Following a meeting of the Fairtrade International Board in November 2013, it was announced that a new model for Fairtrade certification of value-added products was to be introduced. To date, for composite value-added products (e.g. ice cream or chocolate) to carry the Fairtrade mark, “all available ingredients must be Fairtrade certified.” Under the new approach, a model of certification will be introduced that allows the use of a “new, differentiated ‘Program Mark’ either on-pack or in [the company’s] corporate communications”. The differentiated mark will move away from the requirement that “all available ingredients” on composite value-added products must be Fairtrade certified.
The new sourcing programmes will be used alongside the existing model. According to Fairtrade International, “the Sourcing Programs model is the result of almost two years of detailed research and consultations involving Fairtrade producers, partners and consumers.”
The new sourcing model is seen as “opening up new sales opportunities for Fairtrade producers… [as ] more and more companies have committed to buying sustainable cocoa, sugar or cotton, to use across whole product ranges or even their entire business.” Fairtrade International maintains that “the new model provides a big opportunity for Fairtrade farmers to sell to companies who are focused on one or two key raw products, rather than certifying end consumer products.”
The move away from requiring “all available ingredients” in value-added products to be Fairtrade certified could prove to be controversial, with the impact varying from commodity to commodity. For example, in those areas where an expansion of Fairtrade certification of cocoa-based products has been held back by a shortage of Fairtrade-certified sugar, the new rules could increase the uptake of Fairtrade-certified cocoa (or vanilla or other similar ingredients), while potentially reducing demand for Fairtrade-certified sugar.
The development needs to be seen against the background in 2012 of reports from European manufacturers of a shortage of suitably priced Fairtrade-certified sugar (see Agritrade article ‘ Fair-trade component a key factor in BSI acquisition by ASR’, 2 December 2012). These temporary sugar supply problems may have been a factor in the decision of the Fairtrade International Board to introduce a new sourcing model.
However, with 70% of all sugar that is consumed in Europe being in the form of sugar-containing food products, it is in the area of manufactured products that the greatest long-term potential for growth in fair-trade sugar consumption exists in the EU market. Yet, the new Fairtrade sourcing rules could serve to reduce or, at minimum, hold back the increased use of Fairtrade-certified sugar in manufactured products.
This can be seen as coming at a very unfortunate time, with ACP sugar suppliers (who provide around 90% of Fairtrade-certified sugar) scheduled to face increased competition on EU sugar markets after the abolition of EU sugar and isoglucose production quotas.
Given the scope for expanded EU production of sugar from sugar beet after 2017 and the possible loss of current sugar markets to alternative sweeteners (such as isoglucose – see Agritrade article ‘ What scope for increased isoglucose use in the EU after production quota...’, 9 December 2013), the extent to which there will be a market in the EU for ACP cane sugar after 2017 will in large part be determined by the specific demand for cane sugar.
Fair trade is one market component where ACP sugar suppliers would face no competition, from either EU beet producers or EU isoglucose producers. In this context, ACP exporters may be looking to expand Fairtrade-certified sugar exports to the EU. But this will only occur if the demand for fair-trade-certified sugar is growing in Europe. The danger is that the new Fairtrade labelling model will limit, or even reduce, the demand for fair-trade-certified sugars from industrial users.
If short-term market problems have driven this policy change, it is unfortunate, for once a company has moved to single-ingredient fair-trade sourcing, it is unlikely that it will return to multiple-ingredient sourcing at some later date.