Last week I attended the annual World Cocoa Foundation conference in Indonesia, where manufacturers are faced with the prospect of cocoa farmers opting to pursue alternative higher paying opportunities. Cocoa production is predicted to decline by as much as 20% by 2020, yet demand will grow by up to 30%.
I raise this not because I want to discuss the obvious market response which looms, but to discuss who is ultimately driving the lack of investment within these supply chains. Put another way, who has the power to change this reality, and are they willing?
Retailers claim that the customer’s bottom-line concern is always price. STARLAB (the Sustainability, Transparency & Accountability Research initiative of the University of Sydney’s Business School) conducted fieldwork analysing the rate of sale of product that carried a fair trade logo versus product that didn’t. They used bulk bin coffee for this particular trial which showed that, when the logo was applied, a 10.3 percent rise in sales resulted. There was a price premium tolerance of up to nine percent before volume was affected.
If we focus on the consumer, research released this month by McCrindle showed 8 in 10 Aussies would be more likely to purchase a product which supported people in need, assuming product value was similar. Seven in 10 supported the claim that ethical products are good value for money. The research also showed that consumers understood that purchasing a product carrying an ethical label such as Fairtrade, guaranteed a fair wage for farmers and opportunities for sustainable product growth.
In the UK 20 years ago, there were clear signals from consumers that they support the principles of sustainable trade. One of the big retailers Sainsbury’s showed leadership and responded. They did it well, and they were bold about any trade-offs that had to be made with regard to selection and price. In the end, any sacrifices they made there were well and truly compensated for by the pay-off they received from creating for themselves a profile of being a progressive organisation with ethical sourcing policies.
So what are manufacturers and retailers here in Australia doing?
Since the inception of the Fairtrade system in 2004, sales of certified ethical products have grown from $120million in 2010 to more than $200million in 2013. This growth is reflected in product categories such as tea, coffee and cocoa to cotton clothing and sports balls all of which are sourced from developing countries with consumers being able to choose from more than 1,700 products. Even big brands such as Cadbury are now offering consumers Fairtrade certified milk chocolate blocks and bars. Supermarket giants such as Coles where possible in the categories of tea, chocolate and coffee are expanding their Fairtrade range.
Brand manufacturers and retailers who make commitments to Fairtrade are rewarded by consumers. It stands to reason they’ll increasingly look to retailers to be dedicating greater space on their shelves in these product categories that reflect customer values of paying these farmers a fair wage and supporting sustainable production.
So if the power to increase ethical purchasing lies mostly with consumers, then the ability to accelerate this process lies with manufacturers and retailers. We are lagging behind but the market place is showing signs of willingness to change.
So if we think of a world without affordable chocolate, coffee or tea, many in my field would want to do what we can to encourage retailers and brand manufacturers to take a leadership role in supporting ethical and sustainable products. If they don’t, farmers who are the foundation of the supply chain will decide, or be forced to grow something else to survive.
Craig Chester, operations manager, Fairtrade Australia