Session summary
Concurrent interactive sessions: TRADE CROSS-CUTTING OPPORTUNITIES - INNOVATIVE BUSINESS MODELS FOR SUSTAINABLE DEVELOPMENT
11 SEPTEMBER 2010, 13:30 – 15:00
SPEAKERS
MODERATOR
Video
SUMMARY
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The sixth session of the forum saw two parallel break-out discussions. The first considered innovative business models for sustainable development, and in particular the role and impact of private voluntary standards and certification processes.
The last WEDF two years ago focused on increasing consumer awareness, but some commentators predicted that the crisis would reduce the willingness of consumers to pay a premium for so-called fair-trade products. However it was clear that this was not the case.
Mr. Cameron focused his presentation on three main propositions: that trade and civilization had always been inextricable linked, but that sometimes trade could be anything but civilised; that while volume and value were important, as discussed in earlier sessions, they needed to be underpinned by common values; and that fair trade could be the link in moving from aid for trade to aid to trade.
Mr. Cameron said the fairtrade movement was an independent voluntary standards and certification initiative. Producers were co-owners of the system. The principle focus was on agriculture and SMEs. Benefits to producers, once certified, included market access, guaranteed minimum prices, including a fairtrade premium and access to other services such as finance and capacity building.
Fairtrade currently operated in 58 countries involving some 7.5 million producers, with products on sale in 25 developed countries. Increasingly major corporations such as Starbucks, Nestlé, Cadbury and Ben and Jerry were mainstreaming fair-trade products.
Ms. Rogers described the work of the BRAC development organization, which was dedicated to alleviating poverty by empowering the poor to bring about change in their own lives. The organization’s income was generated through its “profit for purpose” businesses, trading in agriculture, dairy and fair trade handicrafts. Since its foundation in 1972, the programme had disbursed more than US$ 7 billion to seven million borrowers.
In Bangladesh the Aarong Company was BRAC’s flagship social enterprise, with 10 retail outlets and supporting more than 65,000 artisans across the country. For Aarong, providing stable employment and supporting strong communities was critical to its definition of success.
Ms. Rogers said that while fairtrade, organic and sustainable labelling systems were good at building consumer awareness, they did not go far enough. She said one glaringly obvious thing was missing, and that was a global living wage standard for each country, overseen by a global, independent and respected body. Such a living wage had the potential to drive more ethical trade in both fairtrade and conventional supply chains to a new level.
Mr. Garbutt described the Global G.A.P. organization, which was a business-to-business initiative mostly working with private retailers. Its aim was to mainstream sustainability.
G.A.P. was a not-for-profit company that set voluntary standards aimed at promoting continuous improvement in practices at farm level, to ensure safe and sustainable food production for the benefit of consumers. Its certification was science-based and the result of wide stakeholder consultation.
G.A.P. was currently present in more than 100 countries, and issued some 100,000 certificates annually. It engaged with large and small producers in both developed and developing countries.
The benefits of G.A.P. certification were increased sales and timely payment, although no specific premium was paid, improved worker health and safety, increased smallholder incomes, and savings on inputs.
Interventions from the floor focused on the costs of obtaining certification, and how these could be recovered, and the lack of incentive to go organic if price differentials were insufficient to justify the cost. The question was also raised as to whether the premium prices paid by consumers in developed countries were passed on the producers or retained by retailers.
Mr. Cameron agreed that the cost of transition could be relatively high, since yields typically declined, but after transition, production costs tended to come down since fewer inputs were required. The decision on whether or not to seek certification had to be a business-based investment decision. Regarding premium payments, he said fairtrade paid a premium at the farm gate: what retailers did was their decision.