i

Table of Contents

Acknowledgement ........................................................................................................ i

List of Figures .............................................................................................................ii

Glossary of Acronyms ............................................................................................... iii

FOREWORDS ............................................................................................................ 1

Chapter 1: Fair Trade and Fair Trade Rice ................................................................... 4

1.1. Fair Trade ....................................................................................................... 4

1.1.1. Conception of Fair trade ......................................................................... 4

1.1.2. Principles of Fair Trade .......................................................................... 6

1.1.3. History of Fair Trade .............................................................................. 7

1.1.4. Actors of Fair Trade movement ............................................................ 13

1.1.5. Benefits of Fair Trade........................................................................... 17

1.2. Fair Trade Rice ............................................................................................. 21

1.2.1. Development of Fair Trade Rice........................................................... 21

1.2.2. Standards of Fair Trade Rice ................................................................ 24

Chapter 2: Fair Trade Rice in Thailand ...................................................................... 27

2.1. Background for fair trade rice movement in Thailand ................................... 27

2.1.1. Thai rice production and plight of Thai rice farmers ............................. 27

2.1.2. Initiation of Fair trade rice in Thailand ................................................. 29

2.2. Thailand‟s experience in developing Fair Trade Rice.................................... 31

2.2.1. Thai fair trade rice trading routes .......................................................... 31

2.2.2. Development of organic farming .......................................................... 37

2.2.3. Empowerment of small-scale farmers ................................................... 41

2.2.4. Development of a Fair Trade Network ................................................. 43

ii

Chapter 3: Recommendations for developing Fair Trade rice in Vietnam .................. 47

3.1. Background for Fair Trade Rice in Vietnam ................................................. 47

3.1.1. Overview of Vietnam‟s rice production and trade................................. 47

3.1.2. Rationale for fair trade rice development in Vietnam............................ 51

3.2. Advantages and disadvantages of fair trade rice in Vietnam ......................... 56

3.2.1. Advantages: ......................................................................................... 56

3.2.2. Disadvantages ...................................................................................... 59

3.3. Recommended solutions for Fair Trade Rice in Vietnam .............................. 61

3.3.1. Promotion of organic farming and sustainable agriculture .................... 61

3.3.2. Further research to establish a model for Fair Trade Rice ..................... 63

3.3.3. Implementation of Fair Trade rice projects ........................................... 64

3.3.4. Raising consumer-awareness of fair trade ............................................. 64

3.3.5. Support for rice farmers in conversion .................................................. 65

3.3.6. Addressing current difficulties posed to rice cultivation ....................... 66

CONCLUSION ......................................................................................................... 68

BIBLIOGRAPHY ..................................................................................................... 69

APPENDIX 1 ............................................................................................................ 73

APPENDIX 2 ............................................................................................................ 77

i

Acknowledgement

I wish to convey my deep gratitude to my supervisor, Mr. Dao Ngoc Tien for his

critical guidance and suggestions without which I could not have brought this

thesis to completion.

Many thanks go to Mr. Do Ngoc Kien for his kind advice and orientation when I

first chose the thesis topic. This thesis is also a thank you note sent to all the

lecturers at Foreign Trade University for their instructions and support over the

last four years.

My appreciation also belongs to all my friends and family for their support and

encouragement, both academically and emotionally.

Last but not least, thank you, all my students and volunteers at Nguyen Dinh

Chieu Blind School who never cease to inspire me in everything I do.

ii

List of Figures

Figure 1.1. Number of Faitrade certified producers .......................................... 12

Figure 1.2. Estimated Retail Value of Fairtrade certified products ................... 12

Figure 1.3. Motivation behind fair trade products ............................................. 17

Figure 1.4. Reasons to buy fair trade products .................................................. 21

Figure 2.1. International integrated chain route for fair trade rice in Thailand .. 32

Figure 3.1. Rice Planting areas (In hectares)..................................................... 48

Figure 3.2. Gross paddy output (in million tons) .............................................. 48

Figure 3.3. Rice export volume (Thousand MT) ............................................... 49

Figure 3.4. Vietnam‟s rice export value (Million USD) .................................... 50

Figure 3.5. Vietnam‟s main export markets 2009 ............................................. 51

iii

Glossary of Acronyms

AAN Altenative Agriculture Network

ACT Agriculture Certification Thailand

ATO Alternative Trade Organization

EFTA European Fair Trade Association

ENGAGE Educational Network for Global and

Grassroots Exchange

FAO Food and Agriculture Organization

FFS Farmers Field School

FLO Fairtrade Labeling Organization

International

FTO Fair Trade Organization

IFAT International Fair Trade Organization

IFOAM International Federation of Organic

Agriculture Movements

MARD Ministry of Agriculture and Rural

Development

NEWS Network of European World shops

NGO Non-governmental Organization

PTD Participatory Technological Development

SFS Surin Farmers Support

UN United Nations

UNCTAD United Nations Conference on Trade and

Development

WFTO World fair trade organization

1

FOREWORDS

1. Rationale of the Thesis

Despite its late debut from the 40s of the last century, Fair Trade has

experienced tremendous growth and emerged as an alternative approach towards

more equitable and just conditions in the world‟s production and trade of goods.

Globally, around 5 million people from over 50 countries are reaping economic,

social and environmental benefits from fair trade partnerships. Concurrently, the

range of products distributed through fair trade routes has continually expanded.

Fairly-traded rice, notwithstanding its short history, has increasingly attracted

developing countries‟ attention. Launched in Thailand, fair trade rice now comes

from India, Laos, Egypt… and has its presence in various sales points in Europe

and America. It has been regarded as an effective movement to lift rice farmers,

who are vulnerable to price fluctuations and serious lack of access to market

information, out of the vicious cycle of poverty.

Meanwhile, Vietnam has not actively grasped the opportunities that Fair trade

can bring. Although the country is the second biggest rice exporters globally and

enjoys marked advantages in producing rice, most Vietnamese rice growers are

still struggling to sustain their lives. It is, therefore, essential to take fair trade

rice into account as a means to solve the current drawbacks of Vietnamese rice

production.

Thailand, the world biggest rice exporters, is also the pioneer in introducing fair

trade ideology into rice cultivation. It now holds the greatest number of fair-

trade certified producers, fair trade Jasmine rice has become widely available in

the world‟s market and Thai small-scale farmers have been remarkably

empowered. Interpretation on these amazing facts is simply the fair trade route.

2

Drawn from the above background, the topic “Fair Trade Rice in Thailand and

lessons for Vietnam” is chosen as my graduation thesis, which comprises a

study on the development of fair trade rice in Thailand with a view to gaining an

understanding of its experiences. Based on these experiences, combined with the

context of Vietnam, the thesis will present some recommendations for the

development of fair trade rice in Vietnam

2. Aims and Objectives of the Thesis

2.1. Thesis Aims

The aims of this research is ultimately to point out lessons learned from Thai fair

trade rice movements and to find solutions to Vietnam‟s development of fair

trade rice

2.2. Thesis Objectives

The research objectives are divided into three primary segments:

- To present general conception of fair trade rice

- To analyze the experience of Thailand in fair trade rice

- To recommend Vietnamese state, fair trade organizations and rice

producers some measures to develop fair trade.

3. Scope of the Research

The success of fair trade rice in Thailand can be attributed to several elements,

both subjective and objective ones. The study of Thai experience to develop fair

trade in Thailand is confined to the measures that Thai people themselves take to

promote fair trade rice.

3

4. Research Methodology

This qualitative research attempts to depict fair trade rice development in

Thailand, which includes a retrospective study on its experience to draw key

learning for adaptation in Vietnam. Combined with deductive and inductive

analysis, all research questions are reasoned based on dialectical materialism.

Data collection is solely done through desk research. Secondary sources of

articles, statistical analysis, questionnaires and expert interviews are also used

for reference.

5. Structure of the Study

Apart from this introduction and a brief conclusion at the end, the main body

consists three chapters as follows:

Chapter 1: Fair Trade and Fair Trade Rice

Chapter 2: Fair Trade Rice in Thailand

Chapter 3: Recommendations for Fair Trade Rice in Vietnam

4

Chapter 1: Fair Trade and Fair Trade Rice

1.1. Fair Trade

1.1.1. Conception of Fair trade

1.1.1.1. Background

Over the past few decades, international trade and globalization has

undeniably been creating enormous wealth for the world, connecting billions of

lives and bringing prosperity to many. However, the conventional trade system

has several problems: it tends to favor multinational corporations and rich

countries while marginalizing small-scale producers in developing nations,

whose limited capacities make them susceptible to exploitation. Within poor

countries, in the traditional trade routes, small-scale producers are at the mercy

of intermediaries or estate owners to sell their products, gaining only a very

small share of prices. This uneven profit distribution and lack of control over the

processing, marketing and exporting of their products trap farmers in the cycle

of poverty and debt. Meanwhile, the fluctuations and declining long term trend

in commodity prices have been forcing vulnerable producers from developing

countries to live an unpredictable existence. Conventional trade, as WFTO

states, fails to deliver sustainable livelihoods and development opportunities to

people in the poorest countries of the world; this is evidenced by the two billion

people who, despite working extremely hard, survive on less than $2 per day.

Fair Trade movement was born as a response to this failure (WFTO, 2009)

1.1.1.2. Definition

Fair Trade is “a lot of things: a social justice movement, an alternative business

model, a system of global commerce, a tool for international development, a

faith-based activity. It means different things to different people… Fair Trade‟s

5

many definitions do always center around the exchange of goods based on

principles of economic and social justice”. (Fair Trade Resource Network, 2010)

The most widely-recognized definition of Fair trade is adopted by FINE, the

informal network of FLO, IFAT, NEWS and EFTA:

“Fair Trade is a trading partnership, based on dialogue, transparency and

respect, that seek greater equity in international trade. It contributes to

sustainable development by offering better trading conditions to, and securing

the rights of, marginalized producers and workers – especially in the South. Fair

Trade Organizations, backed by consumers, are engaged actively in supporting

producers, awareness raising and in campaigning for changes in the rules

and practice of conventional international trade.” (FINE, 1998)

Fair Trade is “an organized social movement and market-based approach that

aims to help producers in developing countries obtain better trading conditions

and promote sustainability. The movement advocates the payment of a higher

price to producers as well as social and environmental standards. It focuses in

particular on exports from developing countries to developed countries, most

notably handicrafts, coffee, cocoa, sugar, tea, bananas, honey, cotton, wine,

fresh fruit, chocolate and flowers” (Wikipedia, 2010)

Fair trade, in short, is a global movement that seeks an alternative approach to

conventional international trade, aiming at sustainable development for excluded

and disadvantaged producers through better trading conditions. It involves fair

trade organizations and ethical consumers who work together towards a fairer

world trade system.

6

1.1.2. Principles of Fair Trade

World Fair Trade Organization, in its article “Charter of Fair Trade Principles”,

lists core principles based on the practical and shared experience of Fair Trade

Organizations. These principles set the foundations for future dialogue and co-

operation among Fair Trade actors - so that Fair Trade “fully develops its

potential to secure greater equity in international trade” (WFTO, 2009).

Market access for marginalized producers:

Many producers are excluded from mainstream and added-value markets, or

only access them via lengthy inefficient trading chains. Fair Trade helps

producers realize the social benefits to their communities of traditional forms of

production. It enables buyers to trade with producers who would otherwise be

excluded from these markets. It also helps shorten trade chains so that

producers receive more from the final selling price of their goods than is

the norm in conventional trade via multiple intermediaries.

Sustainable and equitable trading relationships

Trading terms, including prices and payment, offered by Fair Trade buyers

enable producers and workers to maintain a sustainable livelihood - one that

not only meets day-to-day needs for economic, social and environmental

well-being but that also enables improved conditions in the future.

There is a commitment to a long-term trading partnership that enables both sides

to co-operate through information sharing and planning, to ensure decent

working conditions, including no forced and child labor.

Capacity building & empowerment

Fair Trade relationships assist producer organizations to understand more about

market conditions and trends and to develop knowledge, skills and resources to

7

exert more control and influence over their lives. Small-scale producer,

physically-challenged, ethnic minority, female individuals are those whose lives

are expected to do well out of fair trade partnerships.

Consumer awareness raising & advocacy

Fair Trade relationships provide the basis for connecting producers with

consumers and for informing consumers of the need for social justice

and the opportunities for change. Consumer support enables Fair Trade

Organizations to be advocates and campaigners for wider reform of international

trading rules, to achieve the ultimate goal of a just and equitable global trading

system.

Fair Trade as a “social contract”

Fair Trade transactions exist within an implicit “social contract” in which buyers

(including final consumers) agree to do more than is expected by the

conventional market, such as paying fair prices, providing pre-finance and

offering support for capacity building. In return for this, producers use the

benefits of Fair Trade to improve their social and economic conditions,

especially among the most disadvantaged members of their organization.

Fair Trade, therefore, is not charity but a partnership for change and

development through trade.

1.1.3. History of Fair Trade

1.1.3.1. Early initiatives and development

The global fair trade movement began more than 60 years ago through the work

of Edna Ruth Byler who was moved to take action by the poverty she witnessed

during a trip to Puerto Rico in 1946. She helped set up Self Help Crafts (later

8

Ten Thousand Villages) to buy needlework from Puerto Rico (Ten Thousand

Villages, 2009). Another religious organization, SERRV began to trade with

poor communities in the South in the late 1940s. The products, almost

exclusively handicrafts were at first mostly sold in churches or fairs. The first

formal “Fair Trade” shop selling these and other items opened in 1958 in the

USA (WFTO, 2009).

In Europe, Oxfam UK took the fair trade initiative in 1950s when it started to

sell crafts made by Chinese refugees in Oxfam shops. In 1964 it created the first

Fair Trade Organization (then Alternative Trading Organization - ATO) and

launched "Helping-by-Selling", a program which sold imported handicrafts in

Oxfam stores in the UK (Scott, 2003). In 1967 the importing organization,

(formerly SOS Wereldhandel) Fair Trade Original, was established in the

Netherlands.

In 1968, the slogan, “Trade not Aid”, gained international recognition when it

was adopted by the UNCTAD (United Nations Conference on Trade and

Development) to put the emphasis on the establishment of fair trade relations

with the developing world, instead of seeing the North appropriate all the

benefits and only returning a small part of these benefits in the form of

development aid. Supporting this approach, during the 1960s – 1970s, Non-

Governmental Organizations (NGOs) and socially motivated individuals in

many countries in Asia, Africa and Latin America realized the need for fair

marketing organizations which would provide advice, assistance and support to

disadvantaged producers. Many such Southern Fair Trade Organizations were

established, and links were made with the new organizations in the North. In

April 1969, the first World Shops aimed at selling Third World handicrafts

direct from small scale producers opened in Breukelen in the Netherlands.

Within two years there were some 120 shops selling Third World goods (Trade

and Development Center, 2003). Goods sold through World Shops were initially

9

handicrafts – the market for which was wide open and for many Fair Trade

Organizations sales grew and grew.

The year 1973 saw the first expansion of Fair Trade into products other than

handicrafts when Fair Trade Original imported the first “fairly traded” coffee

from cooperatives of small farmers in Guatemala. After coffee, the food range

was expanded and it now includes products like tea, cocoa, sugar, wine, fruit

juices, nuts, spices, rice, etc... In addition to these food products, other non food

products such as flowers and cotton have been added to the Fair Trade

assortment.

In the first decades of development, sale of fair trade products was mostly

limited to world shops scattered across Europe and North America. It has

become the role of World (or Fair Trade) Shops to mobilize aware and ethical

consumers to participate in campaigning activities for more global justice. The

first European World Shops conference took place in 1984 and The Network of

European World Shops (NEWS!) was formally established in 1994 and now

represents approximately 3.000 World Shops in close to 20 European countries

(WFTO, 2009). Though enjoying growing sales and dedicated customers, these

shops were considered disconnected from the lifestyle of contemporary

developed societies as they did not appeal to mainstream customers (Renand,

2003). There raised the need for a way to expand distribution without

compromising consumer trust in fair trade products and in their origins.

1.1.3.2. Labeling initiatives and international fair trade associations

In the second half of the 1980s, a new way of reaching the broad public was

found when the first Fairtrade certification initiative, Max Havelaar, was created

in the Netherlands with the idea of Nico Roozen, Frans Van Der Hoff, and

Dutch development NGO Solidaridad. Bearing the fair trade label “Max

10

Havelaar”, coffee bought, traded and sold respecting Fair Trade conditions

would stand out among ordinary coffee on store shelves, and would allow not

only Fair Trade Organizations, but any company to sell Fair Trade products

(WFTO, 2009). The independent certification allowed the goods to be sold

outside the Worldshops and into the mainstream, reaching a larger consumer

segment.

In the following years, similar non-profit Fair Trade labeling organizations such

as the Fairtrade Foundation, TransFair and Rättvisemärktwere… were set up in

other European countries and in North America. These

organizations formed Fairtrade Labelling Organizations International (FLO) in

1997, as the global umbrella organization for fairtrade. Its role is to set Fairtrade

Standards, support disadvantaged producers and coordinate the development of

global strategy on Fairtrade. It launched the international

FAIRTRADE Certification Mark used in most countries today “to

improve visibility of the Mark on supermarket shelves, convey a dynamic,

forward-looking image for Fairtrade, facilitate cross border trade and simplify

procedures for importers and traders” (FLO, 2009). Currently, 17 out of 19

labelling initiative members use this FAIRTRADE Certification Mark, while the

USA and Canada use the Fair Trade Certified™ labels to indicate that the same

Fairtrade standards have been met by the products bearing the label. FLO-

CERT, a company owned by FLO, inspects producers and traders to ensure they

comply with Fairtrade standards.

From the mid 70s, Fair Trade Organizations worldwide began to meet

informally in irregular conferences but only by the mid 80s did a desire to come

together more formally emerge. The European Fair Trade Association (EFTA,

an association of the 11 largest importing organizations in Europe) was founded

in 1987 and the International Fair Trade Association (IFAT), now the World

Fair Trade Organization (WFTO), in 1989. FLO, WFTO, NEWS! and EFTA

11

started to meet in 1998 under the name FINE with the aim to enable these

networks and their members to cooperate on important areas of work, such as

advocacy and campaigning, standards and monitoring of Fair Trade.

Parallel to fair trade labeling standards set by FLO, the World Fair Trade

Organization (WFTO) developed a monitoring system for Fair Trade

Organizations. Its Fair Trade Organization Mark was launched in January 2004

to “strengthen the credibility of these organizations towards political decision-

makers, mainstream business and consumers"(WFTO, 2009). The Mark is

available to member organizations that meet the requirements of the WFTO

monitoring system and identifies them as registered Fair Trade Organizations.

WFTO is working with FLO on a Quality Management System for Fair Trade.

1.1.3.3. Fair Trade Today

Fair Trade today is a truly global movement and a successful story. Over a

million small-scale producers and workers are organized in about 3,000

grassroots organizations and their umbrella structures in over 50 developing

countries, with their products sold in thousands of World-shops or Fair Trade

shops, supermarkets and many other sales points in both developed and

developing world (WFTO, 2009). Despite the recent global economic crisis, no

fair trade markets fell back and opportunities for growth are increasing strongly

(FLO, 2009).

According to the latest annual report by FLO, by the end of 2008 there are over

750 certified Fairtrade Producers worldwide with over 6000 Fairtrade certified

products available to consumers. Fair trade producer organizations have been

certified in 59 developing countries, while Fairtrade certified products are sold

in over 60 countries. Now there are over 2700 companies licensed to use Fair

Trade mark on products.

12

Figure 1.1. Number of Faitrade certified producers

Source: Collected and compiled from FLO Annual Reports retrieved from

http://www.fairtrade.net/annual_reports.html

Figure 1.2. Estimated Retail Value of Fairtrade certified products

Source: Collected and compiled from FLO Annual Reports retrieved from

http://www.fairtrade.net/annual_reports.html

13

1.1.4. Actors of Fair Trade movement

1.1.4.1. Producers

The producers are “at the very heart of the fair trade system” (IFAT, 2007).

Disadvantaged small-scale farmers, artisans, craftsmen… in the South usually

struggle to maintain sustainable lives due to difficulties in accessing markets and

gaining a fair share of profit in the conventional trading chains. By cultivating or

producing a wide variety of marketable products (food products like coffee,

cocoa, tea, fresh and dried fruit, spices, etc. as well as a wide variety of

handicrafts including baskets, glassware, jewellery, musical instruments, toys,

etc.) and exporting them to the consumer countries through fair trade channels,

they enter an equitable trading partnership that enables them to greatly enhance

their conditions.

Producers‟ organizations may be cooperatives or associations, family shops or

micro-companies, socially-minded businesses, or non-governmental

organizations. The groups vary enormously in terms of size: from 200,000

coffee producers in Latin America to 20 people with a partner in Burkina Faso.

Currently there are also producer Networks regional associations that represent

small-scale producers, workers and other producer stakeholders in Africa, Asia

and Latin America and the Caribbean.

o African Fairtrade Network (AFN)

Established in Addis Ababa, Ethiopia in 2004, the AFN‟s mission is to increase

Fair Trade awareness in Africa. The organization represents African Fair Trade

producers within FLO. In 2006, AFN membership amounted to 164 Fair Trade

Certified producer organizations and 43 FLO-CERT registered organizations in

24 countries of Africa.

o Coordinator of Fairtrade Latin America and the Caribbean (CLAC)

14

The CLAC was established as a legal entity in Oaxaca, Mexico in 2004. It

represents and unites co-operative organizations of small producers from Latin

American and the Caribbean. Currently CLAC consists of nearly 300 small

producer organizations in twenty countries of the region and estimates that the

number of families of affiliated small producers exceeds 200,000.

o Network of Asian Producers (NAP)

NAP was founded in 2005, at a meeting of producers in Sri Lanka. The

network‟s mission is to encourage more producers in Asia to join the Fair Trade

movement, and to ensure that Asian realities and conditions are taken into

account when FLO standards are set. NAP represents Asian producers within

FLO. Currently, NAP has 96 member organizations.

1.1.4.2. Fair Trade intermediaries

Similar to conventional trade, fair trade products are channeled to consumers

through fair trade intermediaries. These, however, have fair trade principles at

the core of their operations and many of them are recognized as “Fair Trade

Organization”, a mark labeled by WFTO under a series of standards (Refer to

Appendix 1 – Standards of fair trade organizations).

Fair trade intermediaries can be divided into two main categories: exporting and

importing ones.

Fair trade exporting marketing organizations work closely with

producer organizations, identifying markets, connecting disadvantaged

producers with importing organizations in the South and assisting small scale

producers in meeting fair trade demands and principles. They often play an

essential role when the producers are first introduced to fair trade system and

lack necessary resources to implement fair trade practices. By 2007, there had

15

been some 400 commercial exporters registered with FLO-Cert on the sourcing

side of the Fair Trade supply chain.

Fair Trade importing organizations in the South buy products from

producer organizations, sometimes from marketing organizations, at a fair price.

They assist their producer partners in product development, skill and

management training or additional support in difficult economic and social

conditions. In their respective home countries the importing organizations

operate as wholesalers or retailers, or sometimes as a combination of both.

The importing organizations initiate or participate in campaigns aimed at raising

consumer awareness on North-South issues. They promote Fair Trade as an

alternative to the unfair practices of international trade and lobby for change at

the political level. For this advocacy work they link up with a wide variety of

organizations working on related issues (development NGOs, aid agencies,

education centres, etc.)

The products are sold through two main trading channels:

o The integrated supply chain route whereby products are

imported and/or distributed by organizations that have Fair Trade at the core of

their mission and activities, using it as a development tool to support

disadvantaged producers and to reduce poverty, and combine their

marketing with awareness-raising and campaigning. In this supply chain route,

ATOs, humanitarian organizations and World Shops network play a vital role.

By the end of 2007, there were about 3,200 World Shops in Europe, 330 in

America, 350 in Japan and 60 in Australia (Krier, 2007).

o The product certification route whereby products complying

with international standards are certified indicating that they have been

produced, traded, processed and packaged in accordance with the specific

requirements of those international standards. Products traded in this route have

16

a broader access to supermarkets, store chains… The certification mark has both

ensured high quality and reassured consumers of the products value, in the face

of higher prices when compared to conventional products.

In this second route, many commercial companies have been attracted to Fair

Trade and have become the main driving force behind the enormous growth of

the past decades (Krier, 2007). The national initiatives organized within FLO

count an additional over 2000 licensees, i.e. importers, processors and

distributors who have been given the right to market Fairtrade certified products.

Many of the big coffee and restaurant chains such as Starbucks and McDonald‟s

are involved with Fair Trade by selling at least one or a few Fairtrade certified

products. Most of the largest international supermarket chains have also joined

in: Auchan and Carrefourin France as well as Rewe or Spar/Eurospar in

Germany are now Fair Trade‟s commercial partners, as are Co-op, Marks and

Spencer and Tesco in the United Kingdom or Wal-Mart in the US.

1.1.4.3. Ethical consumers

Fair Trade “has become a consumer-driven phenomenon, underpinned by the

growth of „ethical‟ consumption more generally” (Nichols and Opal, 2005).

Ethical consumers make a difference when purchasing fair trade products.

Aware of the inequality caused to marginalized producers by the current trade

system, they are ready to pay a premium to help increase fairness and improve

lives of more disadvantaged individuals. End-users of fair trade products do not

only make ethical purchases but also resist unfair trade practices through citizen

campaigns, pressuring governments and companies to improve the social and

environmental performance of trade.

A survey carried out by Alter Eco in 2008 pointed out that consumers associate

fair trade with ethically-driven business practices.

17

Figure 1.3. Motivation behind fair trade products

Source: Alter Eco (2008), Fair Trade Study, retrieved from http://www.altereco-

usa.com/media/images/altereco-fairtrade-study2008usa.pdf

Consumers in Europe, where the movement started, remain the biggest

supporters of Fair Trade, followed by Canadian, American, Japanese ones.

Notably, Fair trade is moving into a different era as developing countries

become consumers and not just producers of fair trade products. Southern

countries like South Africa, Brazil, Mexico, China and India are being seen as

fast growing consuming countries as well (Adema, 2009).

1.1.5. Benefits of Fair Trade

1.1.5.1. Benefits for small scale producers

The key principle of Fair Trade and the first standard that FTOs must adhere to

is creating opportunities for economically disadvantaged producers, thus helping

them break the poverty circles and develop economic self-sufficiency and

ownership. Factual figure points out the financial benefits brought by fair trade:

5 million people in 2008 benefited directly from Fair Trade in over 60 producer

countries. Since 1998, sales of certified Fair trade goods in just the U.S have

generated an estimated additional 150 million US Dollars for producers (Fair

Trade Resource Network, 2010).

18

The minimum price aims to ensure that producers can cover their average costs

of sustainable production and acts as a safety net for farmers at times when

world markets fall below a sustainable level. Meanwhile, the fair trade premium,

besides the fair trade price, goes into a communal fund for workers and farmers

used to improve their social, economic and environmental conditions through

investment in education and healthcare, farm improvements to increase yield

and quality, or processing facilities to increase income. The case of Fair trade

cotton is a good illustration for this. By 2007, FLO estimates that 28000 farmers

were benefiting from fair-trade certified cotton with significant financial

benefits: In the 2005/2006 harvest, the income farmers received for Fair Trade

Cotton compared to the cotton trade under conventional terms was 40% higher

in Senegal and 70% higher in Mali. This additional income made it possible to

concretely improve the lives of many communities. For instance, the 500

villagers of Association Dougouragoroni, a cotton cooperative in Mali, used part

of the fair trade premium to construct a proper building for the local school

which previously consisted of a hut (FLO, 2007).

Fair Trade norms also establish a more direct relationship between producers

and consumers, earning producers more profit for their products. To illustrate, in

the conventional coffee trade route (which links producers to consumers through

intermediary traders – exporters – importers – distributors), small family farmers

are at the mercy of intermediaries or estate owners to sell their products,

capturing a mere 2-4 per cent of the retail price (Oxfam HK, 2004). In the fair

trade coffee route, importers buy directly from certified cooperatives and pay

them the fair trade price and premium. Their direct relations also enable the

farmers to gain valuable information about the relevant markets. In 2003,

producers in Ethiopia were paid between US$100 and US$ 1000 more than had

they sold all their coffee on conventional markets (FLO, 2004).

19

1.1.5.2. Environment benefits and community development

Organizations which produce Fair Trade products sustainably maximize the use

of raw materials in their ranges, especially locally. They seek to use energy-

saving and environment-friendly production technologies and practices. Buyers

and importers of Fair Trade products give priority to buying products made from

raw materials that originate from sustainably managed sources, and have the

least overall impact on the environment. The use of agrochemicals, which

pollute air and earth, is minimized. Additionally, to qualify for fair trade

certification, fair trade producers have to abide by strict standards regarding

environmental protection such as prohibition of new planting in virgin forest

areas, safe disposal of hazardous waste, economical water consumption… that

preserve and protect the environment. FLO encourages small producers to work

towards organic practices where socially and economically practical.

In 2008 over 48% of Fair trade certified coffee was also certified as organic

(FLO, 2008). Meanwhile, in the flower growing industry of Kenya, fair trade

producers are protecting nearby water supply by harvesting rainwater or drill

boreholes for use by local communities. Soil conservation measures used by

Chipias‟s cooperative Majomut‟s organic coffee production programme

(supported in part by Fairtrade returns) have helped reduce soil loss from

erosion by 3,800 tons per year (Nelson and Pound, 2008).

Thanks to the financially-stable and environmentally-safe living conditions it

brings, fair trade has helped positive external impacts on the community. Fair

trade handicrafts products have helped many ethnic minority groups sustain their

ancestors‟ traditional professions. Fai Trade also encourages the participation of

women and younger generations in preservation of the community‟s values. Fair

trade premium is used to build infrastructural facilities such as schools, markets,

community houses… which strengthen the community spirit and create a better

living environment for the whole community.

20

1.1.5.3. Benefits for consumers

Many believe that Southern producers are the only ones who reap Fair-trade-

generated benefits. However, end consumers who make ethical choice and

purchase fairly-traded products also get a share of the rewards Fair trade brings.

First, as consumers, Fairtrade accreditation gives them the peace of mind of

knowing that the producers in question got a fair deal. They feel the gratification

of participating in a movement where every dollar spent counts as a vote which

reflects the customers‟ choice to support ethical companies and make a

difference in the life of a farmer or an artisan. Fair trade also creates an

atmosphere for businesses to act responsibly, and that the public can in fact

create such a change within business and has found it inspiring when

supermarkets change their practices towards stocking more ethically sourced

goods.

Secondly, with certified fair trade products, which are organically grown and

strictly environmentally controlled, consumers can also be assured that products

are safe for use and do not contain hazardous materials harmful to their health.

Fair trade producers receive a premium for Fairtrade products, so they naturally

select the better quality produce for this market which means consumers get top

quality goods to enjoy. In other words, shoppers get good value for money with

fair trade products. According to a survey taken by Alter Eco, quality is cited as

the second top reason consumers like fair trade products.

21

Figure 1.4. Reasons to buy fair trade products

Source: Alter Eco (2008), Fair Trade Study, retrieved from http://www.altereco-

usa.com/media/images/altereco-fairtrade-study2008usa.pdf

1.2. Fair Trade Rice

1.2.1. Development of Fair Trade Rice

1.2.1.1. Background for fair trade rice

Rice is one of the most vital crops on Earth, having been cultivated for

thousands of years, also becoming an integral part of culture, language, religion,

history, and tradition. As the most widely consumed food in the world, rice is a

staple food for three billion people worldwide and represents 20% of the world's

caloric intake. As a source of livelihood, rice supports nearly 1 billion people –

mostly small farmers in rural areas of developing countries who make their

living, mainly or even exclusively from rice production.

Since the 1960s rice production has increased steadily. However, hunger

remains a problem in many rice producing countries - even those that produce

significantly more than needed to meet domestic demand.

22

Due to the instability and fluctuations within the agricultural commodities

market, farmers' costs of living are often not covered by the returns made by

selling rice. Small farmers are often forced to sell their harvest at prices below

their production costs as they hardly possess the means to store freshly harvested

paddy rice until they can secure the best price. This leads to a situation where

farmers have dismal or negative savings. In Thailand, the world's biggest rice

exporter, 68% of farmers in the northeastern rice growing region hold a debt that

is three times their annual income. Inadequate financial resources and reduced

productivity result from a situation of financial downward spiral, which

successively lowers a farmer's annual income each year.

The increasing costs of modern rice production add to the cycle of debt facing

small-scale farmers. In India, for example, the conventional growing method

utilizes large amounts of pesticides and chemical fertilizers. While fertilizers

initially increase yields, more are needed each year as the soil hardens and

degrades. When world prices for rice are low, farmers take out loans in order to

pay for the expensive chemical inputs their soil now relies upon to produce.

Once in debt, very few ever manage to free themselves from the vicious circle of

indebtedness. This situation has forced many families to choose between selling

their ancestor's land or sending their children to cities to work as cheap labor or

in the sex industry. In India, these pressures have resulted in increasing

incidences of suicides. Mr. Changal Reddy, president of Federation of Andhra

Pradesh Farmers Association, reports that over 3,000 farmers in that Indian state

have committed suicide (ENGAGE, 2008).

In addition, in many regions it is becoming increasingly difficult, if not

completely impossible, to sell domestic rice at sustainable prices. Due to trade

liberalization policies, subsidized rice from highly efficient producer countries

such as the US and Japan, is dumped in foreign markets at prices

below production costs. Rice farmers from developing countries face a situation

23

where fair trade is a promising approach to rescue them from the vicious poverty

circle.

1.2.1.2. Emergence of Fair Trade rice

In the late 1980s, Claro fair trade (then One Sustainable Third World OS3)

established the first contact with Surin Farmers Support (SFS), a Thai aid

organization which worked to improve the living conditions of the indebted

small farmers in the North Eastern province of Surin; it thereby supported the

conversion to bio-farming, the establishment of rice banks and the direct

marketing of the products. In close collaboration between SFS, four rice groups

and OS3, fair trade rice, specifically the native fragrant rice Hom Mali (also

known as jasmine) and yellow Lüeng-On, could be exported for the first time in

1991 (Claro Fair Trade, 2004). Claro worked closely with the European Fair

Trade Association (EFTA) and distributed the rice to various EFTA NGOs, such

as Solidar Monde in France and Oxfam Belgium.

Following the successful cooperation between EFTA members and fair trade

cooperatives in Thailand and India as well as the successful marketing

campaigned held in World shops, FLO took the first steps towards the

introduction of Faitrade standards for rice production in 2000. Until now FLO

already certified 16 producers of fair trade rice in India, Egypt, Mali and

Thailand. Fair trade rice is now sold in America, Canada and almost all

countries in Europe.

Many varieties of rice have been welcome by international consumers. There are

now Fair Trade Jasmine, coral, and red rice from Thailand and Fair Trade white

and brown Basmati rice from India... with sales continuing to increase.

24

Table 1.5. Sales of Fair trade rice (in MT)

Country 2004 2005 2006 2007 2008

Austria 51 88 109

Belgium 39 85 112

Canada 12 14

Denmark 31

Finland 2

France 310 456 778

Germany 170

The UK 27 385

Ireland 1

Italy 34 115 163

Luxemburg 6

Netherlands 53

Norway 9 3

Sweden 1 3

Switzerland 948 914 978

USA 177

AUS/NZ 1

TOTAL 1 383 1704 2 985 4 208 4685

Source: Collected and compiled from FLO Annual Reports retrieved from

http://www.fairtrade.net/annual_reports.html

1.2.2. Standards of Fair Trade Rice

FLO took the first steps towards the introduction of Faitrade standards for rice

production in 2000. The latest version of Fair Trade Standards for Rice for

25

Small Producers‟ Organizations, 16.02.2009, comprises of 3 parts: Part A

Generic Fair Trade Standards for Small Producers‟ Organizations; part B

Product Specific Standards for Rice; Part C Trade Standards for Rice

1.2.2.1. Generic Fair Trade Standards for Small Producers’ Organizations

In it latest version 15.08.2009, the set of Generic Fair Trade Standards for Small

Producers‟ Organizations include Social Development; Socioeconomic

development; Environmental Development; Labor Conditions.

Fairtrade standards for rice ensure that:

- Producers are small family farms organized in cooperatives (or associations)

which they own and govern democratically.

- The minimum guaranteed price is paid directly to the producer cooperatives.

- Environmental standards restrict the use of agrochemicals, ban genetically

modified plants, and encourage sustainability.

- Pre-harvest lines of credit are given to the cooperatives if requested, of up to

50% of the purchase price.

- A Fairtrade Premium is paid on top of the purchase price. This is used by

cooperatives for social and economic investments such as education, health

services, processing equipment, and loans to members.

- No forced or child labour.

26

1.2.2.2. Product Specific Standards for Rice

For each product, according to FLO‟s monitoring system, specific standards

concerning social development, economic development and environment

development … exercised by the certified organizations must be met. However,

there are no additional social, economic or environmental standards specific to

rice producers.

1.2.2.3. Trade Standards for Rice

FLO sets generic trade standards that govern the terms of trade for all Fairtrade

products which must be met by all Fairtrade producers and traders. These

generic trade standards (6 of them – certification; traceability; contracts;

sustaining trade; pre-finance; pricing) are listed in the latest version 15.08.2009

(See Appendix 2). The trade standards for rice add some specific standard in rice

fair trade: Fairtrade rice can be traded in its different forms as paddy, cargo rice,

white rice or parboiled rice. The required quality standards for all forms of rice

are agreed between the Fairtrade Payer and seller with reference to customary

international trade standards.

27

Chapter 2: Fair Trade Rice in Thailand

2.1. Background for fair trade rice movement in Thailand

2.1.1. Thai rice production and plight of Thai rice farmers

Rice has been an essential part of Thai people for at least 6000 years when rice

was first harvested. Nutrition from rice makes up 55-80 per cent of Thai people

total calories consumed and an average Thai eats 600 kilos of rice every year

(Roggerman, 2007). Today, Thailand is considered “the world‟s rice bowl” as

the world‟s biggest rice exporter. The volume of exports reached 9 million

tonnes in 2009 fetching more than 180 billion baht in revenue.

The most produced strain of rice in Thailand is jasmine rice (Hom Mali, fragrant

rice) which is especially flavored by the world markets thanks to its sweet

fragrance and soft texture. Jasmine rice comes from the the unique soil and

climatic conditions of the Northeast region of Thailand – known as Issan.

Traditional methods of growing rice (which is traditionally cultivated once a

year during the rainy season) are manual planting of indigenous rice varieties

and harvesting by hand.

Despite the world status of a giant in rice production, Thai farmers still suffer –

“the increase of Jasmine rice exports has paralleled the rising incidence of

landlessness and amount of debt facing farmers” (Rogermann, 2007). In Isaan,

71.9 percent of the population is involved in the agricultural sector, with an

annual income only one third of the national average. In 2004, more than 61.1

percent of landholders in the Northeast were in debt from agriculture, averaging

45,079 baht ($1172) per household and totaling 73 billion baht (about $1.9

billion) for the region. The situation facing Thai rice farmers is often attributed

to the advent of the Green Revolution in Thailand.

28

The Green Revolution was initiated by the First National Economic and

Development Plan of Thailand in 1961. It stressed the use of western

agricultural technologies - chemical fertilizers and pesticides, modern

agricultural machinery like tractors and mechanized harvesters, and the use of

high-yielding seed varieties grown in monocrops. The Green Revolution

succeeded in increasing rice yields, as rice yields rose 85% and total production

doubled between 1961 and 1990

(Roggerman, 2007). However, it

simultaneously increased the costs of farming and decreased the price of many

agricultural products, with rice‟s real prices fell by more than 50 percent

between 1961 and 1990. Many industrialized “Green Revolution” methods of

farming have decreased the quality and the price of a rice harvest, while adding

costs for the farmer. Fertilizer and pesticide use have made farming more

expensive because they have resulted in a loss of biodiversity and an increase in

soil salinity, water pollution and health problems. The incidence of pesticide

poisoning grew over 251 percent a year from 1971-1998 (ENGAGE, 2008).

Meanwhile, in order to pay for the chemical inputs recommended by

government agencies, farmers were obliged to take out high interest loans from

agriculture banks. Farmers took out more loans each year to pay for increased

chemical inputs. At the same time, the paw kaa cong klang, literally “the vendor

of the middle” was increasingly seen as an obstacle for farmer‟s to receive fair

prices (Haynes, 2008). Farmers, therefore, have not been able to repay their old

debts, but instead have taken out new loans to cover the costs of the next

season‟s harvest. In this way, a cycle of debt has been created. The debt facing

farmers breaks up Thai families as working-age people migrate to cities to find

jobs in construction, factories with sweatshop-like working conditions, and the

commercial sex industry.

Thai rice farming also suffered from external factors, such as the potential Thai-

U.S. FTA which increases competition between small-scale producers in

29

Thailand and heavily subsidized producers in the U.S. by forcing Thailand to

further open its borders to trade. Thai‟s proud Jasmine also faced biopiracy,

specifically the US, whose technological resource allows it to create a

hybridized Jasmine and patent American Jasmine without sharing the benefits

with Thai farmers. The Thai-U.S. FTA extends corporate patents of seeds and

pressures Thailand to accept Genetically Modified Organisms (GMOs) while

also flooding the Thai market with cheap imports from the US. These worsen

the situation of Thai farmers, many of whom are already struggling to support

their families.

2.1.2. Initiation of Fair trade rice in Thailand

Volatile prices, destructive chemical fertilizers, continually mounting debt, and

the disintegration of their communities forced Thai farmers to come up with a

solution to improving their lives. Organic farming and fair trade partnerships are

their long-sought way out.

The farmers decided to stop using chemical inputs and go back to farming the

way their ancestors had long before the Green Revolution invaded Thailand, to

grow organically. And instead of being at the mercy of corrupt middlemen, the

farmers entered a Fair Trade partnership where they cooperatively run their own

mill and sell to conscious consumers domestically and in Europe. Fair Trade is

one of the newest approaches taken by Thai farmers in their way seeking better

farming alternatives. The benefits that Fair Trade brings are promising to

farmers who want to get rid of their debts and build a better life for their

children.

Surin Farmers Support (SFS), an NGO that works to address the predicament of

farmers in Surin, created the Natural Agriculture Group (NAG), a farmer

organization dedicated to organic production in the province of Surin. All

30

members of NAG are also members of the Rice Fund, an organization that is

jointly owned by Surin Farmers Support, which buys the rice from the farmers

for a price that is pre-determined and criteria such as the type of rice, the

moisture in the rice, the percentage of unbroken rice, and the organic qualities of

the rice pre-discussed. At the same time that NAG was growing in Surin, the

Yasothorn Farmer Group Network (FGN- Yasothorn) was developing in a

neighboring province. This group formed the Nature Care Rice Mill (NCRM),

which purchases and mills rice from the members of FGN-Yasothorn.

In 1995, Surin Farmers Support contacted Green Net, a Bangkok-based organic

foods trader, and proposed the idea of exporting fair trade jasmine rice. Green

Net established a subsidiary, Green Net Cooperative, to export the rice. Just as

with a commercial exporter, Green Net received orders from European importers

and then communicated these orders to the Rice Fund and NCRM (Keppelman,

2008). Thai rice‟s first fair trade partner in the North was Claro Fair Trade of

Switzerland who introduced the rice to other fair trade organizations in France,

Germany, Italy, Belgium… Thai fair-trade-certified Black Jasmine, Coral Red

Jasmine… are now present in almost all countries in Europe, the US and Canada

on the domestic market as well. Currently, Thailand has 6 rice producers

certified by FLO (FLO, 2010).

For the farmers growing Jasmine rice, fair trade has provided significant

benefits. It has generated a steady income for farmers that have enabled many to

get out of debt “I was in debt tens of thousands of baht the year I made the

transition from chemical farming to organic farming. I have done organic

farming with the Fair Trade network for six years, but my debt was gone in two

years” – a Surin farmer said. Furthermore, since the rice is organic, both the

health of fair trade farmers and the environment have improved. Fair trade also

helped revive the community unit. Wattanasak Sitsungneung, a Thai fair trade

farmer sums up the impact Fair Trade rice has had on his life “Since we‟ve

31

changed to organic production, through the fair trade network, we‟ve started [to]

be happier as a family. Debt caused a lot of stress. If the kids wanted to go to

school further then we would have to borrow more money. But by selling fair

trade, we have more money left and can pay for things like sending our children

to school. The whole family can sit down and talk with each other about what

we are doing. If we can talk and find understanding within our own family,

that‟s happiness.” (ENGAGE, 2008)

2.2. Thailand’s experience in developing Fair Trade Rice

2.2.1. Thai fair trade rice trading routes

As the pioneer in promoting fair trade rice, Thai fair trade developers followed

two steps to penetrate the fair trade market: At first, Thai rice was distributed

through the integrated supply chain with a view to taking advantage of the

experience of Southern FTOs regarding partner networks, market research,

technical support... Later on, once Thai producer organizations were already

accustomed to the farming practice, distribution procedures, democratic

management… they decided to join the certification route, connect directly with

importers and establish own supply chains for their products.

2.2.1.1. Integrated Fair trade supply chain route

When fair trade was first introduced to Thailand in the early 90s, the concept

was new to Thai rice farmers who had little experience in marketing and few

resources to produce rice products ready to meet the requirements set by the fair

trade markets. Rice was also a new product penetrating the conscious

consumers‟ markets and a successful launch would require professional

promotion. Given all these conditions, the integrated fair trade route, with strong

support from partners of developed countries, was the best way to initiate fair

32

trade rice in Thailand. The following diagram illustrates the supply chain of fair

trade rice in this route, with the main roles of Green Net Cooperative as the

Southern export marketing organization and Claro as the Northern import

organization:

Figure 2.1. International integrated chain route for fair trade rice in

Thailand

Source: Keppleman, Suzy 2004, Jasmine Rice Market Research, URL accessed 15.1.2010

http://engage-humanity.org/materials/food/jasminerice/JR Market Research - S.

Keppelman.pdf

Green Net Cooperative

The "Green Net" was established in 1993 by the group of people wishing to

support the environmental and social responsible business. As the first organic

fresh produce wholesaler in Thailand, Green Net opened her first trading on 20

October 1993 with only 3 staffs. Nowadays, Green Net is still the leader of

organic food wholesaler in Thailand, with around 1,100 members, most of

whom are organic farmers producing organic long grain red, white and brown

33

jasmine rice, with an estimated annual production of 8,360,000 pounds (Fair

Trade Foundation UK, 2008). After a restructuring of the organization in 2000

Green Net is responsible for the marketing area while services such as training

and consultation are performed by the NGO Earth Net Foundation.

In 1995, after receiving the proposal of exporting fair trade jasmine rice from

Surin Farmers Support, Green Net established a subsidiary, Green Net

Cooperative, to export the rice. Green Net‟s goal is “to serve as a marketing

channel for small-scale organic farmers with fair trade principles in its

marketing activities.” It supported farmers groups in Surin, adjacent provinces

Yasothorn and Changensao in organic training, distribution of orders, quality

control…

After harvest, farmer groups will calculate the estimated rice amount for export

and inform Green Net, who then announces the figures to fair trade importers

and receive orders from them. These orders are communicated to farmer groups

so that they can collect the corresponding amounts from cooperative members.

Fair trade rice export is de-husked in the organization‟s own plants, further

processed, packaged and transported to Bangkok. Green Net will then export the

rice to Europe for sale in world shops (Keppelman, 2006).

Claro Fair Trade

Claro fair trade (founded in 1977), a member of the European Fair Trade

Association (EFTA) and the World Fair Trade Organization, deals with

specialties from the southern countries of the world. It opens distribution

channels and outlets in the countries of the north for its southern partners‟

products, with trade carried out directly as long-term relationships. The range of

goods traded by Claro covers more than 2000 products, with rice being listed as

one of the main ones (Claro fair trade, 2009). In Switzerland claro products are

available in 136 Claro shops. Claro fair trade also supplies products to over 500

shops around the world.

34

In the late 1980s, claro fair trade (then OS3) established the first contact with

Surin Farmers Support (SFS), a Thai aid organization which worked to improve

the living conditions of the indebted small farmers in the North Eastern province

of Surin. It thereby supported the conversion to bio-farming, the establishment

of rice banks and the direct marketing of the products. After the first fair trade

rice was exported as an experiment for the first time in 1991, Claro fair trade has

given considerable support to Green Net (Claro fair trade, 2007) in developing

and expanding the first fair trade rice project and contributes to its further

development in the following ways:

o Guaranty of a minimum price which is considerably over the

production costs and a fair trade premium or a bio-bonus for certified products –

Claro worked closely with Green Net to help farmers reach organic standards

required in the European markets and thus securing a better price deal.

o Partner support, quality assurance and orders on behalf of European

fair trade organizations. As the diagram shows, Claro linked Green Net with

other partners in Belgium, Germany, Italy… Claro has over 136 shops in

Switzerland and supplies products to over 500 shops around the world.

o Willingness to sell other bio-products in the European fair trade

network. It helps Green Net to expand its organic product range, including more

rice varieties and other products like coconut.

The first cooperation between Claro Fair Trade and Green Net laid the

foundation for the development of fair trade rice in Thailand.

2.2.1.2. Product certification Fairtrade route

As fair trade rice gradually became known to consumers and rice farmers

accumulate more experience in fair trade production practice, Thai farmers

began to think of fair trade certification as a means to further expand the market

for fair trade rice. In 2002, Green Net was registered as the first fair trade rice

producer in the world by FLO. Such registration allowed Green Net to put the

35

FLO label on rice produced under the organic and fair trade project. Its certified

rice is now marketed by Green Net to appear in various shops both in and out of

Thailand.

Green Net selling places

Green Net set up its first “green shop” in October 1993, and has since adopted a

number of retailing strategies, including the establishment of mobile stalls in the

vicinity of government offices, office buildings and business establishments

(Hermida, 2007). Aside from retailing, Green Net has also ventured into the

wholesale marketing of organic vegetables and products to privately-owned and

NGO managed organic shops in Bangkok and other major cities. It currently

supplies organic products to more than 40 affiliate organic shops across

Thailand, with fair-trade and organic-certified rice in the spotlight.

In the international market, empowered with the fair trade certification mark,

and export licensee granted by Thai Department of Foreign Trade, it can export

fair trade rice directly to various partners in Europe (Green Net, 2010).

Thailand‟s experience also points out is that not only large-scale organizations

can accumulate enough resources to meet strict fair-trade standards, but small

scale producer organizations can also mobilize themselves to achieve what is

expected of the fair trade partnership, as with the case of Rice Fund Surin.

Rice Fund Surin

Until 2004, Rice Fund Surin used to be part of Green Net. At the beginning of

2005, Rice Fund Surin decided to take a big step forward and to become

independent from Greennet, an enormous challenge for a cooperative with only

45 members. Today it has about 588 members with an Estimated Annual

Production of 2,000,000 Pounds. The cooperative applied for Fairtrade

Certification, which they received in August 2005 and provided them with a

direct access to the international market. Some of its direct partners are

36

Rice Fund Surin

Green Net

Cooperative

Certified

producers

Domestic

market

Foreign

market

Others

Others

Organic shops

Alter Eco

stores

Supermarkets

European

supermarkets

Others

The cooperative‟s Fairtrade certified rice can now be found in supermarkets in

several countries in Western Europe and in the USA. Growing sales figures are

not only reflecting the success of the Fairtrade certification for the Rice Fund

Surin, but also suggest a bright future for the cooperative and set the course for

expansion (FLO Annual Report, 2006).

Rice Fund owns the rice mill, packaging facility and the office, avoiding the

added cost of multiple transports during the various stages of transformation. All

the members of Rice fund are stakeholders. Rice Fund is made up of 9 smaller

local-community groups, which nominate a cooperative member to the Rice

Fund board. The staff of Rice Fund oversees all rice sales and work to develop

markets for the rice (Decook, 2005).

Rice Fund has set up direct partnership with Alter Eco Americas, which

launched fair trade rice in the USA in 2006 (Green America, 2006). Alter Eco

currently sells Thai White jasmine rice, Ruby Red Jasmine rice and Coral Red

Jasmine Rice from Rice Fund Surin. Woodstock Farms, Ahaar Organic Foods

are some other reputable fair trade rice distributors in the USA.

Domestically, Rice Fund Surin sells part of it organic rice in local Green

markets, which is organized by Surin Farmers Support.

Source: Author

Figure 2.2. Product certification route for Fair trade rice in

Thailand

37

2.2.2. Development of organic farming

As defined by the International Federation of Organic Agriculture

Movements (IFOAM), “Organic agriculture is a production system that sustains

the health of soils, ecosystems and people. It relies on ecological processes,

biodiversity and cycles adapted to local conditions, rather than the use of inputs

with adverse effects. Organic agriculture combines tradition, innovation and

science to benefit the shared environment and promote fair relationships and a

good quality of life for all involved”.

In fact, the difference between Fairtrade certified products and organic ones is

simply that fair trade includes extra income for farmers. Realizing the close

connection between fair trade principles and organic agriculture methods is a

success of the stakeholders in the Thai fair trade rice movement. The conversion

from conventional farming methods to organic ones enables Thai rice to break

into the Fair trade international networks smoothly. Different entities have

joined efforts in the development of organic farming in Thailand.

Thai farmers and NGOs

Thai farmers and NGOs, who recognized the urgency to abandon the chemical-

overloaded farming way, initiated Thai organic agriculture development. The

Alternative Agriculture Network (AAN) around the early 1980s was established

in this stream to foster sustainable agriculture activism in Thailand (Green Net,

2010). Its main goals are to support small-scale farmers to adopt sustainable

farming practices with the intention of improving their living and agro-

ecological conditions in the rural areas. The conversion strategies put the stress

on raising farmers‟ awareness of the negative impacts of agro-chemicals and the

undue dependency on external markets. Indigenous knowledge of sustainable

38

farming practices are promoted through seminar, research, study tour, and

individual on-farm experiments.

One of AAN‟s most effective programs was the pilot project to promote organic

rice farming in Thailand, with the cooperation of Green Net and Surin Farmers

Support. "The Farmer-Field-School" (FFS) and "Participatory Technological

Development" (PTD) are the main tools for developing appropriate organic

farming skills and technology while also incorporating local indigenous

knowledge (FAO, 2005). AAN and Green Net also worked together to establish

the first Thai body to certify organic products.

o The FFS is a participatory adult learning approach where during the

cropping season, participating farmers come together on a regular basis (e.g.

every 7, 10 or 14 days) to learn about agro-ecosystem management.

Participating farmers are encouraged to observe both conventional and organic

fields under local conditions similar to their own fields, and compare the crop

growth and yield. Through this process, farmers have an opportunity to share

their indigenous experience and learn about the different organic management

alternatives applicable to their local situations. Some farmers adopt the

management recommendations on their farms after observing the results of the

school fields (FAO, 2005). The Farmer Field School approach has proliferated in

other countries as well, including India and Indonesia as a way for NGOs to

raise awareness about their work and cultivate a sense of ethical responsibility

among farmers (Haynes, 2008).

o The PTD focuses on training farmers in the use of practical organic

farming techniques and appropriate technology. Local indigenous knowledge,

such as micro-irrigation and composting techniques is first discussed and

evaluated by farmers. Then the group sets up a field trial in the participants' own

fields. The results of field trials are later presented to the group for collective

learning. After the FFS, the farmers are encouraged to continue to work together

39

to further develop ecological farming technologies through the PTD

methodology. This empowers the farmers to design and control the technology

development process appropriate to local and changing agro-economic

conditions. As farming techniques improve, farmers‟ groups are strengthened

“in order to become more effective in delivering technological services to their

members, reinforcing consciousness and ethical responsibility, and handling

organic produce.” (Haynes, 2008)

o ACT (Agriculture Certification Thailand) was founded in 1995 to

provide inspection and certification services to ensure better market access for

organic products. Organic Agriculture Certification Thailand was granted

IFOAM accreditation in 2001 and was the first certification body based in Asia

to become IFOAM Accredited (International Organic Accreditation Service,

2010). The standards of ACT were based on the grass roots movements and

remain practical for Thai farmers whilst meeting international market

requirements. ACT has focused attention on providing certification services to

small-holder producers through the grower group certification which operates

fully in line with IFOAM Norms on smallholder certification. After being

certified, the farmer organizations are assisted to develop Internal Control

Systems (ICS) to monitor the compliance of participating farmers with organic

standards. Farmer leaders and their staff (they can sometimes also be NGO staff)

are trained to run the ICSs and conduct internal farm monitoring and inspection.

This helps to further strengthen producer organizations and ensure that organic

standards and certification requirements are adhered to.

Local entrepreneurs:

Organic farming movement in Thailand was also supported by local

entrepreneurs who have connection with overseas markets (Green Net, 2010).

They (or their trading partners overseas) noticed the emerging organic markets

and realized the business opportunity. As they normally lack of knowledge on

40

production, especially organic farming, they thus engage local researchers and

government agencies in helping them with farmers‟ conversion. They also tend

to use services of foreign organic certification bodies as suggested by their

overseas trading partners. Green Net first started its operation in this stream.

Another typical entrepreneur example is Capital Rice Co. which started organic

rice project in 1991, used the certification service by Bioagricert, Italy and

began selling organic jasmine rice in Thailand and overseas in 1994. These early

pioneers appear to be the large-scale business with export facilities, however,

when the domestic market emerges, more and more of smaller local business

and entrepreneurs come into the scene.

Thai government

Thai government is a vivid supporter of the organic government.

In 2000, The Cabinet approved US$ 15.8 million (633 million baht) to support a

3-year pilot project on Sustainable Agriculture for Small-Scale Producers. The

project was coordinated by the Sustainable Agriculture Foundation and covered

3,500 farming families. In 2002, Ministry of Agriculture and Cooperative

(MoAC) stablished National Office of Agricultural and Food Commodity

Standards (ACFS), responsible for implementing/enforcing national agricultural

and food standards as well as accreditation.

In 2004, Organic Agriculture Fair was organized by the Ministry of Agriculture

and Cooperative and the Cabinet adopted a resolution to put organic agriculture

on the national agenda and in 2005, the government set aside a 1,215.9 million

baht budget for the implementation of National Agenda on Organic Agriculture

for 2005/06. 23 public agencies were involved with the main objective to reduce

the use of agro-chemicals in conventional farms.

41

2.2.3. Empowerment of small-scale farmers

One of the key principles of fair trade is the empowerment of marginalized

producers. In Thailand, this goal was achieved through a combination of efforts

made by both small scale producers and other entities.

Fair Trade Cooperative management

The organizational structure of Fair Trade Cooperatives is one of the most

successful methods used to mobilize farmers. Take Rice Fund Surin as a typical

example of how transparent and democratic organization is exercised within a

cooperative. Rice Fund is made up of 9 smaller local-community groups, which

nominate a cooperative member to the Rice Fund board. Rice Fund committee

members – who act as a General Assembly, meet once a month and local groups

generally meet every two weeks (Decook, 2005). All members of Rice Fund

meet for the Annual Meeting. Participants have the opportunity to exchange

their new techniques and experiences as well as build relationships among other

organic rice producers. Farmers also discuss the current challenges they

encounter with sustainable, organic agriculture, and brainstorm ways to help and

support each other. Awards are also given out to outstanding farmers to

congratulate their success.

Fair trade cooperative members also discuss to divide the income from the

Fairtrade premium. In Green Net Cooperative, for example, 70% is kept for

revolving fund to support sustainable agriculture, including financial aid to new

members and farmers with difficulty in transition; 10% for community and

public facilities such as road repair, supporting activities in the villages etc; 15%

for welfare of organic farmers e.g. insurance, other cultural and socioeconomic

reasons and 5% for administrative expenses (Fair Trade Foundation, 2010).

42

Involvement of children and women

Thai fair trade producers also realize the importance of passing knowledge about

organic sustainability to the youth. Children in Thabtai village, Surin formed

“Kids love nature” club in which they learn about their environment from the

elders of the village, and the children use their new knowledge to serve their

community. Their activities include planting vegetable gardens for members of

the village, gathering mushrooms and herbs from the forest, making organic

fertilizer, collecting trash to make compost, giving merit at the local temple or

touring the cooperative rice mill. All these are aimed at developing the pride of

youth in their agricultural livelihood.

Fair Trade also empowers women. In Surin, a women‟s group exists for

members of the local cooperative group. They hold mini-projects such as

teaching money management for women who sell their supplemental crops at

the local Market, preserving the local culture through ceremonies… Their

decision-making is conducted in a democratic process – which they pride

themselves on. At Green Net, rice is currently de-husked in four of the

organization‟s own plants and further processed and packaged by women's

groups. The mill in Yasothorn and Green Net are managed by women.

Participation of farmers in quality control, farming development and fair

trade promotion

Farmers got involved in the internal control system to meet the standards set by

fair trade. Besides organic testing, all rice is checked for moisture levels and rice

quality when it is brought to the mill. Farmers may help conduct these tests and

are allowed access to their records, maintaining transparency and ownership

over the process. This is a sharp contrast to conventional rice mills, where

farmers are sometimes taken advantage of though incorrect scales, data entry or

assessment of rice quality (Decook, 2005).

43

The FFS and PTD discussed above also equip Thai rice farmers with the

opportunities to integrate their own experienced methods and techniques into

growing organic rice. Other training and education on the benefits of organic

farming and fair trade, promotion of indigenous seeds, know-hows to make

organic fertilizers, system of rice intensification… given by local NGOs (Surin

Farmers Support is among the most active ones) enhance the knowledge and

capacities for Thai farmers.

Thai fair trade cooperatives farmers regularly welcomes peers from nearby

provinces, all over the country and Southeast Asian countries to learn about the

successful model. In September 2005, ENGAGE (Educational Network for

Global and Grassroots Exchange), an American NGO sent the Thai farmers to

the United States to raise their voice and promote Fair Trade organic rice. Upon

their return to Thailand, the farmers “have continued to be strong community

leaders, helping to promote community development and environmental

sustainability” (Decook, 2005, p.24)

2.2.4. Development of a Fair Trade Network

Thailand‟s fair trade rice movement is successful in its development of a fair

trade network – which not only connects producers to producers, producers to

customers but also involves other entities in society both at local, regional and

international levels.

Producers to producers:

Farmers receive support not only from other members within cooperatives

(credit scheme, seed sharing, peer-to-peer learning…) but also farmers in other

provinces. Farmers in Surin cooperative regularly welcomes farmers from the

provinces of Chiang Mai and Yasothorn, as well as others from all over the

44

country to Surin, to learn about the organic rice production in the region. In

2005, cooperatives members traveled to America to promote Fair Trade organic

Rice and exchange with small-scale American farmers, learning about their

challenges and successes. The Green Net Rice Chain Course brings NGOs and

farmers from the Philippines, Sri Lanka, Cambodia, India and Malaysia to Rice

Fund in Surin to study the entire organic rice process.

Producers to consumers

Thai fair trade producers do a considerable amount of outreach to consumers to

educate the general public about fair trade, as well as create new market places

for its products.

o Consumer Tours:

Rice Fund Surin cooperative welcomes consumer tours to come and learn about

organic rice from the farmers. For a few days, these consumers talk to

cooperative members and educate themselves about sustainable organic

agriculture. Many of these consumers are also vendors also sell rice from Surin

in their stores. Visitors from all over the world, including rice consumers from

the European Union and America who purchase Thai organic jasmine rice,

vendors, government officials and journalists are also welcome to meet with

producers and learn about where their food comes from. This tenet of Fair Trade

helps promote cross-cultural understanding and the expansion of foreign rice

markets. Visitors travel to Surin through connections with IFOAM, Alternative

Agriculture Network and other Fair Trade or organic organizations.

o Green Markets and Community Support Agriculture

Green Markets (held in Chiangmai, Surin, Yasothorn…) allow rice farmers to

sell their supplemental crops directly to local consumers. Green consumer

groups have sprouted up to support the movement of Green Markets and become

45

avid advocates for local producers. In the coming year, with the support of the

Thai Health Promotion Foundation, continuing green consumer efforts will be a

priority for Thai fair trade network (AAN Isan, 2008)

Additionally, Thailand‟s Community Supported Agriculture (CSA) program was

already started. In a CSA, consumers make a financial commitment to the

farmers‟ organization, typically paying at the start of the season, creating a firm

relationship between farmers and customers (Haynes, 2008).

Involvement of other parties

o Thai fair trade rice movements involve a lot of research institutions,

including local universities such as Ubon University (with the study “The

Comparative Costs of Inputs: Chemical vs. Organic Agriculture.”), Surin

Rajahbat University (studied decision-making methods in the transition to

become sustainable agriculturists). On a national level, Thailand Institute of

Technological and Scientific Research (TISTR) / Export Promotion Department

of the Ministry of Commerce, and the Department of Agriculture (DOA) work

together to draft organic rice standards and solutions to enhance the efficiency of

rice farming.

o Local governments support Fair trade as well. In Surin, the

provincial government financially supports the cooperative by providing a grant

for expansion of the mills storage facilities and paid some of the certification

fees. Rice Fund leaders have consulted with the governor and his staff on

organic standards for the province, and how to aid farmers in obtaining

certification. Through activities such as this Surin was named the country‟s first

organic province (Decook, 2005).

o Thai university students often visit the cooperatives to learn about

organic agriculture. This allows for educational outreach within Thailand,

helping teach the next generation about how to continue farming as a sustainable

46

way of life. International students come to Surin through the Council for

International Educational Exchange (CIEE) study center in Khon Kaen can gain

a greater perspective on the importance of organic agriculture and Fair Trade

marketing.

o Thai Fair Trade development is also imprinted with efforts made by

ENGAGE (Educational Network for Global and Grassroots Exchange), an

American NGO comprised primarily of returned study abroad students from

Thailand. Since 2003, ENGAGE has played a crucial role in bringing Fair Trade

rice to supermarket shelves, college campuses, and communities throughout the

United States. ENGAGE has organized four different Speaker Tours, bringing a

total of ten Thai Fair Trade rice farmers to over 20 different cities in the United

States to connect with and educate over 2,000 people about Fair Trade, rice

farming, and the struggle to maintain a sustainable livelihood. Its ongoing Fair

Trade Jasmine Rice Campaign has helped bring organic Fair Trade rice to the

United States and raise awareness about the issues of small-scale farming and

the global food network (ENGAGE, 2008).

47

Chapter 3: Recommendations for developing Fair Trade rice in

Vietnam

3.1. Background for Fair Trade Rice in Vietnam

3.1.1. Overview of Vietnam’s rice production and trade

3.1.1.1. Rice production

Vietnam is one of the most important rice producers in the world, contributing

significant role in the international food security. Rice production in Vietnam

plays a crucial role in the Vietnamese rural economy, with nearly 80 per cent of

Vietnamese farmers cultivating rice. Geography of Vietnam is diverse, there are

high mountain in North and Central, the Vast highland in South Central known

as Central Plateau and two big plains i.e. Red River Delta in the North and

Mekong River Delta in the South. Vietnamese people cultivated rice since early

of their civilization. Rice cultivation started with the Hoa Binh Culture and has

been developing along the history of the country, in different geographical

regions.

Since the introduction of Doi moi, the economic reform that massively changed

every aspect of the economy, Vietnam has acquired considerable achievement in

rice production. It shifted from a rice-importing country to self-sufficient rice

producing one and later the world second ranking rice exporter.

From 1976 to 1989, rice area and output were stable, standing at about 5.4 – 5.8

hectares and the highest output reached 18 million tons.

From 1990 – 2001, both rice area and output increased significantly. 1999 saw

the first time that rice output exceeded 30 million tons. Rice planting area

reached an all time high record of 7.67 million hectares from 1999 – 2000. From

48

then on, rice area began to retract while the paddy volume remained stable at 34

– 36 million tons. Rice farming land area and output picked up again in 2007.

Figure 3.1. Rice Planting areas (In hectares)

Source: MARD (2009), Statistics and food security database

Figure 3.2. Gross paddy output (in million tons)

Source: MARD (2009), Statistics and food security database

49

3.1.1.2. Rice trading

The period 1989 – 1995 saw a gradual increase in export volume and value of

rice. In 1996, rice exports for the first time exceeded 3 million tons and

continued the upwards trend to reach a new record of over 5 million tons in

2005. In 2007, Vietnam was estimated to reach over 4.6 million tons, creating a

3-year-succession of over 1 billion USD in value for rice exports. Vietnam, for

the first time, took over India as the world‟s second biggest rice exporter.

Figure 3.3. Rice export volume (Thousand MT)

Source: Vietnam Food Association (2009), Yearly export statistics,

http://www.vietfood.org.vn/en/default.aspx?c=108

50

Figure 3.4. Vietnam’s rice export value (Million USD)

Source: Vietnam Food Association (2009), Yearly export statistics,

http://www.vietfood.org.vn/en/default.aspx?c=108

Export markets for rice: The country‟s rice now has its presence in over 70

countries and territories. Asia is the biggest export market for Vietnamese rice,

accounting for 61.68% the total export value of rice in 2009 in comparison with

50.8% in 2008. Philippines, Malaysia and Cuba are the biggest Vietnamese rice

importers. In 2009, the Philippines imported from Vietnam a rice amount worth

US$853.1, equivalent to 37% of the total rice exports. Africa and the Middle

East are the two emerging markets for Vietnam. According to the statistics of

the first 3 quarters of 2009, Vietnam shipped approximately 1.4 million tons of

rice to Africa, which makes up 27% of the total export volume, an increase of

98% from that in 2008. The quantity of rice exported to the Middle East stood at

250,000, a 65% year-on-year growth (MARD, 2010).

51

Figure 3.5. Vietnam’s main export markets 2009

Source: MARD (2009), Forecast of 1st Quarter 2010, retrieved from

http://www.agroviet.gov.vn/Pages/thongkedubao.aspx?TabId=thongke

3.1.2. Rationale for fair trade rice development in Vietnam

3.1.2.1. Fair Trade rice addresses the current plight of Vietnamese rice

farmers

Regardless of the country‟s ever growing rice production and the world‟s

leading rice exporters‟ status, Vietnamese farmers are still entrapped in poverty

cycle. Vietnam‟s current distribution channel of rice is similar to that of

Thailand and many other rice growing countries: The current distribution

channel involves many intermediaries from farmers to customers: Paddy

harvested by farmers is first collected by the local assemblers, who sell to

private millers/polishers. After processing, they sell rice to private wholesalers,

state owned food companies and wholesalers residing in other provinces. Only a

0

200

400

600

800

1000

1200

1400

1600

Philippines

Malaysia Cuba Singapore

Senegal Taiwan Iraq Ivory Coast Timor Lest Ghana

Volume (Thousand tons) Value (million USD)

52

small proportion of the total rice production is directly sold to state-owned food

companies. Individual farmers have little storage capacity and are often at a

disadvantage in price negotiation. Most of the profit gained from rice therefore

belongs to private wholesalers or brokers who have the storage capacity for

speculative activities. (Dao The Anh, 2008). At the same time, inflation together

with soaring prices of production inputs (fertilizers, pesticides…) increase cost

of production for farmers. Small-scale rice farmers end up with a meager income

insufficient to sustain their lives. To illustrate, each farmer who grows an

average rice area of 0.1 ha, three crops a year, produces 1.5 tons of paddy and

sells it for 4,100 VND per kilo, will only has an annual income of 2 million

VND per year (Chu Khoi, 2009).

By joining Fair Trade, Vietnamese farmers will be given the opportunity to live

a sustainable life: Fair Trade pricing system helps eliminate devastation caused

by volatile prices and a direct trade relationship generates fairer shares of profit

for rice growers. It also enables the shift from cheap low-quality rice strains to

special high quality rice varieties which fetch higher prices in the market. Fair

trade organizations will additionally equip small farmers with knowledge about

modern farming techniques, market information, marketing methods… and

gradually become well-rounded rice cultivators. Practicing fair trade standards

mean a way to break the poverty cycle as the small farmers are given more

autonomy and empowerment in producing and trading rice.

3.1.2.2. Development of fair trade rice raises the status of Vietnam as a

rice exporter

To improve exports, besides raising the productivity, Vietnam has to put

emphasis on upgrading the quality of its grains and thus raising its prices. Over

the past years, meeting the market‟s demand, the quality of Vietnamese rice has

53

been improved: in 1996, medium quality rice accounted for 22.4%, low quality

23%. In 2003, the figures were 85% and 8%, respectively (Hai Quan 23, 2005).

However, unlike Thailand and India, who is now beginning to capture the high-

end markets in Europe and America, Vietnam is only a competent exporter of

low and average quality rice to undemanding consumers in countries such as

Middle Eastern and African ones. Low quality of Vietnamese grains can be

attributed to several factors: limited storage, drying and milling capacities,

fragmented collection of rice through assembles and private wholesalers, ...

"Export companies and traders always buy rice directly from farmers with

different kinds of rice grains mixed together," Professor Vo Tong Xuan said,

"With such a buying method, they cannot ensure the homogeneity of the rice,

and so the quality is low.” (Vietnam News, 2008) Additionally, poorly-

resourced farmers are unwilling to cultivate high quality varieties which require

special care yet producing smaller yields. This explains why the country exports

some three million tons of rice a year, but only fragrance and glutinous rice

account for 1,000 tons. The export price of fragrance rice is two-to three-fold

over high-yielding rice. Meanwhile, fragrance rice accounts for 38%-43% of

Thailand's annual rice exports of more than seven million tons (SGT Daily,

2003). It is not surprising; therefore, that Vietnamese rice only fetches a meager

price in the world markets compared with other big exporters (See Figure 3.6).

Fair trade rice is subject to specific standards and fair trade rice farmers are

committed to modern, internationally-standardized methods of rice marketing

and farming, which ensure the high quality and stable prices for rice. Besides,

fair trade promotes the value of indigenous varieties and rallies ethical

consumers in developed countries. Therefore, when joining fair trade, Vietnam

will be able to reach the upscale segment of the rice market and gradually create

a “brand name” for its rice. Fair Trade movement has helped strengthen the

reputation for Thai Jasmine Rice, Indian Basmati rice, thus having great

54

potential in bringing the same success for Vietnamese rice specialties, especially

when the number of countries engaged in fair trade rice is still small.

Source: MARD (2009), Forecast of 1st Quarter 2010, retrieved from

http://www.agroviet.gov.vn/Pages/thongkedubao.aspx?TabId=thongke

3.1.2.3. Fair Trader Rice helps lead to sustainable rice supply

The global demand for food in general and rice in particular is constantly

growing. Each day 200,000 more people are added to the world food demand.

By 2050, population growth by an estimated 3 billion more people will increase

food demand (UN, 2008). Vietnam, as one of the world‟s major rice producers

and exporters, sees food security as its vital issue to address. However, the

numerous challenges such as natural calamities, pests and diseases,

environmental pollution, competition from other crops, land contraction… posed

200

300

400

500

600

700

800

900

1000

1100

1200

T1/08 T6/08 T1/09 T6/09 T12/09

USD/ton

Thai rice Grade B 100%

Vietnamese Rice 5% broken

American Rice No2, 4% broken

Figure 3.6. Export Rice Price

55

to Vietnam‟s rice cultivation at present suggest that national food security and

sustainable supply for the international rice market continue to be Vietnam‟s

main concern in the long run.

Fair trade rice production, which puts emphasis on environment protection and

preference for organic farming, is a step towards sustainable agriculture. If

Vietnamese farmers joined the fair trade network, they would take the chance to

abandon the conventional farming, which consumes a lot of chemicals,

fertilizers, pesticides that yield spontaneous high productivity yet at the same

time causing serious and long-lasting damage to the surroundings. They would

be introduced to new methods of cultivating that are both safe for human lives

and ecologically friendly, as well as conduct farming activities in compliance

with strict fair trade‟s environmental standards.

The instability in Vietnam‟s rice production is also attributed to the volatility in

rice prices which is the root of farmers‟ vulnerability. Farmers are hardly in

certainty whether their livelihoods are guaranteed by rice growing activities and

that‟s why they leave paddy fields to search for better earning opportunities. Fair

trade offers producers long term contracts, a stable price and a fair trade

premium to sustain their lives. Rice farming, therefore, would remain a source of

earning to improve Vietnamese people‟s lives.

In other words, fair trade rice farming practice is the key to the development of

sustainable rice production, which takes into account not only economic benefits

but also environmental and social ones.

56

3.2. Advantages and disadvantages of fair trade rice in Vietnam

3.2.1. Advantages:

3.2.1.1. Vietnam’s advantage in producing rice

As one of the cradles of wet rice civilization, Vietnam owns a combination of

endowed conditions to produce rice. The monsoon amenable climate, high

humidity, extensive network of rivers, favorable topography, rain fall patterns…

are suitable for the cultivation of rice. The fertile Red River Delta in the North

and Mekong Delta in the South are the two rice granaries of the country.

Moreover, Vietnam possesses a young labor force to meet the demand of rice

farming which is a labor intensive industry. The position of rice farming has

been affirmed in the development of the country and its rice growers have

accumulated a great deal of experience and traditions. It is therefore no wonder

that rice has long been a major export product of Vietnam.

Thanks to its diverse climatic conditions, Vietnam has many traditional specialty

varieties of rice such as such as Nang Thom Cho Dao of Long An, Bay Nui of

An Giang, ST3 of Soc Trang, Jasmine and Huyet Rong. These high-quality

fragrant grains are pickier than normal varieties regarding irrigation, cultivation

periods and extra care. Vietnamese farmers therefore prefer high-yielding to

fragrance rice production and few want to grow them for commercial purposes.

Fair Trade can address this drawback thanks to its fair pricing system as stated

above in the rationale for development of fair trade in Vietnam.

3.2.1.2. Potential fair trade rice market

Rice has the follower advantage as it joined the range of fair trade products

later than coffee, bananas, handicrafts… Fair Trade has become a worldwide

57

movement and new products eager to join the Fair Trade network don‟t have to

overcome as many obstacles in respect of market access, consumer promotion…

as the first fair trade goods did. Despite the world‟s economic crisis, fair trade

commodities are widely considered “recession-proof” as the number of socially

responsible consumers is still growing. Besides, the growing popularity of Asian

cuisine and constant interest in organic products ensure the marketability of fair

trade rice. According to a survey conducted by Alter Eco in October 2008, rice

ranked the forth as the product most readily associated with Fair trade, showing

that consumers in Europe and America are welcoming to fair trade rice (Alter

Eco Americas, 2008).

Fair trade markets, including those for rice, are now not only constrained to

countries in the South. Producing countries, Thailand and Laos to name a few,

are beginning to consume organic fair trade rice. Vietnamese consumers are also

increasingly aware of the importance of organic farming and prefer products of

high quality. If Vietnam rice can promote its specialties and distribute these

through fair trade channels, it can surely catch consumers‟ attention.

3.2.1.3. The presence of Fair Trade organizations

In recent years, Vietnam has seen the development of several fair trade

organizations which have reaped positive results. These organizations

introduced the conception of fair trade as a means to enhance quality of life for

disadvantaged producers and create a reputation for Vietnamese products. They

are not-for-profit social enterprises, namely Craftlink (founded in 1995), MDI

(International market development and investment) JSC, Hiep Thanh Ltd,

ECOLINK… and receive strong support from fair trade non-governmental

organizations like Oxfam UK, SIDA Sweden, Ford Foundation… A range of

fairly-traded Vietnamese products have made its debut into international

58

markets: traditional handicrafts, coffee, tea, cashew nuts. Craft Link is a member

of the International Fair Trade Association (IFAT) and has been exporting

carved stone statues; lacquer ware bowls and figures; beaded and embroidered

purses… to Ten Thousand Villages, a US world shop chain since 2000 (Ten

Thousand Villages, 2009). Coffee, tea and cashew nuts traded by MDI have all

been fair-trade certified by FLO. MDI is also the first Vietnamese Fairtrade

licensee which can develop labelled Fairtrade products for sale (MDI JSC,

2008).

Producers introduced to Fairtrade are given a great deal of training and support

to. In 2005, Craftlink, together with Oxfam and Management School of Louvain

University gave an extensive training course on fair trade and management for

small scale handicrafts sellers, most of whom were women (Pham Tuyen, 2005).

Craftlink also cooperated closely with the Vietnam Museum of Ethnology to

document and revive traditional crafts; as well as conducted numerous

management, quality control training and market orientation workshops for

Mong, Dzao, Catu … handicraftswomen with advocacy from Oxfam UK and

Hongkong, UNDP… In Ban Lien (Bac Ha, Lao Cai), ECOLINK organized tea-

growing villagers into a cooperative of 228 members and gave them training

courses on organic farming, teamwork skills… so that they could develop an

internal monitoring system to ensure the standards set by FLO-Cert (Anh Tho,

2008).

These successful fair trade initiatives in Vietnam have brought benefits to

various disadvantaged groups of producers. The Craft Link Association of Craft

Producers is comprised of more than 40 producer groups, 70% and 20% of them

being ethnic minorities and disabled people, respectively. With the Premium

from Fairtrade, the Dzao tea-growers in Nam Lanh were able to build a second

concrete school which not only improved the learning conditions for over 40

children but helped support the traditional fabric of the village (FLO, 2006).

59

Notably, supported by the PRISED project (Netherlands) a cooperative of 48

cashew-nut growers in Tien Hung, Dong Xoai, Binh Phuoc province was

certified Fairtrade by FLO in August, 2009 – a proof that Fair Trade can

empower small-scale farmers and open new opportunities for them.

A significant success of fair trade organizations in Vietnam is the sale of fair

trade products not only for export but also for domestic market. This trend is

pioneered by MDI, whose coffee, tea and cashew are on sale in scores of

supermarkets in Hanoi. This helps draw consumers‟ attention to a new type of

products that are economically, socially and environmentally beneficial.

3.2.2. Disadvantages

3.2.2.1. Small scale farmers’ drawbacks

Despite the fact that Vietnam has a history-long tradition in rice cultivation,

Vietnamese rice growers and farmers in general are still conducting their

farming activities in an obsolete, disorganized and small-scale-production-based

manner. Farmers by and large still lack knowledge and skills necessary for

efficient production. They are not accustomed to modern methods of farming,

specifically organic farming which is considered a key prerequisite for fair trade

foods. Agricultural mechanization and irrigation has yet to develop to support

adequately farming activities. Excessive use of agrochemicals including water-

polluting, soil-degrading and health-damaging pesticides chemicals is

commonly practiced. It will take a lot of efforts, both intellectual and financial

ones, to assist small-scale rice farmers in meeting demanding standards

regarding production set by fairtrade.

Additionally, Vietnamese farmers have long been used to family-scale

production, which is typical of spontaneous unplanned activities. To develop fair

trade, they will have to form fair trade cooperatives and farming associations

60

with well regulated, democratic and structured organization. It would be a real

challenge for managerially unskilled Vietnamese rice farmers.

3.2.2.2. Lack of a brand name for rice

Fair trade itself cannot bring prosperity to producers if the products cannot meet

the satisfaction of customers. Fair trade rice consumers are not only driven by

ethical responsibility but also for the high quality indigenous products.

Worldwide rice consumers are well aware of certain Thai and Indian varieties

and consider them the specialties of the country. Meanwhile, Vietnam hasn‟t yet

developed a brand name for its rice or at least has a well-known rice strain that

appeals to international markets. Hermawan Kartajaya, president of the World

Marketing Association, says Vietnam has not yet found out any distinctive

characteristics of its rice to make it identifiable to consumers and help them

distinguish between Vietnamese rice and the rice of Thailand. As popular in the

domestic market as Nang Thom Cho Dao, Vo Tong Xuan commented that it is

“little known to foreigners. Vietnamese farmers can‟t think of a high price for

their rice without a brand name” (Saigon Times, 2008).

3.2.2.3. Various threats posed to rice cultivation

The development of fair trade rice would be put within the context of various

difficulties that rice growing industry is facing. Vietnam is one the countries

most affected by global climate change, which will aggravate natural calamities,

droughts, pests and diseases. Rural pollution (Rural areas discharge more than

100 million tons of trash every year. This is expected to increase to 145 million

tons by 2020. But only 30-40 per cent of it is being collected (Phuong Hoa,

61

2009) causes soil degradation and water pollution. Industrial parks and craft

villages are other sources that discharge pollutants to the rice farming areas.

Meanwhile, arable land for rice cultivation is retracting. The reclamation of land

for different purposes, namely construction of industrial parks, golf courses, and

new residential parks…has proliferated. In 2000, rice planting area stood at 4.47

million hectares. This number decreased to 4.1 million ha in 2009 (Agroinfo,

2009). On average every year Vietnam lost 59,000 hectares of rice growing land.

The disappearance of each rice-planting hectare affects the lives of 10-13 labors.

It was estimated that during the period 2000 – 2005, 73,000 hectares of arable

land was reclaimed, which would have transformed into the reduction of

700,000 tons of land produced each year. Consequently, 53% of the rice farmers

who had their land reclaimed suffered financial damage (Hong Van, 2008).

3.3. Recommended solutions for Fair Trade Rice in Vietnam

3.3.1. Promotion of organic farming and sustainable agriculture

Fair Trade is an approach towards sustainable development, in which

agricultural activities create economic benefits while at the same time preserving

the environment and addressing social issues. Realizing the inevitable trend of

organic agriculture is an important step in drawing up strategies for the

development of rice in particular and agricultural commodities in general.

Therefore, the state, with support from other parties, should put the promotion of

organic farming and sustainable agriculture on the national agenda.

Various efforts from have been made to mainstream organic farming: In

December – 2007, Ministry of Agriculture and Rural Development (MARD)

issued the first Organic Agricultural Production Standards. MARD planned to

develop certification system by Vietnamese competent authorities and cooperate

62

with International and other organization for Organic product certification

(certified according to the standard of importing countries, foreign certification

agencies) (VNFU, 2010). It is recommended that the state and government

continue to put further efforts into developing organic agriculture, such as:

o Raising awareness of organic agriculture and necessary conditions for its

development among state officials and state officers.

o Cooperating with international donors to draft an organic agricultural

action plan and establish an independent national certification body.

o Supporting social marketing efforts to convey information about organic

products to consumers.

o Learning from other countries in the region about their experience in

organic conversion.

Some organizations have conducted pilot project to develop organic rice in

Vietnam: ADDA (Denmark), in cooperation with Vietnam Farmers‟ Union,

already had the first organic rice in Sapa, Lao Cai. Further development of this

project should help create the first fair trade rice for Vietnam:

o Integrating social standards into its project outcomes: poverty reduction

for farmers, better access to social welfare, empowerment of women and

the disadvantaged, involvement of the community…

o Linking to Southern FTOs for market access, technical support,

promotion activities… towards exporting rice to fair-trade-supporting

consumers

At the same time, it is also suggested that joint attempts be made by government

agencies, supporting organizations and farmers‟ associations to persuade farmers

63

of the benefits of organic farming and assisting the conversion from

conventional farming to organic ones.

3.3.2. Further research to establish a model for Fair Trade Rice

Fair trade concept and its approaches have great potential in developing

Vietnamese rice. It is highly recommended that extensive research on Fair Trade

in general and fair trade rice in particular be conducted to work as a theoretical

framework for the development of fair trade Vietnam.

Research might be focused on identifying a suitable model for fair trade rice in

Vietnam: what trading route should be taken; who will act as specific

stakeholders; which variety of rice is to be promoted… Follows are certain

conditions that should be taken into consideration in developing a model for

Vietnam‟s fair trade rice:

o The drawbacks of Vietnamese rice farmers regarding experience,

infrastructure, finance… mean they are not yet ready to join the certification

trading route which would require meeting stringent standards. The integrated

supply chain route should be considered a priority.

o There is yet no organization fully prepared to join fair trade, thus

the fundamentals laid by international FTOs regarding management, experience,

credit are highly appreciable.

o Like any other agricultural products, rice and the farming

conditions should be analyzed. Market research should be conducted to find out

the market with the best potential for Vietnamese fair trade rice, which variety

appeals the most to consumers and promote that variety. Funding for research

focused on creating a variety to consumers‟ taste might be as well considered.

64

3.3.3. Implementation of Fair Trade rice projects

The successful implementation of a fair trade rice project will pave the way for

further development and thus should be accelerated.

o The state and the government should give favors regarding taxes,

tariffs, export-import procedures, consultant fees, policy information... to fair

trade organizations that propose the idea of exporting fair trade products

o Local authorities of rice-farming areas, specifically in the two “rice

bowls” of Vietnam with a wide range of varieties, should proactively assist fair

trade organizations like Oxfam, ADDA… by offering pilot project sites. These

should be the ones that with the large number of small-scale producers with the

motivation for change. The authorities should recognize fair trade as a great

opportunity for local poverty reduction and agricultural development.

o National specialists and farmers with managerial skills should co-

manage the project with experts in marketing, organic farming, fair trade

practice… and quickly adopt their experience.

o In these projects, the model of cooperatives and roles of farmers

should be emphasized. Participant farmers would transfer the knowledge and

skills gained from the project to other farmers, allowing the fair trade

cooperative model to be multiplied in other areas.

3.3.4. Raising consumer-awareness of fair trade

As fair trade is a faith-based activity and a social justice movement, the

mobilization of consumers to join this movement is of special importance.

o The state might hold conferences, press meetings, public relations

activities which can powerfully make consumers aware of fair trade and the

65

benefits that it brings. The appearance of state officials in charity fairs, fair trade

promoting events is also recommended to promote ethical consumerism and

display Vietnam‟s interest in developing fair trade to international donors.

Government agencies themselves should be encouraged to use fair trade rice.

o Fair trade organizations, local authorities and supermarkets should

promote fair trade markets, in which organic and fairly-traded products are

displayed. Big C already has a weekend organic market that can be adopted to

become a fair trade market with ethical consumers interested in purchasing

products with the ability to change lives. Once developed, fair trade rice can be

displayed in specialized Fair Trade shops and supermarkets (in the same way

Better Day fair-trade-certified tea, coffee are being marketed). Students and

youngsters can be mobilized to join the awareness-raising campaigns and work

as volunteers for these events.

o Consumers should be welcome to rice fair trade projects sites to

witness rice farming activities. In this way, consumers know better what is

expected of their ethical purchase and become more willingly supportive of fair

trade. Craftlink has organized similar tours to introduce end-users from

European countries with ethnic minorities whose benefits from fair trade

handicrafts are generated by ethical purchase.

3.3.5. Support for rice farmers in conversion

Vietnamese rice farmers are confronting tremendous hardships and any mean

perceivably able to rescue them from poverty will be zealously welcome. It is

necessary to educate farmers about the benefits of fair trade so that the farmers

will get the determination and develop a commitment to fair trade.

o FTOs should provide rice farmers the opportunity to witness how

Fair Trade is benefiting the farmers in other countries. Study tours to Thailand

66

and learn from the fair trade cooperative model may be an option to consider.

Programs like FFS, in which the farmers see with their own eyes how the

environment is transformed and quality of rice improved by fair trade, should

also be implemented. Once convinced of the chance to improve their lives

through fair trade, Vietnamese farmers will be committed to fair trade and join

stable long-term partnerships with fair trade organizations.

o Once the rice farmers are committed to exercise fair trade farming

methods, the next step is to provide the farmers with adequate skills and

knowledge. Extensive courses on organic farming, democratic and transparent

organization in management, appropriate use of fair trade premium…. These

courses can be organized by NGOs, in cooperation with fair trade organizations

in the region. Peer-to-peer learning, workshops held by fair trade rice farmers in

other countries to convey knowledge and experience are as well recommended.

o As the conversion from conventional farming to organic farming is

a long and expensive process, credit should be given and long term contract

should be secured. The cooperative should work as a source of credit itself. Fair

trade premium is to be prioritized for financial support to new members and

farmers with difficulty in transition. Socially and environmentally responsible

investors are proliferating, and connecting to these funds would be a way to

provide loans to pre-finance cooperative purchasing.

3.3.6. Addressing current difficulties posed to rice cultivation

To develop fair trade rice, it is essential that the overall conditions to cultivate

rice be improved, which requires decisive measures from the government and

concerned bodies to assure rice production.

o Continued overhaul of irrigation system, processing facilities, rural

infrastructure, scientific technologies application, large-scale rice farming

67

areas… These are inherent drawbacks of Vietnamese agricultural system and

will require substantial investment in the coming years.

o Thorough review on the current use of land and definitive

imposition of land use monitoring, in regard to sustainable agriculture and food

security. Decision 391/QD-TTg 2008 regarding agricultural land management

should be strictly implemented.

o Active participation in the fight against climate changes. Southern

provinces, currently the most endangered areas, should be given focused efforts.

Upgrading of dyke systems, increasing forest coverage, promoting research on

climate-change-compatible varieties… are all important approaches.

o Promotion of brand names for Vietnamese rice. Some Vietnamese

rice varieties already suffer from loss of brand name to foreign countries (Gao

Nang Thom Cho Dao was already registered as a brand name by an American

company). Meanwhile, Bac Lieu has succeeded in promoting the brand Mot Bui

Do Hong Dan for its rice. In 2009, Mot Bui Do Hong Dan rice was granted an

geographical indication (GI) by the Intellectual Property Agency under the

Ministry of Science and Technology. The certificate is expected to open up

opportunities for Bac Lieu to export this kind of rice. Recently, the province

signed a contract worth VND375 billion to ship 25,000 tonnes of its rice to the

European market. Examples like this should be followed.

68

CONCLUSION

Over the decade, fair trade rice has experienced significant developments,

specifically revenue expansion as well as growing involvement of fair trade rice

distributing and supporting trade organizations. Thailand, the pioneer in fair

trade rice, whose very practices in establishing and developing fair trade rice

have reaped substantial benefits for its rice farmers, bring valuable lessons for

Vietnam before deciding to join the Fair Trade System for Rice.

Comprehensive study on these practices and Vietnam‟s rice producing sector

situation has drawn out the possibility and importance of applying fair trade rice

in Vietnam to improve farmers‟ livelihoods, help reduce poverty and eliminate

hunger, enhance rice quality, build rice brands and address many other

cumbersome issues faced by the rice industry.

Concurrently, it is also found that along with the prospects, fair trade rice

adaptation in Vietnam may encounter challenges as well. Hence, proper

strategies are of top concern. Based on this background, together with lessons

learned from Thailand fair trade network, the study has sought to point out

feasible and specific solutions for the state/ government, farmers, fair trade

organizations… so that Vietnamese rice can soon has its presence on the Fair

trade markets.

69

BIBLIOGRAPHY

Adema, Sybrandus 2009, The South Can Also Be Consumers of Fair Trade

Products, URL Accessed 30.3.2010

<http://ipsnews.net/news.asp?idnews=47739 >

Agroinfo 2008, Moi nam dien tich trong lua cua Vietnam bi thu hep 59000

hectares, URL accessed March 2010,

<http://www.agro.gov.vn/news/newsdetail.aspx?targetid=15248>

Alternative Agriculture Network Esan, About the AAN, web log at

wordpress.com, URL accessed 4.1.2010, http://aanesan.wordpress.com/about/

Alter Eco 2008, Alter Eco Fair Trade Study, URL Accessed 25.3.2010

< http://www.altereco-usa.com/media/images/altereco-fairtrade-

study2008usa.pdf>

Anh Tho 2008, Nong san Vietnam truoc nguong cua thuong mai cong bang,

Kinh te nong thon, URL accessed February 2010

<http://www.kinhtenongthon.com.vn/printContent.aspx?ID=12405>

Betterday Fairtrade and Organic 2010, About us, URL accessed 2.3.2010 <

http://www.betterday.com.vn/betterday/aboutus.html>

Claro Fair Trade 2007,Green Net, URL Accessed February 2010

<http://claro.ch/uploads/tx_cs2claroproducers/pdfs/241_en.pdf>

Chu, Khoi 2009, Goi kich cau vua qua cua thuc su den tay nguoi nong dan,

Vietnameconomy, URL accessed April 2010

<http://vneconomy.vn/20091106093956638P0C19/goi-kich-cau-vua-qua-chua-

thuc-su-den-tay-nong-dan.htm>

Chu, Jeff 2009, Are Fair Trade goods recession proof? Wal-Mart, Starbucks

and Cadburry hope so, fastcompany.com, article dated 27.3.2009, URL

accessed 22.2.2010 < http://www.fastcompany.com/blog/jeff-

chu/inquisition/fair-trade-recession-proof>

Dao, The Anh (2008), Keo nguoi nong dan ve voi ruong, Tuanvietnam.net, URL

accessed February 2010 <http://www.tuanvietnam.net/keo-nguoi-nong-dan-ve-

voi-ruong>

70

Decook, Robin 2005, Reaping the Harvest: Farmers, Fair Trade and

Community Development, ENGAGE, URL Accessed December 2009

<http://engagetheworld.org/Rice%20Research/Reaping%20the%20HarvestDeC

ookDec2005.pdf>

Fairtrade Labelling Organizations International 2009, About Fair Trade, URL

accessed 26.2.2010 <http://www.fairtrade.net/about_fairtrade.html>

Fairtrade Labelling Organizations International 2009, Annual Reports, URL

accessed 30.3.2010 http://www.fairtrade.net/annual_reports.html

Fairtrade Labelling Organizations International 2006, Teagrowers build school,

URL accessed January 2010 < http://www.fairtrade.net/tea_growers.html>

Fair Trade Foundation 2010, Boonjira Tanruang, Green Net Co-operative,

Thailand, URL Accessed December 2009

<http://www.fairtrade.org.uk/producers/rice/boonjira_tanruang.aspx>

Fair Trade Resource Network 2010, The New Conscious Consumer, Retrieved

from http://www.fairtraderesource.org/wp/wp-content/uploads/2010/03/the-

new-conscious-consumer.ppt Published March 3.2010

Government seeks solutions to climate-change problems 2009, MONRE, URL

Accessed March 2010

<http://www.monre.gov.vn/monreNet/default.aspx?tabid=258&idmid=&ItemID

=64187>

Haynes , Bennet H. 2008, Cultivating Alternatives: A Thai Fair Trade Rice

Farmers’ Movement and Transnational Network, Program of Environmental

Studies, Bowdoin College 2008

Hong, Van 2008, Dat nong nghiep thoi khung hoang luong thuc, Saigontimes,

URL accessed March 2010,

< http://www.thesaigontimes.vn/Home/thoisu/doisong/5017/>

Keppleman, Suzy 2004, Jasmine Rice Market Research, URL accessed

15.1.2010 http://engage-humanity.org/materials/food/jasminerice/JR Market

Research - S. Keppelman.pdf

Krier, Jean-marie 2008, Fair Trade 2007: New Facts and Figures from an

ongoing Success Story, Dutch Association of WorldshopIFAT, Netherlands,

August 2008

71

MDI Vietnam 2010, Projects, mdivietnam.com, URL accessed 21.12.2009 <

http://www.mdivietnam.com/services/services.htm>

Ministry of Finance 2005, Xuat khau gao nam 2005, URL accessed March 2010

<http://www.mof.gov.vn/Default.aspx?tabid=612&ItemID=20625>

Nicholls, Alex and Charlotte Opal 2005, Fair Trade: Market Driven Ethical

Consumerism,Thousand Oaks, California: Sage Publications

Nelson, Valerie and Pound, Barry 2009, The Last ten years: A comprehensive

Review of the Literature on the Impact of Fairtrade, Natural Resources Institute,

University of Greenwich, England, September 2009.

Novey Joelle 2006, Fai Trade Rice Makes its Debut, Green America, URL

accessed 20.2.2010 <

http://www.greenamericatoday.org/pubs/realgreen/articles/fairtraderice.cfm>

Oxfam Hongkong 2009, Unit Three: Fair Trade vs Conventional Trade. URL

Accessed February 2010

<http://www.maketradefair.org.hk/form/p1_5_eng.pdf>

Pham,Tuyen 2005, Khóa học Thương mại công bằng và Đào tạo về quản lý.

URL accessed April 2010 <http://vietbao.vn/Giao-duc/Khoa-hoc-Thuong-mai-

cong-bang-va-Dao-tao-ve-quan-ly/70015383/202/ >

Phuong, Hoa 2008, Experts say rural pollution is alarming, URL accessed

March 2010,

<http://www.monre.gov.vn/monrenet/Default.aspx?tabid=211&idmid=&ItemID

=74202>

Roggerman, Ellen 2005, Fair Trade Thai Jasmine Rice: Social Change and

Alternative Food Strategies Across Border, Urban and Environmental Policy

Institute, Occdental College, The United States, August 2005

Roy, Scott 2003, History of Fair Trade, One Village, URL accessed 24.3.2010

<http://onevillage.org/fairtrade-history.htm>

SGT Daily 2003, Vietnam boosts production of fragrance, speciality rice, URL

accessed February 2010 < http://xttmnew.agroviet.gov.vn/loadasp/hang/gao-

spec-detail.asp?tn=tn&id=18753>

Sitbunloam, Panjaporn 2010, Organic Agriculture Certification Thailand –

Thailand, IOAS, URL Accessed April 2010 <http://www.ioas.org/act.htm>

72

Surin Farmers Support 2010, Local Fair Trade, URL accessed 21.2. 2010 <

http://www.surinfarmersupport.org/search/label/Fair%20Trade>

Ten Thousand Villages 2009, Our history: Roots of a Global Movement, Ten

Thousand Village, URL accessed 26.2.2010

<http://www.tenthousandvillages.com/php/about.us/about.history.php>

Trade for Development Center 2008, A brief history of Fair Trade, URL

accessed 23.2.2010 <http://www.befair.be/en/articles/www-befair-be/1-

accueil/1-le-commerce-equitable/a-brief-history-of-fair-trade.cfm>

TransFair USA 2010, Producer Porfiles, URL accessed 22.1.2010 <

http://www.transfairusa.org/content/certification/profiles.php>

Tran The 2009, Binh Phuoc – mot to hoi nganh nghe duoc dan nhan thuong mai

cong bang quoc te, URL accessed March 2010

<http://quadieuvang.binhphuoc.gov.vn/3cms/?cmd=180&art=1258174483367>

Vietnamnet 2010, Vietnamese rice needs an int’l brand name, Vietnamnet, URL

Accessed March 2010,

<http://www.stockbiz.vn/News/2010/1/31/92172/vietnamese-rice-needs-an-int-

l-brand-name.aspx>

Vietnam News 2009, Vietnam must promote rice brandnames abroad,

Vietnamnews.biz, URL accessed 1.4. 2010 <http://www.vietnamnews.biz/Viet-

Nam-must-promote-rice-brandnames-abroad_43.html >

World Fair Trade Organization 2009, Chapter of Fair Trade Principles, URL

accessed 20.12.2009

<http://www.wfto.com/index.php?option=com_content&task=view&id=1082&I

temid=11>

World Fair Trade Organization 2009, Ten Standards of Fair Trade, URL

accessed 30.1.2010

<http://www.wfto.com/index.php?option=com_content&task=view&id=2&Item

id=14>

73

APPENDIX 1

STANDARDS OF FTOs

WFTO prescribes 10 Standards that Fair Trade Organizations must follow in their day-to-day

work and carries out monitoring to ensure these principles are upheld:

Standard One: Creating Opportunities for Economically Disadvantaged Producers

Poverty reduction through trade forms a key part of the organization‟s aims. The organization

supports marginalized small producers, whether these are independent family businesses, or

grouped in associations or co-operatives. It seeks to enable them to move from income

insecurity and poverty to economic self-sufficiency and ownership. The trade supports

community development. The organization has a plan of action to carry this out.

Standard Two: Transparency and Accountability

The organization is transparent in its management and commercial relations. It is accountable

to all its stakeholders and respects the sensitivity and confidentiality of commercial

information supplied. The organization finds appropriate, participatory ways to involve

employees, members and producers in its decision-making processes. It ensures that relevant

information is provided to all its trading partners. The communication channels are good and

open at all levels of the supply chain.

Standard Three: Trading Practices

The organization trades with concern for the social, economic and environmental well-being

of marginalized small producers and does not maximize profit at their expense. It is

responsible and professional in meeting its commitments in a timely manner. Suppliers

respect contracts and deliver products on time and to the desired quality and specifications.

Fair Trade buyers, recognising the financial disadvantages producers and suppliers face,

ensure orders are paid on receipt of documents and according to the attached guidelines. An

interest free pre payment of at least 50% is made if requested.

Where southern Fair Trade suppliers receive a pre payment from buyers, they ensure that this

payment is passed on to the producers or farmers who make or grow their Fair Trade

products.

Buyers consult with suppliers before canceling or rejecting orders. Where orders are

cancelled through no fault of producers or suppliers, adequate compensation is guaranteed for

74

work already done. Suppliers and producers consult with buyers if there is a problem with

delivery, and ensure compensation is provided when delivered quantities and qualities do not

match those invoiced.

The organization maintains long term relationships based on solidarity, trust and mutual

respect that contribute to the promotion and growth of Fair Trade. It maintains effective

communication with its trading partners. Parties involved in a trading relationship seek to

increase the volume of the trade between them and the value and diversity of their product

offer as a means of growing Fair Trade for the producers in order to increase their incomes.

The organization works cooperatively with the other Fair Trade Organizations in country and

avoids unfair competition. It avoids duplicating the designs of patterns of other organizations

without permission.

Standard Four: Payment of a Fair Price

A fair price is one that has been mutually agreed by all through dialogue and participation,

which provides fair pay to the producers and can also be sustained by the market. Where Fair

Trade pricing structures exist, these are used as a minimum. Fair pay means provision of

socially acceptable remuneration (in the local context) considered by producers themselves to

be fair and which takes into account the principle of equal pay for equal work by women and

men. Fair Trade marketing and importing organizations support capacity building as required

to producers, to enable them to set a fair price.

Standard Five: Child Labour and Forced Labour

The organization adheres to the UN Convention on the Rights of the Child, and national /

local law on the employment of children. The organization ensures that there is no forced

labour in its workforce and / or members or homeworkers.

Organizations who buy Fair Trade products from producer groups either directly or through

intermediaries ensure that no forced labour is used in production and the producer complies

with the UN Convention on the Rights of the Child, and national / local law on the

employment of children. Any involvement of children in the production of Fair Trade

products (including learning a traditional art or craft) is always disclosed and monitored and

does not adversely affect the children‟s well-being, security, educational requirements and

need for play.

Standard Six: Non Discrimination, Gender Equity and Freedom of Association

The organization does not discriminate in hiring, remuneration, access to training, promotion,

termination or retirement based on race, caste, national origin, religion, disability, gender,

sexual orientation, union membership, political affiliation, HIV/Aids status or age.

75

The organization provides opportunities for women and men to develop their skills and

actively promotes applications from women for job vacancies and for leadership positions in

the organization. The organization takes into account the special health and safety needs of

pregnant women and breast-feeding mothers. Women fully participate in decisions concerning

the use of benefits accruing from the production process. The organization respects the right

of all employees to form and join trade unions of their choice and to bargain collectively.

Where the right to join trade unions and bargain collectively is restricted by law and/or

political environment, the organization will enable means of independent and free association

and bargaining for employees. The organization ensures that representatives of employees are

not subject to discrimination in the workplace.

Organizations working directly with producers ensure that women are always paid for their

contribution to the production process, and when women do the same work as men they are

paid at the same rates as men. Organizations also seek to ensure that in production situations

where women‟s work is valued less highly than men‟s work, women‟s work is re-valued to

equalize pay rates and women are allowed to undertake work according to their capacities.

Standard Seven: Working Conditions

The organization provides a safe and healthy working environment for employees and / or

members. It complies, at a minimum, with national and local laws and ILO conventions on

health and safety.

Working hours and conditions for employees and / or members (and any homeworkers)

comply with conditions established by national and local laws and ILO conventions.

Fair Trade Organizations are aware of the health and safety conditions in the producer groups

they buy from. They seek, on an ongoing basis, to raise awareness of health and safety issues

and improve health and safety practices in producer groups.

Standard Eight: Capacity Building

The organization seeks to increase positive developmental impacts for small, marginalised

producers through Fair Trade.

The organization develops the skills and capabilities of its own employees or members.

Organizations working directly with small producers develop specific activities to help these

producers improve their management skills, production capabilities and access to markets –

local / regional / international / Fair Trade and mainstream as appropriate. Organizations

which buy Fair Trade products through Fair Trade intermediaries in the South assist these

organizations to develop their capacity to support the marginalized producer groups that they

work with.

76

Standard Nine: Promotion of Fair Trade

The organization raises awareness of the aim of Fair Trade and of the need for greater justice

in world trade through Fair Trade. It advocates for the objectives and activities of Fair Trade

according to the scope of the organization. The organization provides its customers with

information about itself, the products it markets, and the producer organizations or members

that make or harvest the products. Honest advertising and marketing techniques are always

used.

Standard Ten: Environment

Organizations which produce Fair Trade products maximize the use of raw materials from

sustainably managed sources in their ranges, buying locally when possible. They use

production technologies that seek to reduce energy consumption and where possible use

renewable energy technologies that minimize greenhouse gas emissions. They seek to

minimize the impact of their waste stream on the environment. Fair Trade agricultural

commodity producers minimize their environmental impacts, by using organic or low

pesticide use production methods wherever possible.

Buyers and importers of Fair Trade products give priority to buying products made from raw

materials that originate from sustainably managed sources, and have the least overall impact

on the environment.

All organizations use recycled or easily biodegradable materials for packing to the extent

possible, and goods are dispatched by sea wherever possible.

WFTO 2009, Ten Standards of Fair Trade, URL Accessed 23.1.2010

< http://www.wfto.com/index.php?option=com_content&task=view&id=2&Itemid=14>

77

APPENDIX 2

FLO SPECIFIC TRADE STANDARDS FOR RICE

1. Product Description

Rice means non-glutinous and glutinous rice (Oryza sativa L.).

2. Scope

These standards cover the purchase and sale of rice in their primary form. For the sections

under certification and traceability (only), the standards also cover any processed products

and derivatives.

3. Certification

There are no additional requirements.

4. Traceability

There are no additional requirements.

5. Contracts

There are no additional requirements.

6. Sustaining Trade

Sourcing plans must cover each harvest. Sourcing plans must be renewed a minimum of three

months before they expire.

7. Pre-finance

On request from the producer, the Fairtrade payer must make up to 60% of the value of the

contract available as pre-finance to the producer at any time after signing the contract. The

pre-finance must be made available at least six weeks prior to shipment. Contract production

operators should refer to the contract production standards on pre-finance.

8. Pricing

Fairtrade Minimum Prices and Fairtrade Premium levels for Fairtrade products are published

separately to the product standards.

Payment Terms

Payment must be made upon receipt of the product.

Late payment

For contracts involving Fairtrade payers, producers and conveyors, conveyors must pay

producers no later than 15 days after receipt of the payment from the Fairtrade payer.

9. Other product requirements

Qualities

Fairtrade rice can be traded in its different forms as paddy, cargo rice, white rice or parboiled

rice. The required quality standards for all forms of rice are agreed between the Fairtrade

Payer and seller with reference to customary international trade standards.