THANDI WINES IN SOUTH AFRICA
Rising from the ashes of apartheid in South Africa, in 2003 THANDI wines became the first Fairtrade certified wines in the world. They are sold on the Belgian market exclusively by Carrefour. Interview with Vernon Henn, general manager of THANDI wines.
What is the history of Thandi Wines?
With the release of Nelson Mandela in 1990 and the collapse of the apartheid regime, the desire for democracy swept through South Africa. The government was concerned to correct former imbalances and to bring black people on board the South African economic vessel. Loans were made more readily available to assist this policy. Thanks to the decisive action of a white farmer, Dr Paul Cluver, and a para-governmental agency active in forestry, land – initially 14 hectares – was released to the black Thandi farming community, who were particularly disadvantaged, in the Elgin valley about 60 kilometres from the Cape. Emancipated from the race laws and prosperous from this new economic activity (grapes), this community used mortgage loans to gradually buy a share of the ownership from the agency and the Cluver family.
What made you opt for fair trade?
There came a time when we realised that this empowerment of the local black community wasn't enough. In the highly competitive wine market, we had to find a specific commercial niche, which could increase the value of our production on an international scale. WIETA (the Wine Industry Ethical Trading Association) was too local, it wasn’t recognised internationally.
We opted for Fairtrade, as it is perfectly in keeping with the principles of black empowerment. Today, under the umbrella of FLO, it gives us access to the markets of many European countries and also to those of America and Asia. In Belgium and the Netherlands, two of our wines are sold by Carrefour, under the Max Havelaar (Fairtrade/FLO) label.
So you are operating with the “fair trade premium”…
Exactly. This is paid to the 250 farming families making up the Thandi community. We had to wait until 2007 for the volumes sold, fully labelled, to be large enough to make a significant difference to the well-being of the community. Most importantly, this premium now allows us to pay for school fees and uniforms for the children, to run two crèches and, for young people, to fund programmes in technical training (use and reduction of pesticides), literature and mathematics, and university entry for some. The premium is also used for sports facilities. In the future, we hope it will assist with school transport, as our community is very remote from roads and the children have to walk long distances to catch buses or shared taxis.
What do you think of the cost of Fairtrade certification?
Very high, although I’m very satisfied with Fairtrade! The registration fees are 500 euros. Registration as an exporter, 300 euros. The annual licence, 1200 euros. Add to that the minimum price to be paid within 30 days after delivery of the grapes. Fortunately these costs have very little effect on the price paid by the consumer. As for the list of criteria to be met for certification, it is very long. We are in a good financial position thanks to the volumes sold (every year we harvest 1300 tonnes of grapes). But the costs are too high for the smallest growers.
> www.thandi.com - CERTIFICATION: FLO
FLO (MAX HAVELAAR) IN VIETNAM
Dominic Smith is an agricultural economic adviser with MDI, a Vietnamese company specialising in the production, processing and export of tea, coffee and cashew nuts to South East Asia and Europe. At the end of 2009, in Brussels, MDI received a “Be Fair Award” for the best South-South Fair Trade organisation, from the Trade From Development Centre (BTC).
Why did your company choose the fair trade route?
It’s an option we have favoured ever since the creation of MDI in 2007. We are neither an NGO, nor a charitable organisation – we are a completely private Vietnamese company. From the start, we wanted to set up, with our target population – a thousand farming families belonging to various ethnic minority groups in Vietnam – a form of sustainable development.
It wasn't just a case of turning up and saying: “You are poor, here is some money”: We wanted to give them technical assistance to strengthen their social fabric and their participation in commercial activities.
Why did you choose the FLO label?
There are several fair trade labels with a presence in Vietnam. But FLO appeared to be the most suitable label for our products, which are not fruit juice and craft products. We knew that our whole way of working fell within the concept of fair trade, but we needed to be labelled “ethical” in the eyes of the world. It's a question of public awareness and recognition. We want anyone finding us on the Web to know that MDI has been Max Havelaar certified in a totally independent manner.
How did certification go?
In the first year, these growers - mostly women - passed the certification test with flying colours. They didn't miss a single document, not one detail in the application file! But this process of education – on keeping accounts, on the traceability of goods, etc. - was particularly difficult. It is well known that the FLO headquarters are in Germany: They are run by precise, scrupulous people. For the credibility of the system, this is an excellent thing. But their certification standards were really designed for co-operatives in South America, employing thousands of people – who were poor, yes, but occupying coffee plantations of several hectares.
In Asia, it's different. It doesn't make sense to apply the same certification standards to small groups of women, speaking neither English or Spanish (not even Vietnamese!), working on plots of 1000 to 2000 square metres and, what is more, in a communist country. One example: FLO once asked us for an e-mail address. But these women don't even have access to electricity! For very poor and marginalised populations, there should be a more specialised and progressive certification process.
What is the cost of certification for MDI?
FLO costs us 1400 euros a year. This is a huge cost, bearing in mind that the average annual income of each family is only 200 euros.
But we have been lucky because, for small groups of producers with no money, FLO has a special fund that pays 75 % of the costs for three years. This is absolutely invaluable to us! For the first year, MDI was out of pocket. Then, during the next two years, each kilo of goods sold was subject to a very small deduction by MDI, which was a form of repayment by the women growers. It’s still too early to say, but I think the sale price of our goods should increase after three years. As regards the additional cost associated with “fair trade” certification, this should be negligible for the end buyer.
CERTIFICATIONS: FLO, UTZ CERTIFIED
Our whole way of working fell within the concept of Fair Trade, but we needed to be labelled “ethical” in the eye of the world.
ORGANIC AND FAIR TRADE IN SRI LANKA
Set up in Sri Lanka in 1993, Bio Foods is a company which exports organic products, mainly tea spices, natural herbs and coconuts.
It buys these products from small producers who normally cultivate plantations of about a hectare and who belong to a subsidiary cooperative called SOFA (Small Organic Farmers Association).
The co-operative helps new members to process and manage their crops so they can become certified as organic producers. It also guarantees them a fair income and participation in decision-making, and brings them into the fair trade system (certified by FLO). From 183 farmers in 1997, SOFA has now grown to almost 1900. Interview with Anil Yapa Bandara, Export & Business Promotion Manager at Bio Foods.
Why did you choose organic certification?
Partly our way of looking at things, partly a desire to produce crops without using pesticides, in order to preserve the planet for future generations. Also, there was a growing demand from our customers for organic products. The need for guarantees on the part of our overseas customers and the effect on marketing also came into the equation. We wanted to position ourselves as the most environmentally aware organic producer in South Asia. Apart from satisfying our customers, we also wanted to adopt a fair trade approach in order to satisfy our employees and the farmers who work for us. Because, for us, organic production also means being part of an equitable community-based approach. The objective was to work for a sustainable future, mindful of the social development of communities of small producers, who are growing products that are healthy for the planet.
Was certification difficult to obtain?
To obtain organic certification, producers have to embark on a process lasting three years. This is the period required to ensure that crops are free of pesticides. The field inspections are carried out annually on each plantation. We help them during this operation, and over the three years Bio Foods continues to buy their harvests and sells them through another subsidiary called Eco Foods. If we don't provide this aid to farmers during the transition period, there is a strong risk they will go back to conventional farming. We give them our know-how from our research and development centre, for example to develop new products, and we also transfer knowledge concerning biodynamic agriculture.
What is the cost of certification? The cost of obtaining certification is paid by Bio Foods and amounts to 70,000 USD a year. It is a high cost, but it covers almost 3000 producers.
CERTIFICATIONS: BIO EUROPÉEN, BIO SUISSE, USDA ORGANIC,
JAPANESE AGRICULTURE STANDARDS, CEYLON TEA QUALITY, FOREST
GARDEN PRODUCTS, FLO
We wanted to position ourselves as the most environmentally aware organic producer in South Asia.
Extracts from a discussion with small producers at the Sofa office at Gampola, Sri Lanka.
SOFA HAS BEEN FLO CERTIFIED SINCE 1998 FOR TEA AND SINCE 2006 FOR SPICES
What does fair trade mean for you?
Since we have been working within the fair trade system, we have obtained additional income from sales of our products.
Previously, we earned about 1 USD a day. Now, we earn three times as much. This allows us to invest in new seeds to develop our crops. But it has also allowed social development within our communities:
We help people in poverty, we have developed sports facilities, and built houses and a well to obtain fresh water. We have also developed environmental programmes, planting new trees and cleaning the plantations.
Some producers have also started beekeeping. This system encourages biodiversity.
Have women also benefited from these changes?
Yes, in fact a development programme has been designed for them. It is based on the manufacture of small boxes out of palm leaves, in which tea is packed. This brings them additional income, which allows us to contemplate a better future for our children. We are now working with the concept of setting up a prosperous and environmentally aware society. Training programmes have also been set up for everybody, with courses on computer studies and also on agriculture itself, with sessions explaining how to combat soil erosion, how to correctly maintain a plantation, prepare compost, etc. Producing without pesticides also has a positive effect on our health, as chemical products are very harsh on the eyes and skin! Finally an education programme has been launched to fund the purchase of school equipment for primary and secondary school children, and to help young people start university studies.
What has changed since you've had your own plantation? (Previously, it belonged to big landowners)
First and foremost, we can choose the teas or spices we want to grow. This is an important decision, as it takes more than three years for a tea bush to produce a harvest. Thanks to the cooperative system, we now have a say in the matter. Everyone is entitled to vote and can stand in the regional elections. Everyone can express their opinion, whereas before only the leaders could take decisions.
ORGANIC, FAIR AND SUSTAINABLE, IN PERU
Cepicafe, which forms part of the Norandino cooperative, was set up in 1995.
Originally consisting of 400 coffee producers, it now numbers 7000, in 90 primary organisations, located in the regions of Piura and Nor-oriente in Peru.
Two million Peruvians depend on coffee production. 90% of the producing families own a plot of land of between 0.5 and 10 hectares. Today, Peru has become the world's leading producer of organic fair trade coffee. Interview with Santiago Paz Lopez, joint manager of Cepicafe.
What is the background to coffee production in Peru?
We began our activities in a difficult environment.
Piura is not a major production area in Peru. Before 1990, middlemen profited from the lack of organisation of the peasant farmers, paying them very low prices for coffee that was not of the best quality. Fair trade was therefore an opportunity for small growers, as it allowed them to improve their working conditions and to receive a guaranteed minimum price and prefinancing, and gave them access to international markets. In addition, importers operating in accordance with the rules of fair trade are generally more flexible than those in the conventional market. For small farmers facing this situation for the first time, it is easier, as their mistakes, especially in administration and procurement, are judged less severely. Today, the country exports 1,050 million quintals of coffee, with strong growth since 2004-2005.
Belgium is the third biggest European importer of Peruvian coffee after Germany and the UK.
Which certifications have you chosen and why?
From the start, we opted for organic certification, which in my view fully complements fair trade certification. We also have Rainforest certification, which was a requirement for the UK market. Since 1997, we have also been working with FLO certification.
In the beginning it wasn't too complicated, but over the years it has become a bit more complex and the requirements are not always easy to satisfy given the situation on the ground. There are a lot of documents to fill in for small producers who are not used to dealing with so many administrative procedures. Often, their documents are not filled in properly. A second problem that does not take into account everyday realities is child labour. Here, it is normal for children to help their parents in the plantations; it forms part of their education and training, alongside school education. The parents are teaching their children their future work. And when they say this in the documents they have to hand in during inspections, they receive a warning. But that's the reality in Peru …
Fair trade also requires the organisation to have a trade union. But from our point of view, this is only useful in a conventional business - in an organisation of producers it doesn't make sense, as the owners and the trade union members would be the same people. So it isn’t a priority …
How much does certification cost?
FLO certification costs about 15,000 USD. It is paid by Cepicafe. Rainforest costs 8,000 USD. It is less demanding than organic and fair trade certification, but it has brought about fewer changes for us.
What were the major changes you saw after certification?
Initially, we were producing “dried coffee”, which is the traditional product of Peru. It is a strong coffee, containing a lot of caffeine. For the overseas market, we have started producing “washed coffee”, which is milder and of better quality.
In more general terms, we have seen great economic, social and political changes. Small producers don't normally have an important place in the world. Pooling our resources has empowered us. We are now a sizeable economic group recognised by the government as a key player in development, due largely to our exporting capacity. On the other hand, we get pressure from the market because we apply minimum prices. You could say that growth also has its problems …
CERTIFICATIONS: FLO, RAINFOREST ALLIANCE, BIO LATINA, USDA ORGANIC, NATURLAND