Fairness Is the Future Of Business
Consumers today are far more discerning than ever before. And increasingly, they are not just
looking for the best bargain but also for products that represent their values. Shop for Change
certification offers companies a chance to respond to the growing evidence that shows consumers
are not only interested in the products companies are selling but also how these products are
produced. Market research suggests that sophisticated Indian consumers already place importance
on whether products are sourced ethically and sustainably.
A 2007 IMRB survey of 10,000 indian socio-economic class (SEC) A,B, and C consumers
showed that 30% of consumers believe it is important that companies act ethically and 30%
would be willing to pay more for environmentally friendly products.
A 2007 McKinsey and Co. study revealed that 42% of Indian respondents said that they
would be more inclined to buy from food and beverage companies that developed more
environmentally friendly products.
A 2008 independent study identifies a “greener apparel” consumer segment, made up of
13% of Indian Urban consumers, that is willing to spend more on certified, environmentally
friendly clothing.
How SFC can help in business
By providing differentiation to tap rising consumer demand
In an increasingly competitive marketplace, the Shop for Change label provides a way for
your company to distinguish itself. As consumers look for ways to shop more responsibly,
Shop for Change certified products stand out from the competition with an offer of quality,
social ethics, and environmental responsibility.
By helping build assurance and brand equity
As Indian consumers look more and more for assurances of good corporate practices, Shop
for Change certification provides a guarantee of good values. Shop for Change is not only
good for your sales, but also your company’s image.
By creating a meaningful CSR initiative
Corporate Social Responsibility (CSR) is a buzzword in business circles. But how can your
company start CSR initiatives that will have real impact? Shop for Change certification
provides a tangible, meaningful way for your company to have real and sustainable impact
on the lives of poor farmers and artisans – a CSR initiative that your company can be proud
of.
Fair trade’s record of success
Shop for Change certification builds on a model that has seen impressive success in countries
around the world. Since fair trade labelling was introduced in 1988, global sales of fair trade labelled
products have grown to more than US $3.62 billion and saw a 47% year-to-year increase from 2006
to 2007. Fair trade certified products are now available in 20 countries around the world.
Global companies that have invested in fair trade certification tout its value – both in terms of
customer loyalty and increased sales.
"Virgin Atlantic recognises how important it is for all companies to understand the impact of the
products they use, both on the environment and on the people producing them. So, we're proud to
support Fairtrade, which guarantees farmers a fair price for their product, and are really pleased that
our passengers will benefit from a comprehensive range of Fairtrade teas and coffees onboard our
flights."
- Sir Richard Branson, President of Virgin Atlantic
"Fairtrade is good for farmers and good for our coffee business. [It] strengthens our supply chain and
gives farmers the resources they need to maintain an extremely high quality coffee."
- Rick Peyser, Director of Sustainability for Green Mountain Coffee Roasters (NASDAQ GMCR)
Certification for farmers and artisans
Shop for Change is working to ensure that supply chains allow farmers and crafts producers to share
in the opportunities created by the market. By promoting the Shop for Change label to consumers,
Shop for Change aims to create a win-win business model that benefits producers and the
companies who sell fair trade products, as well.
Shop for Change creates incentives for companies to buy directly from producer organizations under
fair and equitable terms. This helps producer organizations achieve their goals by increasing direct
market access, creating long term trading relationships, and bringing benefits to their organizations’
members. Shop for Change connects farmers, producer organizations, and businesses to facilitate
joint business opportunities, relationships, and the growth of the fair trade market.
SFC’s unique contribution
Using international fair trade principles as a point of departure, Shop for Change aims to lower
barriers for producer participation, allowing new producers to enter value added supply chains and
creating new opportunities for established fair trade producer organizations currently selling to
international markets. As part of its contribution to the fair trade movement, Shop for Change is
addressing three key issues: 1) meeting community needs and priorities, 2) recognizing that
adherence to best social, environmental, and labour practices is a process, and 3) lowering
certification costs so they are not a barrier to producers. The Shop for Change approach was
developed with the goal of providing a variety of benefits to those who participate:
For producers, the Shop for Change system creates opportunities for better livelihoods by
encouraging capacity building programs that can lead to increased production efficiency and
profitability, as well ensure more stable and direct access to the market.
For workers hired by producers, the Shop for Change system helps secure healthy and safe
working conditions, fair pay, and a working environment free from discrimination and
harassment.
For producer organisations, the Shop for Change system rewards strong collaboration with
individual producers, facilitates identification of key needs and priorities for capacity building,
and then helps ensure resources to address those needs over time. As part of the standards
requirements, Shop for Change has developed a Participatory Assessment System that aims
to better balance top-down requirements on producer organisations with a process that
empowers them to identify their own priorities and work progressively to achieve them.
For buyers and brand owners, the Shop for Change system helps identify reliable sources of
responsibly produced crops and differentiate their products in the market as socially and
environmentally sustainable. This creates opportunities to bolster brand image and, over
time, gain market share.
SFC standards
Along with marketing the fair trade concept and supporting farmers and artisans, Shop for Change
provides certification for farmers, artisans, and companies against a set of social and environmental
standards. These standards were developed with the specific dimensions of Indian production and
markets in mind.
As part of our efforts to ensure that our standards meet the needs of Shop for Change's
stakeholders, and most importantly the needs of the farmers, handicrafts producers, and workers for
whom Shop for Change was established to benefit, Shop for Change spent several months seeking
input from a variety of organisations and individuals, as well as the public at large. We received
excellent feedback from farmer and artisan organisations, companies, NGOs, and others, and in July
2009 released the current version of our agriculture standards which are now being used to certify
producer organisations and companies.
Importance of fair trade
Fair Trade is important for developing countries. Many countries in Africa produce coffee and cocoa
beans, people buy it from them at a very cheap price, if the good are marked as Fair Trade goods then
everybody will pay then a fair price and they will prosper.
Fair Trade Certified products alone positively impact the lives of the over
one million Fair Trade farmers and their families, who are located in 58
countries. Fair Trade raises the standards of living for these families and
offers a comprehensive development of their communities. It offers true
change, and not charity.
Fairly traded products affect millions and millions of producers providing
them with more resouces and control over their lives. Support of Fair Trade lifts
others up while respecting Mother Earth and her limits.
All of this positve change is as easy as reaching for Fair Trade Certified coffee
at your grocery store and shopping from merchants who support Fair
Trade practices.
Can an old concept help India's rural farming crisis?
By Hanna Ingber Win — GlobalPost
Published: March 29, 2010 06:45 ET
Indian farmer Udham Singh examines his wheat crop in a field on the outskirts of Amritsar on March 9, 2010.
(Narinder Nanu/AFP/Getty Images)
AMRAVATI, India — Rajendra Panja Kadu lives with his family in a small, humble home in a farming village in
central India. He works three jobs — farming his two acres, milking his water buffalo and working as a laborer on
others’ farms — but Kadu, like millions of other Indian farmers, can barely make ends meet.
Kadu earns about 60,000 rupees ($1,300) a year and must rely on government ration cards to help him buy food, he
says as he sits on his wooden bed. Mounds of cotton puffs waiting to be sold peek out from under the bed. Large sacks
of soybeans lean against one wall. Paintings of Hindu gods adorn another.
When Kadu is low on cash, he must borrow about 10,000 rupees a year from moneylenders, who he says charge him a
5 percent monthly interest rate.
The farmer, who lives in Ghodghwan village in Amravati district, says he continues farming despite the difficulties
because he has no better options. “It is my business. It is my job,” he said. “I don’t know anything else.”
Kadu manages, thought not always. Last year he had a motorbike accident and had to borrow 150,000 rupees — more
than double his annual earnings — from friends and relatives to pay the medical bills.
A non-profit organization called Shop for Change is trying to improve the lives of Indian farmers like Kadu by
supporting and formalizing fair trade practices and giving those farmers better access to a market interested in buying
fair-trade products.
Shop for Change, which has created the first fair trade certification label for a domestic Indian market that works with
the mainstream supply chain, launched cotton T-shirts with its label in an Indian retailer this January. Other
companies adopting the certification standards will offer various types of certified cotton products.
Typically, fair-trade goods like coffee and tea are produced in the developing world and sold to consumers in
developed nations. Shop for Change aims to capitalize on a growing market of middle- and upper-class Indians who
have the extra disposable income to pay higher prices for goods and who — it hopes — will feel compelled to help
farmers struggling just a train ride away, said Shop for Change CEO Seth Petchers.
“This whole concept of fair trade — and also of consumer empowerment to influence the way companies do business
and the choices they can make as consumers — is a new concept here,” Petchers said.
Shop for Change identified three farmers’ organizations, which represent about 2,500 farmers, and audited them to
ensure they are in compliance with its certification standards. The organizations, Petchers said, must have safe and
healthy working conditions, be transparent, have an environmental management plan in place and build the capacity
of the farmers to increase their productivity and reduce their production costs.
The companies that buy the raw materials from the farmers pay the farmers’ organizations a 15 percent premium,
which is earmarked for building the farmers’ capacity through trainings and social development through group
activities and planning, said G. Venkat Raman of Agriculture and Organic Farming Group India, a network of
organizations that works with farmer collectives.
Shop for Change has identified cotton textiles as the first product to target because of the particular hardships cotton
farmers in India, and in this particular region, have faced.
Saddled with overwhelming debt from the high costs of production and exorbitant loan interest rates, some Indian
farmers face such difficulty and shame they resort to suicide. The number of annual suicides varies, with estimates
reaching as high as over 17,000 a year.
For the first time in four years, the number of suicides in Vidarbha region, which includes Amravati, dropped below
1,000 in 2009, according to the Times of India. In general, though, the region sees some of the highest rates of
suicides and is considered the epicenter of India’s agricultural problems.
Kadu says he joined Zameen Organic, one of the farmers’ organization working with Shop for Change, because he can
earn more money from them than from the conventional market, does not have to pay for expensive chemicals like
pesticides and learns about new cost-effective technologies.
Shop for Change aims to create new market opportunities for farmers who want to follow sustainable practices but
would otherwise face difficulties complying with a cumbersome international certification process, according to
Petchers.
Plus, Indian consumers are attractive because of “the sheer numbers here,” he said. If Shop for Change reaches even 1
percent of India’s 1.1 billion people, “it could blow small European countries doing fair trade out of the water.”
The biggest challenge Shop for Change faces, he says, will be convincing Indian consumers they should pay extra for
these products. The trick will be how retailers position the products in the minds of the consumers, said Neelam
Chhiber, the managing director of Mother Earth, which is the first chain to carry the Shop for Change label.
Mother Earth is targeting a younger generation of urban Indians who might pay the equivalent of $9 for a stylish,
fitted Shop for Change shirt because they perceive buying fair trade products as cool, according to Chhiber.
“We want to make doing good become fashionable,” she said.
Shop for Change has also enlisted Bollywood actor Parvin Dabas, who starred in Monsoon Wedding, to promote the
label. Dabas, who was born in a farming village outside New Delhi, says he will use photographs he took of cotton
farmers to raise awareness about fair trade products.
Critics of fair trade argue that the system does not help farmers because it encourages them to continue growing low-
priced crops and because the inflated prices leads to overproduction, which causes the prices to fall even further.
Another criticism is that some of the premium spent on fair trade products goes to the retailer — or even the
certification agency — rather than the farmer.
“Retailers add their own enormous mark-ups to Fairtrade products and mislead consumers into thinking that all of
the premium they are paying is passed on,” states a 2006 Economist article on food politics. Citing an interview with
Tim Harford, author of "The Undercover Economist," the Economist says: “Fairtrade coffee, like the organic produce
sold in supermarkets, is used by retailers as a means of identifying price-insensitive consumers who will pay more.”
Petchers argues that fair trade is not trying to be a silver bullet to solving the plight of farmers, but that it is “one piece
in a much larger puzzle of what needs to happen to help these farmers.”
Shopping Fair Trade
How do I know that a product is Fair Trade?
Some Fair Trade products, like coffee and chocolate, are third-party certified Fair Trade and carry a label
or “seal.” For other products, like handcrafts, there is not a certification system. Non-certified products are
sold by Fair Trade Organizations, businesses approved by a third-party.
* The only major label, mostly for food products, is show at right. The Fair Trade Certified ™
logo is an independent certification that adheres to monitoring criteria and standards set out by
the Fairtrade Labeling Organization. Since 1997, FLO has established common principles,
procedures and specific certification requirements for Fair Trade. Currently FLO certifies
around 10 items. The reasons are numerous and complex, but in general relate to the fact that
“The very variety of handcrafted items are their strength…unique handcrafted items are not subject to
direct comparisons with regard to price and performance.” (Fair Trade Yearbook, p. 159)
* Fair traders of handcrafts work directly with artisans to guarantee Fair Trade standards (see
What is Fair Trade?). Fair Trade Organizations (FTOs) work with low-income artisans to
market their products and build their businesses. FTOs, many of whom are members of
organizations like the Fair Trade Federation (FTF) or the World Fair Trade Organization
(WFTO), adhere to Fair Trade criteria including workers’ pay, environmental practices, and
good working conditions. When you purchase home furnishings, clothing, or crafts from FTOs, you know
you have purchased a unique item representing not only the talent of the artisan–often a woman from a
developing country–but also the culture and traditions of the source country.
Consumers in search of Fair Trade products have a vast array of products to choose from. Certified Fair
Trade labels and membership in associations like FTF and WFTO help identify Fair Trade products that
are produced according to Fair Trade standards. Looking beyond the label to the trading relationship,
consumers can identify Fair Trade standards that meet their values.
