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African fair-trade producers highlight need to strengthen their position in supply chains

04 January 2013

In November 2012, the third meeting of the Africa Fairtrade Convention took place in Ethiopia, with the aim of exploring ways of strengthening the position of producers in global value chains. According to recent press releases from Fairtrade Africa, the organisation currently ‘supports over 700,000 farmers and workers through 310 producer organisations in 29 countries across the continent.’ It is acknowledged, however, that ‘despite agro-food systems like Fairtrade, most African producers still receive the lowest earnings in the whole chain due to lack of access to decent public infrastructure, financial resources and up-to-date market prices.’

According to Tadesse Meskala of the Oromia Coffee Farmers Cooperative Union, which represents over 100,000 Ethiopian small-scale farmers, ‘it is not a lack of natural resources, but the formulation of trading mechanisms that makes us poorer and poorer.’ He maintains that ‘platforms like the Africa Fairtrade Convention help us identify solutions to overcome these barriers.’

While reports in the press have highlighted the resilience and continued growth of fair-trade sales in 2011 (for more details see Agritrade article ‘ Fair trade shows resilience in face of economic downturn’, 22 September 2012), it should be noted that the €65 million paid out in Fairtrade premiums in 2011 for investment in ‘farm improvements, processing equipment, education and career training, community projects and healthcare’ represented only 1.27% of the final sales value of Fairtrade products. 

Editorial comment

The fact that Fairtrade premiums represent only 1.27% of the final sales value of Fairtrade products would appear to reinforce the need to strengthen the negotiating position of primary producers in supply chains, so they can improve their overall share of value generated by fair-trade sales. The entry of discount retailers such as Lidl and Aldi into fair-trade retail sales would appear to further underline the importance of this issue. Indeed, strengthening the position of primary producers in supply chains, particularly in terms of price negotiations, would appear to be a central challenge facing the fair-trade movement in the coming years.

At the public policy level, this may require some form of guidelines related to sales revenue distribution in areas where fair-trade claims are made by manufacturers and retailers, to ensure that consumers are not misled as to the proportion of the final sales prices that ends up in the hands of primary producers.

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