Max Havelaar (FLO) | TRADE FOR DEVELOPMENT CENTRE

Max Havelaar (FLO)

Launched in 1988 in the Netherlands to free the producers of the Countries of the South from their dependence on market prices and intermediaries, Max Havelaar (Max Havelaar/FLO) was the first global Fair Trade label. Today, more than 7 million producers benefit from it in sixty countries.

Max Havelaar was the eponymous hero of a bestselling book in the 19th century, dealing with the exploitation of coffee plantation workers by Dutch colonists in Java (Indonesia). This name was chosen in 1988 by the Dutch worker priest Francisco Van der Hoff, who was working in Mexico, when he decided, in collaboration with Nico Roozen of the Dutch NGO Solidaridad, to set up an organisation which would label goods that meet a series of economic, social and environmental criteria.
Initially focusing exclusively on coffee, the Max Havelaar label today covers foodstuffs (sugar, chocolate, honey, rice, etc.) and increasingly non-foodstuffs (cut flowers, footballs, alcohol, cotton, etc.). Among the guarantees given to the consumer, Max Havelaar ensures that the contractual relations between producers and exporters or importers are formalised: The latter must pay a guaranteed minimum price, a development premium and a payment advance and enter into a long-term contract. Max Havelaar also ensures observance of working conditions (no forced labour, no child labour, freedom of association and collective negotiation, etc.). Finally, it ensures observance of ecological criteria, including a ban on GMOs. With 23 other national fair trade labelling organisations, Max Havelaar Belgium is a member of FLO International (Fairtrade Labelling Organisations).
The mission of this umbrella organisation is to define international fair trade standards. Since 2003, certification is entrusted to FLO-Cert, a company owned by FLO International and certified under the ISO 65 international standard.

In brief

Creation date:

1988

Based at:

Bonn, Germany

Origin/need:

Fair trade has its origins in the social inequalities created by post-war international trade. Creation of the “Max Havelaar” label made supermarket consumers more aware.

Sector:

Mainly agriculture, textiles.

In Belgium:

Bananas, cane sugar, cocoa, coffee, dried fruits, fruits, fruit juice, flowers, nuts, herbs and spices, honey, olive oil, quinoa, rice, cotton, balls for recreational sports, tea, wine.

What is guaranteed:

Prices that cover the costs of sustainable production, a development premium, production pre-financing, sustainable commercial relations, decent working conditions.

Stakeholders:

NGOs, experts, businesses, trade unions, producers.

Beneficiaries:

Cooperatives, factories, enterprises/ brand holders.

Type of assessment:

Second and third party.

Methods:

Analysis of the documentary system, pre-announced site visits, interviews with internal and external stakeholders.

Sector activities concerned:

Production, import/export, processing, distribution, public awareness.

Requirements:

Generic standards for small producers in cooperatives, producers with employees, and specific standards for each product. Available on the website.

Room for manoeuvre:

Minimum and progress requirements.

Improvement procedure:

The FLO standards have developed progress requirements leading producers into a process of continuous improvement and investment in the sustainable development of their organisations and workers. These standards are principally aimed at marginalised producers.

Did you know ?

In Belgium, the target of 1,000 products labelled Max Havelaar was reached in 2009. One of the reasons for this success was the sale of MH products in supermarkets. Certain brand holders, like Candico (for its cane sugar), decided to convert the whole of their production to fair trade.
For more information: www.fairtrade.net
www.flo-cert.net

This label remains the fair trade yardstick.

Initially focusing exclusively on coffee, the Max Havelaar label today covers dozens of food and non-food products.

How do I get the certification ?

As a producer

- Contact the FLO-Cert certification organisation and complete an application form.
- Schedule a field audit with an FLO-Cert certification manager.
- Verification of compliance with the required criteria. Indication of certain key points before being able to obtain certification. Once the required criteria are met, issue of a certificate authorising commencement of activities under the conditions required by fair trade.
- During the application and certification process, a producer relations and support service is available.
- The buyer must also be in possession of an FLO licence to be able, in turn, to sell under the fair trade conditions. If a minimum price has been specified, this must be applied, as must payment of the fair trade premium. Negotiations on an increase are always possible.
The FLO standards explain the premium application procedure.

How much does the certification cost ?

As a producer

Small producers grouped into cooperatives and submitting their application for FLO certification pay 500 euros as activation costs.
FLO-Cert will carry out the audits and initial certification at a daily rate of 400 euros. For an organisation of less than 50 workers, the audit will take about 3.5 days (9.5 days for an organisation of more than 1000 workers). Allow 200 euros for each additional product. If the organisation has processing equipment (cleaning, packaging, etc.), a charge of 200 to 600 euros is made for each machine. A follow-up audit may be organised by FLO-Cert to verify any failings in the initial or preceding audit (400 euros/day). Annual audits are charged at 350 euros.
The audits are carried out at least once a year, in three-year cycles.

HOW CAN I PARTICIPATE IN TRADE IN MAX HAVELAAR CERTIFIED PRODUCTS?

As a Nothern enterprise

The generic standards for traders are intended for operators wishing to enter the trade in Max Havelaar certified products. They are accompanied by specific standards for each type of product. The products must be certified throughout the chain, from the producer to the finished and packaged product. A commercial operator must therefore contact FLO-Cert to be able to buy fair trade products from similarly certified producers.

Application of a commercial operator to FLO-Cert:
- Activation costs: 500 euros.
- Various supplements according to size, and the variety of products and suppliers concerned.

Annual certification costs:
- Basic cost: 1,800 to 2,600 euros (small operators: 400 to 1,200 euros)
- Performance of audits: 400 to 1,200 euros.
- Supplement:
- Additional volume of products (depends on the product): 600 to 1,000 euros.
- Additional producer/supplier: 100 to 300 euros.
- Additional product category: 100 to 300 euros.

Interview

Interview:

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).

Interview

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.

> www.mdivietnam.com
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.

> www.biofoodslk.com
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 …

> www.cepicafe.com.pe
CERTIFICATIONS: FLO, RAINFOREST ALLIANCE, BIO LATINA, USDA ORGANIC, NATURLAND

Some remarks

Other information

PREFINANCING:
UP TO 60% ON SIGNATURE OF THE CONTRACT
One of the pillars of fair trade is income security.
In addition to the minimum price imposed to ensure that falling prices do not have disastrous consequences, a system of prefinancing has been set up. At the request of the producer, the purchaser will pay for up to 60% of production on signature of the contract.

TURNOVER UP BY 17%
80 to 90% of marketing professionals have included “ethical” and “authentic” values in their top five current trends, and their importance continues to grow. This almost certainly explains the 17% increase in turnover generated by Max Havelaar certified fair trade products in Belgium in 2009.

Search form

News