Fair Trade Rubber
Financial Times UK - FT.com Rubber gloves form next fair trade
By Chris Tighe
Published: April 13 2009 03:00 | Last updated: April 13 2009 03:00
Made of Sri Lankan rubber and sold in a packet emblazoned: “I’m washing unfair trade away”, the gloves from Traidcraft, the UK’s leading fair trade organisation, have just arrived on Tesco’s supermarket shelves. Those buying them – and UK consumers in their lifetime each use an estimated 150 pairs – do so in the knowledge Sri Lankan rubber farmers will benefit from a fair price, technical support, help in buying equipment and a development premium to transform their communities.
As these gloves retail at £1.10 ($1.64) a pair, their purchasers could probably buy more cheaply but have opted for principle and quality. Such consumers are well-catered for. Leading supermarkets now stock fair trade and ethical products and the UK market for fair trade and ethical products and services stands at £32bn, the Cooperative Bank estimates. Even though the recession is making consumers acutely aware of price, there is clear evidence leading companies now reckon ethical and sustainable sourcing matters to consumers and consequently to business reputation.
Sustainable sourcing is also critical to long-term security of supply. Last month, Cadbury pledged to spend £1.5bn to ensure its Dairy Milk bars sold in the UK and Ireland are certified as Fairtrade products. Last week Mars, the world’s biggest confectionary company, said it would ensure the cocoa it uses is sustainably sourced by 2020. Tesco says it has notched up double-digit growth in the Fairtrade products it stocks in the year to March 2009. The Fairtrade Foundation says sales of Fairtrade products in 2008 were £700m, up from £500m the year before. Tyneside has a pivotal role in the development of this burgeoning fair trade sector. Gateshead is the headquarters of Traidcraft, whose founder, social entrepreneur Richard Adams, also helped establish the Fairtrade Foundation, the independent certification body for the Fairtrade mark, in which Traidcraft staff are heavily involved.
Ethical businesses founded by ex-Traidcraft employees include Gateshead-based online retailer ethicalsuperstore.com, which last month announced it is merging with Natural Collection to form a business expected to have sales of about £8m in 2009-2010. And Newcastle is the headquarters of Shared Interest, the world’s only 100 per cent fair trade lender. It lends more than £30m each year from UK investors to businesses in the developing world. It recently opened its first South American office. Recent research commissioned by Traidcraft indicates personal values, rather than typical demographic segmentation such as age, gender or income, distinguish its customer base. This, it believes, partly explains why fair trade and ethical products have not been affected to the same extent as other branded products by recession. “Buying from Traidcraft is a positive choice people make to help improve someone else’s life,” says head of communications Melissa Duncan.
Traidcraft, which in 2009 notched up 30 years of fighting poverty by trade, says its financial figures for the year to March 31, now being finalised, are expected to show sales in line, or slightly below, the previous year’s £21m, with pre-tax profit slightly down. Its crucial measure of success, its level of ‘developing world’ purchases, is up, thanks to the relaunch of its popular Geobars which now include Fairtrade rice, as well as chocolate, sugar, honey and apricots. Squeezing suppliers on price when times are tough is inimical to fair trade businesses which have to be more inventive, whether by increasing product ranges or changing selling techniques. Ethical Superstore, for example, has achieved a 40 per cent increase in sales during the last year by selling its food and drink products singly rather than in boxes.
The difficult economic climate has also yielded some unexpected benefits. Shared Interest, a cooperative lending society whose members lend between £100 and £20,000 to businesses in developing countries, has seen an influx of funds as investors conclude that, with commercial institutions offering negligible rates of interest, they might as well do some good with their savings. Investment has increased by £1.2m in the last six months and now stands at £24.9m. However, sterling’s weakness is a problem and global recession means customers in developing countries are seeking to borrow to their maximum limit. Managing director Patricia Alexander says: “If we think the economic downturn is difficult for companies here, it has been absolutely devastating in central and South America. It was bad enough for businesses when commercial lenders had huge interest rates of 30 per cent – but now they have withdrawn all lines of credit, leaving more fair trade organisations to call on Shared Interest for loans.”
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