Currently, there are no legally binding international standards to ensure trade is “fair” across supply chains – so it is often up to the consumer to choose Fairtrade-certified products if they wish to express their support for decent livelihoods and healthy agrological ecosystems.
“Consumer sales are a significant factor in brands choosing to source from Fairtrade-certified producer and worker organisations,” said Johnna Phillips, Director of External Relations at Fairtrade International. “No single player in the food supply chain can accomplish sustainability alone. Farmers, traders, and brands must each do their part, but government also has a role in enacting laws that secure the livelihoods of farmers and workers and create a level playing field for businesses to source sustainably.”
EU regulation falters
The European Union adopted a directive in 2019 to prohibit 16 unfair trading practices across the region, and Member States were required to transpose it into national law by May 2021 – but few have met that requirement. Draft laws are either still under discussion in national parliaments, or have not been put forward at all.
Trade association FoodDrinkEurope, which represents the food and drink manufacturing industry in the European Union, has urged all EU member states to ensure national laws based on the directive enter into force by the Commission’s November 1 deadline.
Widespread unfair practices
The organisation cites a recent survey from the Commission itself, which found 86% of companies polled had faced unfair trading practices from retailers and wholesalers. The survey also found 19% of companies had reported an increase in unfair trading practices since the beginning of the Covid crisis.
“The importance and value of the food supply chain was revealed more than ever during the pandemic, as farmers, producers and manufacturers safeguarded food production and ensured supply to consumers across the EU,” FoodDrinkEurope said in a statement. “…Unfair trading practices will hinder, not help, the road to recovery.”
How to go further
The directive itself encourages national legislators to go further than its minimum requirements – as does FoodDrinkEurope – and Fairtrade International specified that banning below-cost selling would be a good place to start.
“Selling products below cost-price leads to a devaluing of products by consumers and is an important driver of poor working conditions and low income in food supply chains,” Phillips said. “While retailers may want to sell stock below cost-price as a marketing mechanism, or because of shelf-life and therefore food waste considerations, retailers should always ensure that suppliers receive payment covering at least cost of production.”
However, she added that there was still some way to go before companies that invest in a fair deal for suppliers and the environment would be able to compete on an equal footing with those that focus on economics alone.
“With legislation that requires human rights and environmental due diligence for all manufacturers, there is not only a financial incentive, but also a legal one,” she said.
“…Currently, there is no definition of ‘sustainable’ when it comes to food production. Many voluntary schemes audit the actors in the supply chain, but these are truly voluntary, with little or no legal ramifications. Until laws exist that define sustainability and require specific targets for achieving sustainability, those businesses who choose to invest in ensuring farmers / workers receive wages that support a decent livelihood and that actions are being taken to protect the climate, will, in effect, be at a financial disadvantage to those companies who focus solely on their bottom line.”
In the meantime, consumers remain key actors in fair trade, with Fairtrade marks ensuring that products meet internationally-agreed social, environmental and economic Fairtrade standards.
“The effects of the demands by consumers for Fairtrade and sustainably produced products cannot be underestimated,” Phillips said. “…Consumer sales are a significant factor in brands choosing to source from Fairtrade-certified producer and worker organisations.”