Food industry: fair trade Vs free trade

By Anita Awbi

- Last updated on GMT

Related tags: Fair trade, Food industry

Consumers are demanding more fair trade food products than ever
before, but can the food industry adapt its free market sourcing
policies in time to maintain brand respect?

Within the sector food safety always tops the bill for concerned consumers, followed by environmental factors such as GM-free and organic certification.

Traditionally, this has pushed ethical trading concerns much further down the list of customer expectations, buying companies time before a cultural backlash erupts to erode brand reputation.

As a result the food industry has not been open in actively supporting fair trade in the same way it embraced the organic movement, nor has the government.

Instead, food industry buyers generally look for the cheapest and most plentiful sources of staple commodities, leaving the lofty ideals of fair trade far behind in the boardroom.

Many close to the situation believe that only sourcing from suppliers with a scrupulous labour policy takes serious logistical planning, and looks like an impossible task for manufacturers buying large amounts of varied ingredients and retailers responding to consumer demands for all-year availability of stock.

Even those working towards more ethical trading practices are finding it difficult to keep track of their suppliers.

But while shoppers are likely to pick up branded fair trade chocolate or coffee, rather than actively seek out shops and manufacturers providing all their grocery staples in fair-trade format, the impetus is not there for a full reworking of sourcing practices.

Julia Hawkins, of the Ethical Trading Initiative (ETI), an alliance of companies, trade unions and non-government organisations, explained the problems facing the food industry are very different from the garments or footwear sectors, which have already succumbed to consumer pressure.

The brand threat factor is different, and there has been little drive to transfer a fair trade model from the textiles industry to the equally fragmented food industry.

"In the garment industry we have found workers rights are up there as a big concern. This has a lot to do with sweatshop stories hitting the headlines from far-flung corners of the world,"​ she said.

"The food industry is a similar business model with thousands of small suppliers, but the reputational threat is different."

But companies are starting to realise there is a win-win situation between business and ethics, regardless of consumer interest - and this indicates a turning point in food sourcing practice.

If a company has a value-added long-term relationship with suppliers it can build a bond of trust - and this helps overcome supply chain hiccups.

The ETI has worked to develop an ethical code of conduct for business since 1998, and is now starting to look at the success of its implementation around the world.

It believes there has been some movement forward in this issue, as more and more big players join the organisation, using it as a sounding board for new ideas. Asda, Sainsbury's, Tesco and Premier Foods are all members, working together to establish compliance rules for their suppliers.

Although results to the impact study are expected later this year, Hawkins said: "It's a complex issue for food companies. In some companies it's important to have traceability. So it's all about compliance to rules. We are talking about an audit approach. But how do you make that effective?"

In the case of supermarkets and international manufacturers, ethical trading codes need to be meted out by many thousands of sources across the globe before a company can truly claim to have a secure policy in place.

"What we found is the first rule of ethical trade is to know your suppliers,"​ she said.

Ten years ago many companies began to develop ethical auditing systems for suppliers, sending representatives out to monitor working conditions - but this often ended in a box-ticking exercise.

Some suppliers quickly learnt to play the game and were adept at keeping two employee logs painting two very different pictures of working conditions.

"Our members are asking how to make this approach develop and change. So it should now be a diagnostic requirement rather than a pass or fail system. You shouldn't just strike suppliers off because they are not 100 per cent perfect,"​ Hawkins said.

"What is critical is to work with suppliers in the long term to protect jobs. Ethical trade is a long term thing - these issues aren't going to go away overnight."

Firms engaging this issue are reluctant to communicate ethical supply concerns to consumers. The topic is complex and fraught with difficulties, and companies are afraid of sending out a confused message, said Hawkins.

Many are unwilling to publicise their work because there is still much to be done. They seem happy to quietly work behind the scenes on ethical sourcing, as if preparing for a future where these issues burst into the mainstream to catch them out.

But in the current climate of responsible consumerism how much time remains until food ethics are thrust to the fore?

A recent study by the UK's Co-operative bank suggests spending on 'ethical' food, including organic, fair trade and free range, was up from £3.7bn to £4.1bn in the 2004-5 period.

This prompted Melanie Howard, from the Co-op's research partner Future Foundation, to say the results should serve as a "clarion call" to business and government to take the upward trend in ethical consumerism very seriously.

Related topics: Market Trends

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