Tropical Agriculture Association
Reproduced from the March 2001 Issue of the Tropical Agriculture Association Newsletter © pp.22-26

At first glance, ethical trade and organic agriculture would seem natural allies. Organic agriculture is widely perceived as being more ethical than industrialised, external input-based farming; ethical trade is promoted as being more morally acceptable than what has existed previously. Both have succeeded in capturing the public imagination, and caused people from producers to consumers to question the conventional way of doing things.

Moreover, there are both moral and business imperatives for emphasising the synergies between ethical trade and organic agriculture. Although the largest group of ethically conscious consumers are concerned primarily with food safety issues (Nicholson-Lord, 1999), there is a significant group of consumers who make purchasing decisions on a combination of ethical issues that merge healthy eating (with an emphasis on organic produce), worker welfare, community development (supporting local suppliers), fairtrade (a better deal for Third World suppliers), animal welfare, and environmental sustainability (Tallontire & Rentsendorj, 2000). These people rarely distinguish between these issues, but want products that can guarantee a positive holistic impact.

The multiple retailers that dominate food sales in Europe are also increasingly unwilling to give shelf space to differentiated ethical products. For instance, in continental Europe, multiples are reluctant to stock separately labelled fair-trade and organic bananas, and are looking for suppliers that can meet fair-trade and organic standards with the same product (NRET, 2000).

Therefore, for the uninitiated outsider, the fact that there is not greater synergy between ethical trade and organic agriculture is surprising and problematic. The IFOAM Trading Group has produced guidelines on social issues for organic producers, and there has been work on joint certifications using organic production and fair-trade standards (Courville, 1999). Furthermore, there is evidence from a number of sources that organic agriculture has a positive social dimension in tropical countries (Crucefix, 1998; NRET, 2000b). However, in general it is fair to say that there is a long way to go before there is the degree of coherence that consumers and customers might expect.

One difficulty in optimising the linkages with organic agriculture is that there are different definitions of ethical trade. The term itself was probably chosen in order to grab attention and not because encapsulates a coherent concept or set of values. An early user of the term was Richard Welford who used it to refer to a 'more holistic and ethical approach to doing business' that values social and environmental impact, and restructures North-South relations (1995). This is a very broad definition that embraces social, environmental and economic dimensions of trade, and which I have argued elsewhere sets the scope for a broad church where organic agriculture standards can sit side-by-side with an array of social and environmental initiatives (Blowfield et al., 1999).

Since then ethical trade has become more narrowly associated with the monitoring of and compliance with the core labour and human rights standards set out in the ILO core labour conventions, the UN convention on the rights of the child and the Universal Declaration of Human Rights. There is a wide array of labour codes of practice which include criteria on forced, indentured and bonded labour freedom of association, rights to collective bargaining, equal remuneration for male and female workers, forced and bonded labour, discrimination, and the minimum age of workers. The most well-known of these codes in the UK are SA8000 and the Base Code of the Ethical Trading Initiative.

These initiatives are probably most accurately described as ethical sourcing. The codes are intended to guarantee minimum acceptable standards for workers, and are a response to growing recognition of exploitative practices in developing country industries exporting to the West. They have been heavily promoted by brand-owners and retailers, and used as part of their socially responsible supply chain management strategies. Because of retailer support and adverse publicity about commercial farms and plantations in Africa and Latin America, they have been widely adopted in commercial agriculture.

In some ways reminiscent of organic production and processing standards, the number of worker welfare codes of practice has grown rapidly, and there are international, regional, national and company-specific schemes. These look very similar on paper, but are often quite different in approach. For instance, the Ethical Trading Initiative is a membership-based alliance of retailers, primary marketing organisations, NGOs and trade unions as interested in partnership and common-learning as in auditing particular producers. SA8000 in contrast a third party verified code, compliance with which is increasingly a requirement for suppliers to engage with Western customers. Custodianship of codes and the nature of the audit process remain contentious topics, with developing country producers increasingly active in developing and implementing their own schemes.

Unlike organic agriculture standards, there has been little attempt to make these codes a legal requirement, not least because to do so could lead to challenges at the World Trade Organisation. Of course, many of the criteria accepted by ILO member States and are already enshrined in national law. Some critics argue that compliance with codes is seen as an achievement when in fact it may only be a statement that a company is not behaving illegally. Nonetheless, even achieving these criteria is protested in various quarters. Some developing country governments have argued that the codes of practice are non-tariff barriers to trade aimed at protecting Western companies from global competition. Developing country growers and manufacturers criticised Western companies of failing to consult about the criteria and the options for meeting them.

Equally, there are those that argue the existing criteria are insufficient to address the ethical values or priorities of developing country stakeholders. For companies that wish to manage social risks in their supply chains and international development agencies that want to see business have a positive impact on poor people, the emphasis of worker welfare codes may be too narrow. They focus only on issues in the workplace, and even then often do so in a simplistic fashion, ignoring for instance the specific needs of women, migrant groups, seasonal labour, the disabled, and children who for a variety of humane reasons may have to work. Avoiding such issues may actually have a negative impact on certain workers, and will leave companies open to the type of negative publicity they wish to avoid.

To establish a reputation as a responsible company, it is not enough only to concentrate on the workplace: the relationship with neighbouring communities and respect for land rights, for example, are also critical issues. Similarly, how a company manages retrenchment or its policies for developing human capital are issues that a socially responsible business needs to address. In other words, existing codes of practice are too spatially and temporally specific to be considered a comprehensive indicator of corporate social responsibility.

Mentioning the limitations of this approach to ethical trade is not to ignore the positive outcomes that have already been achieved in the space of a few years. To take the examples of horticulture in Kenya and Zimbabwe, the use of codes of practice has led to significant benefits to workers in the areas of housing, sexual harassment, working hours and worker-management relations. It has also served as a catalyst for bringing together different companies and organisations, many of whom would have been mutually suspicious if not antagonistic in the past. In other papers, I have argued that in the absence of sufficient data on the actual impact in the workplace of using codes of practice, this catalytic role both in the West and developing countries is one of the major achievements (Blowfield, 1999).

There are similarities between the management of social issues in the supply chain and organic standards. Both have been developed to meet commercial requirements, and are performance-based standards used to reassure customers that certain conditions of production are being met. Unlike process-based standards such as ISO14000 or AA1000,external parties define what is good performance and certify producers based on compliance with fixed principles or criteria. Although with great significance to developing countries, both have their origins in the West and are mostly used for trading with Western customers.

What neither addresses is the nature of the trading relationship itself. This is often problematic because even the most willing of producers can face constraints to improving their social or environmental performance as a result of what other stakeholders do or do not do. For instance, the potential for organic agriculture to benefit small producers in developing countries is often constrained by lack of credit or infrastructure. Similarly, factors such as interest rates, foreign exchange policies and terms of trading have a significant impact on how far and how quickly growers can improve workers ’conditions. In private and to a lesser extent in public growers and exporters criticise their customers for making ever more demands for better performance while refusing to recognise the need for better prices or stable contracts.

Of all the initiatives to manage the social and environmental dimensions in supply chains, fair-trade is unique in that it promotes an alternative approach to conventional trading relationships. There are a number of types of fair-trade, but a recent common definition agreed upon by key organisations in the fair-trade movement defines fair-trade as:

'an alternative approach to conventional international trade. It is a trading partnership which aims at sustainable development for excluded and disadvantaged producers. It seeks to do this by providing better trading conditions, by awareness raising and by campaigning.' (Humphrey, 2000.)

Some of fair-trade’s own advertising emphasises how producers obtain better prices and the investment in social development by producer groups made possible by a consumer price premium. Better farm-gate prices is a simple message to communicate both to consumers and producers, but for a variety of reasons it has often been difficult to achieve (Collinson & Galvez, 2000; Blowfield & Gallet, 1998; Nelson & Malins, 1998). Moreover, it may not be the most important benefit for producers. According to Traidcraft’s director, Philip Angier, what distinguishes fair-trade is the sharing of risk along the supply chain (pers. comm.). Fair-trade buyers typically exhibit a strong commitment to their producers, and alternative trade organisations such as Traidcraft and Oxfam invest heavily in building up the capacity of local organisations. Many mainstream companies would say they do the same, and that stable relations with suppliers and investment in capacity building is simply business best practice. However, the sharing of risk between producers, producer organisations, buyers and retailers is unique to fair-trade.

Two key challenges for fair-trade are how to retain that commitment while trading in volatile commodities and when supply outstrips demands from fair-trade buyers. The examples of Kuapa Kokoo in Ghana and MCCH in Ecuador show that the fair-trade market is easily saturated, and the true test of producer/trading organisations is their ability to adhere to fair-trade principles once they begin to supply for conventional markets (Collinson & Galvez, 2000). In both of these cases, it seems that the organisations concerned have made a successful transition, but evidence from Uganda and elsewhere shows that this is not always the case (Nelson & Malins, 1998).

There has been more dialogue between the organic agriculture movement and fair-trade than there has with advocates of ethical sourcing. In part, this is because both see themselves as bringing benefits to small producers, and have a shared interest in reducing the costs of monitoring and verifying performance. Occasionally, this identification of common interest has led to an impression (not least amongst producers) that both offer financial benefits beyond those offered by conventional markets. This is misleading and potentially damaging. The premium for organic produce is largely a factor of demand outstripping supply, and of the increased costs of production; as supply increases and large-scale producers convert to organic the farm-gate premium is likely to fall. In contrast, the premium for fair-trade is intrinsic to the fair-trade philosophy, and is justified by investment in the social and human capital of producers.

At the start of this paper I highlighted some of the reasons for greater links to be drawn between ethical trade and organic agriculture. These were essentially commercial reasons. However, there are also issues specific to tropical agriculture that need to be considered. Some would argue that the ideological and technical differences between the organic and ethical trade (fair-trade in particular). Even the fair-trade movement has differences of opinion about the value of certification, and fair-trade standards only exist for a small range of products.

Some in fair-trade say that certification is an unjustified added cost, although there is growing experience, particularly in organic agriculture, on how to make this more efficient (e.g. the use of internal control systems). In relation to tropical countries, the questions raised earlier about the relevance of ethical sourcing to cultural values and priorities is more pertinent, but it would be unwise to ignore what is a rising area of commercial activity.

There are those that argue that ethical trade in whatever form does not address the more deeply rooted problems of trade itself (e.g. the trade in food across continents), and that the best way to improve people’s standards of living is to add value near to the farm (e.g. through processing).

However, international trade in organic agricultural produce is a reality, and production for that market has a human dimension that is hard to ignore. Organic farming usually requires more labour than high external input-based agriculture. Whether in the context of small-scale or largescale producers, this brings worker rights and welfare to the fore on organic farms. Farm-owners may argue that they cannot afford to provide better conditions where labour costs increase and opportunities for than mechanisation decline, but additional costs may be more than offset by savings in other external inputs and higher prices. In general, conversion to organic production shifts costs from external, often imported inputs, to local labour, and the rise in interest in ethical trade makes it in farm-owners' moral and commercial interests to ensure that workers benefit from this change.

For all types of producer, the net cost of socially responsible organic agriculture should not be more than that for conventional agriculture. To some extent, any increased costs arising from organic farming are more than compensated for by the premium prices still paid for organic products (around 15 to 20% for most export crops). Income is often also increased because of more direct marketing lines (something that would be further strengthened by fair-trade), and because organic conversion may be combined with investments in quality improvement (e.g. better fermentation of cocoa beans), again leading to better prices for farmers.

There is growing recognition in conventional agriculture that social performance is a legitimate part of quality management, and it would be short-sighted to assume that the credentials of organic agriculture will go unchallenged. There are many examples of good socially responsible business practice to learn from, and opportunities to influence future developments. For most development agencies, environmental impact by itself is not a strong enough argument for investment. For many developing country people, the benefits of organic agriculture are limited by working conditions and trading relations. For industry, ignoring the social dimensions of business practice is to put its reputation at risk. For all of these reasons, it is in the interests of all who see organic agriculture as playing an important role in tropical countries to think seriously about the role of ethical trade and how they wish to engage with it.

Mick Blowfield can be contacted by email: nret@gre.ac.uk

Blowfield, M.E. (1999) 'Ethical trade: a review of developments and issues'. In Third World Quarterly 20:4 pp.753-770; Carfax, Basingstoke.

Blowfield, M.E. (1999b) 'Ethical Trade-An End or a Means?'. Paper presented at the Development Studies Association, Bath, September 1999.

Blowfield, M.E., Gallet, S. (1998) 'Ethical Trade and Sustainable Rural Livelihoods Case Studies: Volta River Estates Fairtrade Bananas case study'; NRET working paper, Natural Resources Institute, Chatham.

Collinson, C., Galvez, M. (2000) 'Economic Viability of Ethical and Conventional Cocoa Trading for Forest-Dependent People in Ecuador'; NRET working paper, Natural Resources Institute, Chatham.

Courville, S. (1999) 'Preliminary report on joint inspections of coffee in Mexico bringing certification agencies together at the inspection level'; no publishing details.

Crucefix, D. (1998) 'Organic Agriculture and Sustainable Rural Livelihoods in Developing Countries'; NRET working paper, Natural Resources Institute, Chatham.

Humphrey, L. (2000) Which way to market? Exploring opportunities for marginalised producers in developing countries to supply mainstream commercial companies in the UK'. Traidcraft Policy Unit Report Series No. 1, Traidcraft Exchange, London.

Nelson, V., Malins, A. (1998) 'Ethical Trade and Sustainable Rural Livelihoods Case Studies: Farmers Fair Trade (Uganda) Ltd. organic cotton trade case study'; NRET working paper, Natural Resources Institute, Chatham.

Nicholson-Lord, D. (1999) 'A natural reaction, Foods for thought', Independent Supplement, 21 September, 1999.

NRET (2000) 'Finding Futures for Caribbean Exotic Fruit: inception report'; NRET document for DFID), Natural Resources Institute, Chatham.

NRET (2000b) 'Natural Resources and Responsible Business: guidance documentation for DFID', Natural Resources Institute, Chatham.

Tallontire, A., Rentsendorj, E. (2000) 'Ethical Consumers and Ethical Trade: a review of current literature'; NRET working paper, Natural Resources Institute, Chatham.

Welford, R. (1995) Environmental Strategy and Sustainable Development: the corporate challenge for the 21^st century; London, Routledge.