FAIRTRADE CERTIFICATION - from niche to the mainstream

Index

1. Fairtrade Certification history – how control became a tool to access the mainstream market,

2. Certification today –new challenges in the era of big brands,

3. The big R recession – juggling cost & control in this economy,

4. The Low Carbon Economy – threat or opportunity for small scale farmers?

5. Crystal ball – what the future holds for Fairtrade Certification.

1. Why Certification?

Ensure Credibility of Fairtrade towards Consumers• Do we realy do what we say we do?

Manage Risks for Producers, Traders, Licensees• How safe are the claims I make?

1. The Company

Legal Form: Limited Company, founded in September 2003

Owned by: FLO International e.V. (Association)

Purpose: Certify Producers and Traders against Fairtrade Standards

Staff: 80 staff members working in Bonn, Germany 30 staff members working in local offices in

Tanzania, South Africa, Costa Rica, Columbia, India 130 Inspectors working locally on temporary

contracts

1. Facts and Figures

App. 900 certified coops and plantations in 54 countries

App. 1.100 certified traders in 73 countries

About 1.4 Million Farmers and Workers benefiting from FT

Certified retail value 09: app. 3.5 Bill. € Total FT Premium 09: 55 Million €

Annual growth (new clients): 2008: 37%; 2009: app. 20%

Turnover: 2008: app. 6 Mio €, 2009 app. 8 Mio €

1. ISO 65 Accreditation of FLO-CERT

Accredited since October 2007 by DAKK (German Accreditation Body)

Submitted to yearly audits in the different areas

Feedback from DAKK:

• “Worldwide first combination of development and product certification”

• “Worldwide first certification system accredited for social compliance”

• “One of the most complex certification systems ever accredited”

2. Certification in the era of the Brands

• Certification system was not designed to “see” whole supply chains.

• Project management and account management principles implemented 2007.

• New services developed to aid major switches, e.g. supply chain pre-assessment.

• New approach makes cost & risk identification possible prior to a deal

• New challenges in communications and legal issues.

Credible Certification

DevelopmentFacilitate Trade

Χ

2. Getting the Balance Right!

3. The Big R Recession

GED has influenced all strategic planning at FLO-CERT:

• General cost effectiveness – 25% savings achieved already!

• Product adjustment – how can we change existing products?

• New product development – what new products can we develop?

• Markets – what markets are not currently served?

HOW CAN WE DRIVE COST DOWN?

• Agricultural yields in some African regions are expected to decrease up to 50% by the year 2020, IPCC, 4th Assessment Report, Climate Change Impacts, Adaptation and Vulnerability.

• Consumer and Retail behavior is changing: the demand for low-carbon products is increasing.

• European Countries are preparing their legislations to move towards a low-carbon economy

4. Low Carbon Economy - background

5. What does the future hold?

“Mid-term, conventional food will be more expensive then food produced from sustainable farming systems, which today care about soil and biodiversity.”

“We pro-actively shift from large-scale to small-scale farming systems as they turned out to present a lower risk on yield loss through diseases.”

Jorge Calderón, WalMart Latin America

5. What does the future hold?

Fairtrade perfectly positioned to help small farmers capitalize on the changes that are coming to the market!!

To be future proof:

• Need to develop systems that provide LOW COST solutions for small farmers around sustainability indicators.

• Need to work with partners to develop COST EFFICIENT ways of switching core supply from large scale to small scale farming

• Need to ensure that systems, business models and financial flows enable growth at scale!!

Thank you!