ABC Radio Australia - Last week, Connect Asia ran a story about coffee farmers in East Timor, who were shocked to hear the green coffee cheries they sold to middlemen for 30 cents US went on to be sold for 26 dollars or more in places like Australia, often as a fair trade product.
The farmers said they were desperate to see an increase in the price paid for coffee in order to sustain their very simple lives and send their kids to school. Fairtrade Australia and New Zealand got in touch with Radio Australia, saying they were disappointed with the implication that the fair trade system was not providing benefits for farmers in developing countries.
Presenter: Liam Cochrane
Speaker: Stephen Knapp, CEO Fairtrade Australia and New Zealand
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COCHRANE: First of all, let me give the chance to air your concerns about what we broadcast last week?
KNAPP: First of all I think the key point is that Fairtrade Coffee can only be sold as Fairtrade if it's met Fairtrade standards through the entire supply chain and I mean the main part of that is the economic benefits that go to the farmer organisation, which is that they're paid at least a Fairtrade minimum price and then also an additional Fairtrade premium, that goes to the group and the group as a whole decide how they're going to invest that in local community development projects. Now currently the Fairtrade minimum price stands at $1.40 per pound with an additional 20 cents premium for organic certification and a further 30 cents a pound premium which is the community investment premium which goes to the entire group. And I mean we set that minimum standard by doing some research, the minimum price by doing some research with farmers all over the world to try and establish what's the cost of sustainable production and you know exactly as you say what we're looking for is a price that covers the farmers cost of production and also their basic needs, so that they're able to put food on the table, send their kids to school, the sort of things that we take for granted. And then the additional premium then goes to the group as a whole and they decide democratically how they're going to invest that premium in their local communities and time and time again, they decide to invest in better health care facilities, better school facilities for their kids, access to basic needs, in some parts of Africa access to fresh water and things like that are problem, so that's the sort of thing that they would decide to spend the premium money on.
COCHRANE: Now in East Timor, there are four major coffee companies and one of the largest is CCT the Cooperative Cafe Timor. Until recently, that was the Fairtrade organisation I understand, but it has withdrawn from that process, not wanting to meet some of the requirements. Can you explain the situation there?
KNAPP: Yeah, about this time last year, because I mean we obviously do audits and inspections of producer organisations all over the world and there's an annual audit and a three year cycle of a full inspection audit to retain their certification. About this time last year, CCT had an audit and a decision came through from our certification body FLO-CERT, which is an independent certifier and is also accredited to ISO65, which is the international accreditation for certification systems and they were issued with a number of corrective actions in order to retain their certification. They then have six months in order to either address those corrective actions or come back with a plan on how those issues are going to be resolved in the future. CCT decided not to respond to the certifier and so in December, voluntarily withdrew from the Fairtrade certification system.
COCHRANE: So does that mean from now on there will be no Fairtrade coffee coming out of East Timor?
KNAPP: Well, I mean while their under suspension for corrective actions, the producer organisation is still able to fulfil existing orders under their Fairtrade contracts.
COCHRANE: Even though they haven't complied with the certification?
KNAPP: Well, until they're completely decertified yeah and then there's, because what we do is we give the organisations a six month window in which to address their corrective actions. I mean unless their major, if there's problems around using exploitative labour and that sort of thing, then that would be immediate decertification. But if they're minor certification issues, then we give a six month window for producers to be able to address those issues or come up with a plan on how they're going to address those issues. They're not allowed to enter into any new Fairtrade contracts during that period, but they are allowed to fulfil existing contracts.
COCHRANE: I'm speaking with Stephen Knapp, from the Fairtrade Australia and New Zealand Organisation.
Stephen Knapp, the farmer that I spoke to that we heard from earlier the 89 year-old man. He explained that he and his family sold their raw coffee cherries to a businessman, a middleman essentially. He then sold on to CCT, the Cooperative Cafe Timor, which is or was until recently the main Fairtrade company. By that chain of sourcing, it would seem to me like he should be getting some benefits from the Fairtrade system and yet he said that he's never had any assistance from an NGO or from an organisation and was seeking help with processes, with equipment. How is it that this farmer could have fallen through the cracks?
KNAPP: Well, I mean Fairtrade is designed to address exactly those problems and the farmers themselves would be part of a cooperative or an association, like CCT is and the farmers would sell directly into the cooperative. So if that farmer was selling to a middleman who was then selling to the cooperative, that doesn't quite make sense to me, because that's not the way the certification system works. The farmer has to be a member of the cooperative. We check that all the supply that comes into the Cooperative comes from the Cooperative members and because they're members of a certified group. Now the minimum price and the premium is paid to the group as a whole. The farmers are the owners of the cooperative. There's always processing costs involved going from red cherry through to the dry green bean that is then exported and there's usually transportation costs and that sort of thing. So what we check as a certification system is that there's transparency around how those costs are deducted from the price, that the producer organisation receives under Fairtrade and then how those benefits are then distributed to the farmers themselves.
COCHRANE: And yet in this specific case and I must stress this is just one farmer and there are tens-of-thousands in East Timor, so I don't mean this to be a representative sample. But from the few people I spoke to and in particular this one farmer. He's missing out because of this middleman, because of this businessman who's sort of in the middle of that process. Is that the sort of thing, the sort of compliance problems that CCT had in the past that they've been suspended for?
KNAPP: I mean that problem of farmers selling to middlemen. I mean in Latin America they call they coyotes and it's that selling of red cherry at farm gate which is exactly the sort of problem that Fairtrade is trying to address, so that we can build strong producer organisations that are able to get a better price for their members. So I mean it's exactly that very low price that goes to the farmers who are selling their red cherry that we're looking to address through the Fairtrade system. I mean it happens all over the world, not just in East Timor, but this does sound like a particularly low price that that farmers receiving for his hard work.
COCHRANE: With CCT being suspended from the Fairtrade certification system at the moment. Do you think it would concern people buying the product, buying the coffee product here in Australia for a lot of money, $26 sometimes up to $40 in some places. Do you think that they would have the expectation that the source of their coffee is fully certiified Fairtrade?
KNAPP: Yeah, I mean anything that's sold with the Fairtrade label on is fully certified as Fairtrade. I mean we do the checks we have the audit systems in place.
COCHRANE: But you said CCT can continue trading even though it is suspended. It can fulfil its orders?
KNAPP: No, CCT were decertified in December and they cannot sell anymore coffee as Fairtrade certified. I mean there is still Fairtrade certified and organic certified coffee in Australia that has come from the CCT Cooperative. But those are stocks that already exist in Australia and very often coffee roasters will buy their product up to a year in advance and I mean the dried green bean that the roasted coffee is made from has quite a long shelf life. So I mean we may well see Fairtrade certiified coffee from East Timor still around in Australia up to about a year from now. So CCT itself are no longer allowed to sell Fairtrade certified coffee under the Fairtrade system.
KNAPP: First of all I think the key point is that Fairtrade Coffee can only be sold as Fairtrade if it's met Fairtrade standards through the entire supply chain and I mean the main part of that is the economic benefits that go to the farmer organisation, which is that they're paid at least a Fairtrade minimum price and then also an additional Fairtrade premium, that goes to the group and the group as a whole decide how they're going to invest that in local community development projects. Now currently the Fairtrade minimum price stands at $1.40 per pound with an additional 20 cents premium for organic certification and a further 30 cents a pound premium which is the community investment premium which goes to the entire group. And I mean we set that minimum standard by doing some research, the minimum price by doing some research with farmers all over the world to try and establish what's the cost of sustainable production and you know exactly as you say what we're looking for is a price that covers the farmers cost of production and also their basic needs, so that they're able to put food on the table, send their kids to school, the sort of things that we take for granted. And then the additional premium then goes to the group as a whole and they decide democratically how they're going to invest that premium in their local communities and time and time again, they decide to invest in better health care facilities, better school facilities for their kids, access to basic needs, in some parts of Africa access to fresh water and things like that are problem, so that's the sort of thing that they would decide to spend the premium money on.
COCHRANE: Now in East Timor, there are four major coffee companies and one of the largest is CCT the Cooperative Cafe Timor. Until recently, that was the Fairtrade organisation I understand, but it has withdrawn from that process, not wanting to meet some of the requirements. Can you explain the situation there?
KNAPP: Yeah, about this time last year, because I mean we obviously do audits and inspections of producer organisations all over the world and there's an annual audit and a three year cycle of a full inspection audit to retain their certification. About this time last year, CCT had an audit and a decision came through from our certification body FLO-CERT, which is an independent certifier and is also accredited to ISO65, which is the international accreditation for certification systems and they were issued with a number of corrective actions in order to retain their certification. They then have six months in order to either address those corrective actions or come back with a plan on how those issues are going to be resolved in the future. CCT decided not to respond to the certifier and so in December, voluntarily withdrew from the Fairtrade certification system.
COCHRANE: So does that mean from now on there will be no Fairtrade coffee coming out of East Timor?
KNAPP: Well, I mean while their under suspension for corrective actions, the producer organisation is still able to fulfil existing orders under their Fairtrade contracts.
COCHRANE: Even though they haven't complied with the certification?
KNAPP: Well, until they're completely decertified yeah and then there's, because what we do is we give the organisations a six month window in which to address their corrective actions. I mean unless their major, if there's problems around using exploitative labour and that sort of thing, then that would be immediate decertification. But if they're minor certification issues, then we give a six month window for producers to be able to address those issues or come up with a plan on how they're going to address those issues. They're not allowed to enter into any new Fairtrade contracts during that period, but they are allowed to fulfil existing contracts.
COCHRANE: I'm speaking with Stephen Knapp, from the Fairtrade Australia and New Zealand Organisation.
Stephen Knapp, the farmer that I spoke to that we heard from earlier the 89 year-old man. He explained that he and his family sold their raw coffee cherries to a businessman, a middleman essentially. He then sold on to CCT, the Cooperative Cafe Timor, which is or was until recently the main Fairtrade company. By that chain of sourcing, it would seem to me like he should be getting some benefits from the Fairtrade system and yet he said that he's never had any assistance from an NGO or from an organisation and was seeking help with processes, with equipment. How is it that this farmer could have fallen through the cracks?
KNAPP: Well, I mean Fairtrade is designed to address exactly those problems and the farmers themselves would be part of a cooperative or an association, like CCT is and the farmers would sell directly into the cooperative. So if that farmer was selling to a middleman who was then selling to the cooperative, that doesn't quite make sense to me, because that's not the way the certification system works. The farmer has to be a member of the cooperative. We check that all the supply that comes into the Cooperative comes from the Cooperative members and because they're members of a certified group. Now the minimum price and the premium is paid to the group as a whole. The farmers are the owners of the cooperative. There's always processing costs involved going from red cherry through to the dry green bean that is then exported and there's usually transportation costs and that sort of thing. So what we check as a certification system is that there's transparency around how those costs are deducted from the price, that the producer organisation receives under Fairtrade and then how those benefits are then distributed to the farmers themselves.
COCHRANE: And yet in this specific case and I must stress this is just one farmer and there are tens-of-thousands in East Timor, so I don't mean this to be a representative sample. But from the few people I spoke to and in particular this one farmer. He's missing out because of this middleman, because of this businessman who's sort of in the middle of that process. Is that the sort of thing, the sort of compliance problems that CCT had in the past that they've been suspended for?
KNAPP: I mean that problem of farmers selling to middlemen. I mean in Latin America they call they coyotes and it's that selling of red cherry at farm gate which is exactly the sort of problem that Fairtrade is trying to address, so that we can build strong producer organisations that are able to get a better price for their members. So I mean it's exactly that very low price that goes to the farmers who are selling their red cherry that we're looking to address through the Fairtrade system. I mean it happens all over the world, not just in East Timor, but this does sound like a particularly low price that that farmers receiving for his hard work.
COCHRANE: With CCT being suspended from the Fairtrade certification system at the moment. Do you think it would concern people buying the product, buying the coffee product here in Australia for a lot of money, $26 sometimes up to $40 in some places. Do you think that they would have the expectation that the source of their coffee is fully certiified Fairtrade?
KNAPP: Yeah, I mean anything that's sold with the Fairtrade label on is fully certified as Fairtrade. I mean we do the checks we have the audit systems in place.
COCHRANE: But you said CCT can continue trading even though it is suspended. It can fulfil its orders?
KNAPP: No, CCT were decertified in December and they cannot sell anymore coffee as Fairtrade certified. I mean there is still Fairtrade certified and organic certified coffee in Australia that has come from the CCT Cooperative. But those are stocks that already exist in Australia and very often coffee roasters will buy their product up to a year in advance and I mean the dried green bean that the roasted coffee is made from has quite a long shelf life. So I mean we may well see Fairtrade certiified coffee from East Timor still around in Australia up to about a year from now. So CCT itself are no longer allowed to sell Fairtrade certified coffee under the Fairtrade system.
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