Fairtrade and the COVID-19 response – lessons for business and the food system
As the rapid spread of COVID-19 has provoked emergency restrictions across the world, colleagues across the Fairtrade movement have been looking hard at the risks to the 1.6 million farmers and workers in the Fairtrade system, and the many millions more in their families and communities.
The numbers are mind-boggling. The International Labour Organization estimates that 94 percent of the world’s workforce are living with some form of workplace closure, alongside a drop in working hours equivalent to 305 million jobs.
The United Nations estimates that nearly 50 million more people will be pushed into extreme poverty. At Fairtrade, we immediately started asking what we could do to support farmers facing this terrible storm.
Conversations with retailers and supply chain businesses also made clear just how challenging it was to keep food and other essential supplies moving to the UK’s supermarkets. With nearly half of the UK’s food coming from overseas, and around ten to fifteen percent from Asia, Africa and Latin America, the global shutdown could have led to shortages on the shelves.
Fairtrade farmers and workers, and millions of others like them around the world, quickly became recognised as “key workers”. Their well being was understood to be directly linked to yours and mine; a well being, of course, which became suddenly and profoundly threatened, in several ways:
- Most obviously, the immediate public health emergency. How could farmers and workers be protected at work and at home? There were urgent needs for protective equipment, additional sanitation, distancing measures and health education, for example.
- Producers of shopping basket staples, such as banana farmers, typically saw demand for their produce rise or remain stable. However, necessary movement restrictions at work (including shielding leave for older workers) and transport difficulties for shipments made production harder and more expensive.
- Some sectors saw potentially catastrophic drops in income. “Non-essential” goods such as flowers, and “delayable” purchases such as storable commodities, saw huge drops in sales, sometimes in a matter of days. Garments and flowers were two sectors hit hard as consumers simply stopped buying overnight. Flowers were also badly affected by the sudden drop in air freight capacity. The flower industry in East Africa saw mass layoffs, with businesses at risk of permanent closure. Migrant and casual workers are especially vulnerable, without the protection of employment contracts, and with movement restrictions preventing travel to work.
- The risk of human rights abuse in factories and fields increased, partly because movement restrictions and lockdowns have prevented the kind of workplace scrutiny from buyers, researchers, journalists and auditors that would usually be taking place. In addition, the drop in incomes and availability of work could be putting pressure on people to accept poor or even abusive working conditions. Such risks are heightened in settings with pre-existing human rights concerns.
Business responses – what does good look like?
The grave context means that action by retailers, brands and traders during the crisis has been (and continues to be) critical for the protection of livelihoods, human rights and the public health of vulnerable suppliers. At Fairtrade, we’ve been offering advice and taking action ourselves. The following points summarise our advice to retailers, brands and supply chain businesses.
- Support public health at work
Businesses can support their suppliers in taking emergency measures such as establishing social distancing and utilising protective equipment. With misinformation about COVID-19 widespread, sharing accurate health advice is also important.
- Immediate business protection
With a high risk of business failure, emergency funding to help cover cash flow problems can help to keep workers paid or to pay for measures such as furlough and shielding leave. As well as looking after the workforce, preventing businesses from going under in the “first crunch” also makes it easier to restart or scale up production.
- Financing and responsible purchasing practices
With money so tight, predictable, reliable financing and prompt payment of bills is very important. Prompt payment terms, pre-financing, reassurance that existing contracts will be honoured, and commitment to future orders all help producers to plan and to keep paying wages.
- Making human rights expectations clear
With human rights risks heightened, buyers need to be clear to suppliers that there is an expectation to see human rights, wages commitments and public health measures upheld, even within these exceptional circumstances. If such messages come alongside commitments to help producers with financing or other support, there will be reassurance that the buyers are not about to cut and run, and therefore less temptation to cut corners.
- Market intelligence
Information about the UK market and insight into future buying trends will be critical for producers, helping them plan and prepare with as much confidence as possible, despite the uncertainties.
Governments too need to hear what is going on in supply chains as a result of COVID-19. They set policy for managing the crisis and will commit large sums towards recovery and rebuilding. We need policy to back protective measures in the short term, and the kind of sustainable, resilient supply chains that are needed both by supply chain workers and UK consumers in the long term. As we move into the recovery phase, there is an opportunity to rebuild fairly and sustainably, but this could be lost if business does not raise its voice alongside civil society.
What has Fairtrade itself been doing?
In the Fairtrade system, we’ve taken a number of steps to support producers through the crisis. We’ve been coordinating across the Fairtrade system, bringing together our producer networks and market-facing organisations, to support producers in several ways:
- Fairtrade Premium
We made a temporary change to the rules on Fairtrade Premium use. Fairtrade Premium is an additional payment made by Fairtrade buyers to farmers and workers groups. Producers could use these additional financial payments for a wider range of uses than usual, including salaries. It has been widely used by producers across the world to pay for furloughs and shielding leave, job protection, public health measures, and other steps.
- Human rights
Our advice to producers was accompanied by a statement of Fairtrade expectations with regard to maintaining standards including human rights, wages and health.
- Market intelligence
We have been sharing regular briefings with producers on UK market conditions and trends, to help them understand the trends in the UK retail market and inform their planning.
We have established a Fairtrade relief fund with initial resources of €3.1 million to support immediate protection and restart needs. This is underwritten with reserve funding and seeks to leverage donor and company funding.
We have produced a series of briefings aimed at decision makers, which have been shared widely with politicians, businesses and beyond. We’ve also taken part in webinars and press work to draw attention to the issues facing producers, as well as encouraged business and donor responses. As discussions begin on recovery plans, we’ll be continuing to put the position of Fairtrade farmers and supporters forward.
What are we learning?
The crisis has shown us just how fragile our food supply chains are. With many producers in developing countries already working on very low margins. With workers close to the poverty line, the shock of COVID-19 has seriously challenged the production of food and the well being of whole communities.
There are important lessons here for business and government decision makers. How can we be better prepared to face the risks of future shocks to supply, whether they come from further pandemics or are shocks caused by extreme weather related to the climate crisis?
Some initial reports suggest that supply chains where Fairtrade approaches were operating have often shown impressive resilience through the first months of the crisis. It was also important that producer to buyer relationships were strong and based on a shared commitment to fairness and sustainability. We have received many reports from producers about the ways in which they have been able to offer job protection and furloughs, introduce health measures and keep businesses running, despite the extreme circumstances. Why might this be?
Where this has happened within Fairtrade producer groups the following may apply:
- A strong base of investment in community infrastructure, medical facilities and possibly better household assets, with this being linked to better value received over time through Fairtrade Premium investments and (where applicable) the minimum price mechanism.
- The release of Fairtrade Premium for emergency support has clearly been very significant as a buffer for job protection and emergency measures. Again, this is linked to additional value paid over time.
- There has often been impressive community and/or worker organisation in response, arguably supported by Fairtrade’s focus on producer empowerment.
The approach taken by buyers also seems to be significant. Where issues such as human rights, environmental measures and poverty reduction are embedded in company values and structures, they are more likely to be “top of mind”. In this context, the business case to invest quickly to support vulnerable suppliers has been well understood, and the expertise to take appropriate action has been on hand within the company.
For example, Waitrose quickly announced emergency funding to help suppliers in developing countries with public health advice and improve sanitation, as well as committing to speed up payments to vulnerable suppliers, alongside other actions. Co-operative Food committed significant emergency funding for their Fairtrade producers and announced human rights due diligence measures as part of a package of support.
Tate & Lyle sugars recently confirmed to me that they had been able to replicate the communication and safety measures adopted in the UK premises in their overseas operations within days and ensure that appropriate provisions were agreed with the cane farmers who supply them. They felt that the relationships and structures developed through Fairtrade were instrumental in this being done in a timely way.
Sadly, this kind of good practice is not universal. We also heard a different kind of story, notably from the “fast fashion” industry, of buyers cancelling contracts as the crisis hit, leaving suppliers and their workforce, high and dry.
An opportunity to learn and redesign
So far, these examples are based on personal experiences of working with and within Fairtrade supply chains. Independent research into these and similar experiences would be invaluable. If there is strong evidence that businesses practicing fairer trading practices have seen their supply chains stand up better in the face of the pandemic, then the implications for business planning and government policy on trade, food security and environment could be huge.
Fairtrade has argued for years that the problems of poverty, human rights and environmental damage linked to the food we buy will not be solved unless farmers and workers are paid fairly. The pandemic experience makes clear that failure to pay fair prices is not just something that hurts farmers and workers, it also progressively stacks up the risk of future shocks to our food system and food supplies.
By contrast, paying farmers fairly, investing in decent livelihoods and building community resources like housing, schools and health facilities, as well as paying living wages and incomes, have always been intrinsically the right thing to do. We can now see that building the resilience of farmers is also key to protecting the well being and food security of the world’s future consumers.