias-owned Bombay Burmah Trading Corporation.

Farming has become more and more unsustainable in India over the years, with 8,000 farmers and 4,600 agri-labourers taking their lives in 2015, mostly because of indebtedness. While the vagaries of monsoon push farmers deeper into debt, the volatility in prices for their produce and middlemen are also contributing factors. Fair trade could in theory mitigate farmers' woes but, to realise that, scale is essential and it will likely retrace the steps taken by organic food in India, which was once very niche but is now less so at least in some product categories.

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