APPENDICES
I Gap analysis
II Soil Association standards for Fairly Traded Organic III Fairtrade standards for Fresh Fruit
IV Fairtrade standards for Hired Labour
Appendix I
Gap Analysis
between the Soil Association and Fairtrade standards and procedures
Gap analysis between Soil Association and Fairtrade standards and procedures.
Soil Association Standard Fairtrade Standard
Ref
No. Actual Standard Ref
No. Actual Standard Specific Differences
1.1
These standards for ethically traded organic have been developed to identify and recognize fair and ethical trade practices through the whole organic food chain from producer to retailer in both developing and developed countries.
None FT Standards do not cover
the whole food chain.
1.1 Fairtrade adds development potential
1.3
The intention of these standards is not developmental (as is those produced by the Fairtrade Foundation); it is to ensure fair and equitable trading and employment relationships.
Therefore there is no requirement for a ‘social premium’. Social premiums are not prohibited but operators should be able to substantiate any additional social and welfare claims made in advertising and labelling.
1.1.1.
1
The producer organisation (employer in HLS Standards) needs the revenues of Fairtrade to be able to promote social and economical development of small farmers.
SA Standards not developmental.
1.4
These standards are open to all licensed operators as an additional, voluntary component on top of their normal organic certification. It is not obligatory for operators to comply with these additional standards but they are encouraged to do so.
Intro
Fairtrade is an initiative for small farmers and wage workers in the South, who have been restrained in their economical and/or social development by the conditions of trade.
2.2
All operators involved in producing, processing, importing and handling fairly traded organic products and ingredients must be subject to inspection and certification in accordance with these additional fairly traded organic Standards. This includes:
(followed by list)
-do- -do-
FT is more restricted by the type of operation that can be licensed - i.e only small farmers and enterprises with hired labour. It is also restricted to the "South".
On the other hand, it is not restricted to operators that are already certified for organic production and processing.
2.3
Operators wishing to sell their products as fairly traded organic must:
Be registered with, and hold a valid certificate of registration from, the certification body as a certified organic operation for the products concerned
-do- -do-
2.4
The operational procedures and practices, from intake of raw materials through to the packaging and dispatch stage, including the sourcing of raw materials and adequate identification during storage, processing and transport, must be supported by effective and documented control systems and records to provide an audit trail to enable the inspectorate to trace:
(list follows)
N/A Nil
FT Standards have no requirements for traceability in the SFO and HLS Standards, but there may be requirements in other documents.
2.6
On receipt of the fairly traded organic products the operator must verify the origin and fairly traded organic nature of the products from the information contained in the label/documentation.
N/A Nil
No requirement for verification of origin in the documents reviewed.
3.1- 3.7
A series of standards on
equivalence. N/A Nil
No standards on equivalence in the documents reviewed, but if the various Fairtrade organizations are all following the same standards this would not be necessary. However, there are no rules on equivalence outside of FLO.
4.4
All employers must provide written terms and conditions of
employment to all employees, both permanent and temporary, complying as appropriate with the employment policy and specifying:
(list of requirements)
1.5.1.
3
Regarding other conditions of employment like maternity leave, social security provisions, non-monetary benefits, etc., at least the provisions as laid out in the Collective Bargaining Agreement or the
Agreement signed between the workers' committee and the management must be fulfilled.
SA Standards group together all employment standards whereas the equivalent standards in the FT Standards are spread out in different areas. All the same points are covered with the exception of:
FT Standards do not include location and type of work, complaints, disciplinary procedure or compensation for injury. FT Standards do include a prohibition of involuntary prison labour that SA Standards do not include.
4.5
Companies who have more than 10 employees must have a written employment policy which must include: (list of contents)
N/A Nil
SA Standards include the requirement for a written employment policy whereas FT Standards do not.
However, most of the points required in an employment policy are required by the FT Standards, but not in a formal document.
4.6
Wages must, as a minimum, be sufficient to meet basic needs and meet with local laws.
1.5.1.
1
Minimum requirement - salaries are in line with or exceeding regional average and official minimum wages for similar occupations.
SA Standards include additional requirement of meeting basic needs. It is envisaged that evidence would be collected locally in order to establish what this level needs to be. The term
"regional average" in the FT Standards is a bit vague, but presumably is based on experience in these matters.
4.8 Permitted - Overtime, which must
be paid at a higher rate. N/A Nil No requirement for a higher
rate in FT Standards.
4.9
Hours of work above 48 hours per week in exceptional and/or short term circumstances which shall be specified in the terms and conditions of employment.
4.11 Prohibited - Excessive overtime over long periods.
N/A Nil No limits for overtime
specified in FT Standards.
4.10
Permitted - An annual closure period – this need not be paid, provided that this is clearly stated in the terms and conditions of employment.
N/A Nil No standard covering this in
FT Standards.
4.12 - 4.17
Various standards on Workers'
Unions 1.4 Freedom of Association and
Collective Bargaining
Essentially the same. FT Standards more specific in cases where no union is present, but both Standards include the right of collective representation to
management.
4.18-
4.24 Health and Safety 1.6 Occupational Health and Safety
Both Standards cover similar ground, but the FT
Standards necessarily has extra Standards on the use of agrochemicals. This could be an issue on SA Cert farms that have organic and non-organic sections.
The two sets have Standards have a different approach. SA Standards put the onus on
management to implement Health and Safety - perhaps a Euro-centric approach. FT Standards focus much more on a collective approach - perhaps more appropriate in developing countries.
4.22
Employers with 10 or more employees must have a written health and safety policy.
N/A Nil No such requirement in FT
Standards.
4.23
Employers with 10 or more employees must have supervisors or other nominated staff trained in first aid.
N/A Nil No such requirement in FT
Standards.
4.24
A record must be kept of all accidents, however slight, and the follow up treatments administered, and retained for 3 years.
N/A Nil No such requirement in FT
Standards.
4.25 - 4.33
Various standards for Plantations and Estates covering housing, fuel, schools, shopping, land for growing food, recreation and medical facilities.
N/A Nil
No Standards in the documents reviewed - may be in another document.
5.1 -
5.10 Trading Relationships 1.1.1.
1
The producer organization (employer in HLS Standards) needs the revenues of Fairtrade to be able to promote social and economical development of small farmers.
A very fundamental difference between the two sets of Standards. SA Standards take the approach of good trading relationships with rules on long term contracts, a basis for minimum prices, purchasing policy, exclusivity. FT Standards base everything on the social premium. This may give higher prices to some, but tends to limit the scope of the scheme to
commodities.
6.1
Co-operatives allow small and large producers to come together on an equal footing, enabling them to pool their resources and benefit from economies of scale that the individual members would not be able to do on their own.
1.2.11 SFO
The majority of the members of the organization are small producers providing more than 50% of the total production of the Fairtrade product.
FT Standards are aimed at small scale producers. FT Standard slightly
ambiguous. Does the 50%
refer to the organization or is it a labelling issue - or both (i.e. does the other 50%
necessarily have to come from the same organization or can it be from anywhere?)
6.3
Co-operatives are essentially a form of trading relationship and are therefore treated as such and must comply with section 5 above where appropriate.
1.1.1.
1
The producer organization (employer in HLS Standards) needs the revenues of Fairtrade to be able to promote social and economical development of small farmers.
See above under Trading Relationships.
6 Co-operative rules in general. SFO Document in general.
Similar rules on democracy, transparency, involvement, discrimination, etc. SA Standards include extra rules on pre-payments. No rules on dealing with premiums in SA Standards, apart from 1.3 in the Introduction that requires that any claims must be substantiated.
7.1- 7.2
Organic farms and organic businesses are social and cultural entities, and have a central role to play in the social and cultural life of their communities and of society in general.
N/A Nil No such requirement in FT
Standards.
7.3- 7.4
All operators activities are planned and implemented with a view to optimize their social and cultural value, both internally (within the operators business) and externally in the wider community
1.1.1.
1
The producer organization needs the revenues of Fairtrade to be able to promote social and economical development of small farmers
Whereas SA standards aim on involvement of external community and cultural values, FT standards concentrate on individual producer development (social and economical).
7.5
System of ranking the operators.
Operator can comply with categories over and above their legal obligations.
N/A FT standards rank operators by product category
SA standard sets categories to aim on social and cultural progressiveness (scoring system for assessing compliance) aims on progressive
7.6
Operators will be judged confirm the number of categories they comply to (comprehensive scoring system for assessing compliance will be investigated)
N/A Nil
This clause enables the certification body to acknowledge and reward operations that contribute to positive social and cultural matters above their legal obligations.
8.1 - 8.7
Various standards on labelling specifying minimum FT content in FT products.
N/A Nil
No Standards in the FT Standards documents reviewed - may be in another document. The SA Labelling Standards are also backed up by the SA Cert Spec Sheet system (MIPS and SIPS) and are in addition to the organic labelling rules.
I-5
Appendix II
Soil Association standards for Fairly Traded Organic
Soil Association
Standards for Fairly Traded Organic - Pilot
Approved by the Council – 19.12.03
These standards have been approved by the Soil Association Council, as a development of those approved on 29.01.02, specifically for the pilot scheme to test out the important new concepts involved and to apply them in practice. They will be reviewed, and are likely to be developed further, in the light of the experience gained during the pilot.
1. INTRODUCTION Scope and Coverage
1.1 These standards for ethically traded organic have been developed to identify and recognise fair and ethical trade practices through the whole organic food chain from producer to retailer in both developing and developed countries.
1.2 These standards include but are not limited to relevant parts of the International Labour Organisation Conventions and Recommendations. This is indicated by "ILO" plus the Convention or Recommendation number.
1.3 These standards are open to all licensed operators as an additional, voluntary component in addition to their normal organic certification. It is not obligatory for operators to comply with these additional standards but they are encouraged to do so.
1.4 The Soil Association may in the future, and after due consultation, make these additional standards an integral and required part of the Standards for Organic Food and Farming.
Aims and objectives
1.5 The objective of these standards is to ensure fair and equitable trading and employment relationships, together with socially responsible practices, in the organic food chain.
There is no requirement for a ‘social premium’ but operators should be able to substantiate any additional social and welfare claims made in advertising and labelling.
1.6 The ‘principal Aims of Organic Production and Processing’ of the IFOAM Basic Standards 2002 include:
- To recognize the wider social and ecological impact of and within the organic production and processing system.
- To provide everyone involved in organic farming and processing within the quality of life that satisfies their basic needs, within a safe, secure and healthy working environment - To support the establishment of an entire production, processing and distribution chain
which is both socially just and ecologically responsible.
2. GENERAL STANDARDS FOR ETHICALLY TRADED ORGANIC
Principles
2.1 In order to comply fully with organic principles, trading and employment relationships in organic production and processing are based on fairness, mutual respect and transparency.
Required
2.2 All operators involved in producing, processing, importing and handling ethically traded organic products and ingredients must be subject to inspection and certification in accordance with these additional ethically traded organic Standards. This includes:
This means that the whole production, processing and distribution chain of an ethically traded organic product or ingredient must comply with these standards and be inspected and certified as such.
a) Producers of primary agricultural products;
The main area of ethically traded certification for producers is their employment relationship. Producers who do not employ staff may also apply, in which case the certification will be simplified.
b) Co-operatives and trading groups;
c) Traders, wholesalers, agents and distributors;
d) Processors and packers;
e) Independent and multiple retailers;
For an own brand product to be ethically traded organic certified, the owner of the brand must also be inspected and certified – both for the employment relationship of their trading arm (as a minimum) and for the trading relationships relating to the product.
f) Importers of organic raw materials and processed products.
2.3 Operators wishing to sell their products as ethically traded organic must:
a) Be registered with, and hold a valid certificate of registration from, the certification body as a certified organic operation for the products concerned; and
Operators must therefore comply with all other appropriate sections of the Standards for Organic Food and Farming.
b) be registered with and hold a valid certificate of registration from, the certification body as a certified ethically traded organic operation for the products concerned.
At least initially, this will involve an additional and separate application, inspection and certification process. Where possible the inspection will be carried out at the same time as the organic inspection.
2.4 The operational procedures and practices, from intake of raw materials through to the packaging and despatch stage, including the sourcing of raw materials and adequate identification during storage, processing and transport, must be supported by effective and documented control systems and records to provide an audit trail to enable the inspectorate to trace:
a) The origin, nature and quantities of ethically traded organic products which have been delivered to the unit;
b) The nature, quantities and consignees of ethically traded organic products which have left the unit.
c) Any other information such as origin, nature and quantities of other raw materials delivered to the unit and the composition of ethically traded organic products that may be required for the purposes of proper inspection of the operation.
2.5 Labels and documentation of traded products must include reference to ethically traded organic in addition to the normal labelling/documentation requirements for organic products.
2.6 On receipt of the ethically traded organic products the operator must verify the origin and ethically traded organic nature of the products from the information contained in the label/documentation. The result of this verification must be explicitly noted in the records.
Where the check leaves any doubt as to the product’s ethically traded organic status (either because of inadequate, incomplete or misleading information on its nature or origin) it may only be put into processing or packaging as ethically traded organic after elimination of that doubt.
3. ORIGIN OF FAIRLY TRADED ORGANIC PRODUCTS/INGREDIENTS
Principles
3.1 All organic ingredients in an ethically traded organic product are ethically traded.
Recommended Best Practice
3.2 Sourcing from local operators, where appropriate, so as to minimise imports.
3.3 Working with and encouraging the indigenous organic organisations to develop their own ethically traded organic certification capacity.
Required
3.4 Where organic products or ingredients are destined for use in ethically traded organic products, all relevant suppliers must also be certified as ethically traded organic for the products or ingredients concerned.
An operator must therefore not only themselves comply with these ethically traded organic standards in all trading and employment relationships relevant to the products concerned, but also all relevant ingredients of the products concerned must have been traded in accordance with these standards at all stages from the point of primary production.
3.5 Ethically traded organic certification must be achieved for products or ingredients used in a ethically traded organic product by one of the following means:
a) Direct inspection and certification by the certification body of production units, processing and other operations producing and handling the products/ingredients;
b) Direct inspection and certification by the certification body of production units and processing operations in other countries where there is no approved ethically traded organic certification;
c) Evaluation by the certification body of other ethically traded organic certification by means of on-site visits or other co-operative arrangements;
Until 31st December 2003, producers on the Fairtrade Labelling Organisation ‘producer list’ will be considered as equivalent to these ethically traded organic standards,
provided their organic certification can be demonstrated to be equivalent to the requirements of these Standards.
d) Review by the certification body of individual inspection reports produced by other certification bodies through their own inspection procedures.
Inspectors of other certification bodies may need to undergo specialist training in order to be able to carry out ethically traded organic inspections.
Permitted
3.6 Organic products destined for use by operators may be produced and/or processed in other countries or under the control of other certification bodies. However, in order to protect the integrity of these standards and the ethically traded organic label, it must be demonstrated that such products are produced and processed to equivalent ethically traded organic standards.
The certification body operates an international programme to verify equivalence of imported products and to assist operators to comply with the requirements for importation..
Restricted
3.7 Where the brand owner of a product can demonstrate to the satisfaction of the certification body through adequate documentation and internal controls that all relevant suppliers in the supply chain comply with these ethically traded organic standards, then direct inspection of each supplier may be foregone. However inspections may be carried in case of suspicion or as part of normal due diligence procedures, at the discretion of the certification body. In any event inspection of the primary producers is required.
This derogation would generally only be allowed where the brand owner has sufficient control over the supply chain and has systems in place to ensure and demonstrate compliance with these standards. An example would be a supply chain consisting of a succession of processing operations working under contract to the brand owner where the contract incorporates appropriate obligations and control mechanisms.
4. EMPLOYMENT RELATIONSHIPS
Principles
4.1 Ethically based employment conditions ensure that acceptable living wages are paid, hours of work are not excessive and working conditions are decent.
Recommended
4.2 Where there are insufficient facilities for purchasing appropriate food, beverages and meals, measures should be taken to provide workers with such facilities.
Required
4.3 Employment of all employees must comply with national requirements as a minimum, or ILO standards, if they are higher.
The operator will need to demonstrate they are aware of national legislation and show evidence of their compliance.
4.4 All employers must provide written terms and conditions of employment to all employees, both permanent and temporary, complying as appropriate with the employment policy and specifying:
- wages
- method of payment
- location and type of work (job description) - hours of work
- overtime
- access to trade unions and/or complaints procedure - health and safety
- disciplinary procedure - holiday pay
- sick pay or sickness benefit - compensation for injury
- other benefits (pensions, maternity/paternity)
4.5 Companies who have more than 10 employees must have a written employment policy which must include:
a) The provision of written terms and conditions of employment to all employees, permanent, temporary or casual.
b) No discrimination on the basis of race, caste, sex, sexual orientation, religion, political opinion, nationality (including migrant workers - ILO 100), social origin or other distinguishing trait (based on ILO 111)
c) All employees will receive equal pay for equal work.
d) No use of forced or bonded labour.
e) Sickness or injury provision to cover loss of earnings.
f) Insurance for permanent disability or death arising out of or in the course of their employment.
Compensation should be paid to the employee and/or the family in accordance with national regulations. Foreign workers should receive equal treatment. (ILO 110) g) Temporary employment on a permanent basis is prohibited. Temporary employment
may not last more than two years.
Two years is seen as the maximum period of temporary employment in a permanent position. After that it is expected that the employment will be made permanent. The aim of this is to ensure that permanent positions are filled by permanent employees and two years is seen as the longest time that an employee should be expected to seen as temporary.
h) A standard working week of maximum 48 hours with an uninterrupted rest period of at least 24 hours each week.
i) Provision for paid holidays after a period of continuous service. (ILO 101)
ILO 101 states in Article 1 that "Workers employed in agricultural undertakings and related occupations shall be granted an annual holiday with pay after a period of continuous service with the same employer".
j) A documented disciplinary procedure with a system of warnings before any dismissal.
Dismissed employees must be given full details of the reasons for their dismissal.
k) No use of child labour. Only workers 15 years of age or older, or above the compulsory school-leaving age shall be employed. No worker less than 18 years of age shall be allowed to undertake any hazardous employment. (ILO 138).
‘Child labour’ is defined as full time employment or any employment that interferes with schooling in accordance with national legislation.
l) A training policy for the company and a training record for each employee.
m) Where meals and other food supplies are only available to the workers directly by the employer or a contractor, their prices must be reasonable. (ILO 110)
‘Reasonable’ means on a par with local market prices.
n) There must be no physical, mental or sexual coersion or abuse.
4.6 Wages must, as a minimum, be sufficient to meet basic needs and meet with local laws.
Workers must be informed of the wage rates payable, the method of calculation, the frequency of wage payments, the place of payment and the conditions under which deductions may be made. Wage payments should be properly documented, including rate of pay, hours worked, period of payment, details of deductions, overtime worked and the net amount of wages due.
They should be paid regularly and in legal tender and not in the form of promissary notes, vouchers or coupons.
This applies to all workers, ie including casual workers.
Wages should be no lower than the national minimum wage or appropriate industry
benchmarks or the local average, whichever is higher, and should always be enough to meet basic needs and to provide some discretionary income. Information on what might be
considered an adequate wage will be gathered locally, if there is insufficient information in the public domain.
4.7 Records must be kept of casual workers employed together with their pay and conditions and duration of employment.
Permitted
4.8 Overtime, which must be paid at a higher rate.
4.9 Hours of work above 48 hours per week in exceptional and/or short term circumstances which shall be specified in the terms and conditions of employment.
4.10 An annual closure period – this need not be paid, provided that this is clearly stated in the terms and conditions of employment.
Prohibited
4.11 Excessive overtime over long periods.
‘Excessive’ means more than a total of 48 hours of work per week.
‘Long periods’ means more than 17 weeks (from the EU Working Time Directive).
Workers' Unions
Principles
4.12 Trade unions play an important role in representing the combined interests of employees especially in situations where the workforce is disadvantaged and/or fragmented.
Required
4.13 All employees must have the right to join a recognised union, have the right of representation to management and have genuine opportunities for collective bargaining. Unions and/or worker representatives must be able to meet with management on a regular basis to discuss working arrangements, wages, grievances and other subjects relevant to work.
4.14 Unions and their representatives must have the right to conduct legitimate union activities without discrimination.
4.15 There must be no restriction placed on the movement of workers after working hours.
4.16 Workers have the right to join or leave a union at their discretion.
Restricted
4.17 Where there are less than 10 employees, paragraphs 4.13 to 4.16 are not required, but the alternative measures should be consistent with the nature of the work.
Health and safety
Principles
4.18 The employer is responsible for providing and promoting a safe and healthy working environment.
Recommended
4.19 Employers should make every effort to ensure that they appoint employees who are physically and mentally capable of performing the tasks allocated to them.
4.20 A hazard analysis should be carried out for all operations. Staff should be trained in dealing with the hazards identified.
Regulation governing this area in the UK include the Health and Safety at Work Act 1974 and COSHH. Operators should be appraised of relevant legislation in their country, have
necessary information on file and be able to demonstrate that they comply with it.
Required
4.21 Employers must provide a safe and healthy working environment, taking adequate steps to prevent accidents and injuries at work by minimising the causes of hazards inherent in the working environment.
Hazardous employment is defined as that likely to jeopardise the health and safety of employees and the morals of young persons (ILO 138).
4.22 Employers with 10 or more employees must have a written health and safety policy.
4.23 Employers with 10 or more employees must have supervisors or other nominated staff trained in first aid.
4.24 A record must be kept of all accidents, however slight, and the follow up treatments administered, and retained for 3 years.
Plantations and Estates
Principles
4.25 Employers on estates and plantations, where they provide the whole living environment, have particular responsibilities for the welfare of workers and their families.
Required
4.26 Housing, if provided, must be equally available to all grades of workers and must conform to legal requirements.
The operator will need to be able to demonstrate that the legal requirements are met.
4.27 Housing must:
a) be weather proof and solid;
b) be spacious enough to accommodate the people living in them;
c) have lighting and electricity, where available locally;
d) have potable water and adequate sanitation available within the housing development;
e) have fire escapes where appropriate;
f) comply with health and safety legislation, if in place.
4.28 Adequate fuel must be available for collection within 1 km of all housing developments.
4.29 Estate workers must have adequate access to schools, which must have teachers and books and conform to legal requirements as a minimum.
Day schools should be within about 1½ hours walk or drive.
4.30 On isolated estates, shopping facilities should be at least comparable with local villages in terms of opening hours, range of products and prices.
This is aimed at ensuring that in isolated places essential provisions are available at reasonable prices.
4.31 Adequate land for growing food crops must be made available.
This should normally be enough suitably fertile land to produce sufficient fresh vegetables year round for an employee’s family.
4.32 There must be recreational facilities.
Depending on scale, this would normally be a place for people to meet and space for physical recreation.
4.33 There must be a medical facility close by and it must conform to legal requirements.
This should be preferably on-site, within the perimeter of the estate/plantation.
5. TRADING RELATIONSHIPS Principles
5.1 Sound and sustainable trading relationships are built on trust, transparency, continuity and stability.
5.2 Trading relationships are likely to be most unbalanced between primary producers and purchasers and this therefore needs to be redressed.
Recommended
5.3 The trading relationship between producer/supplier and purchaser should be long term and based on mutual advantage, including price stability.
Required
5.4 The trading relationship between primary producer and purchaser must be of three years duration as a minimum, unless specific conditions prevent this.
NB the minimum three year trading relationship refers to the primary producer and their purchaser only. When a trading relationship starts, the three year relationship must be clearly intended (ie it does not have to be retrospective) and this should be identified in any trading agreement.
Where a landlord/owner and associated tenants/share-croppers are included in a ethically traded organic operation, the relationship between them is considered to be a trading relationship and therefore must conform to relevant parts of this section.
5.5 The price paid to the primary producer for the product must, as a minimum, be related to the cost of production plus a margin for profit and investment.
Prices should be based on the cost of production plus a margin for profit and investment.
Long term agreements at fair prices are considered more important than margins above market prices.
5.6 Brand owners must have a purchasing policy statement for the ethically traded organic products licensed, which must be publicly available, and an appeals procedure for this policy, records of which must be retained and be made available to the certification body.
Such a policy statement should address the whole supply chain and include price negotiations, on-going trading relationships, the appeals procedure and any other relevant issues.
5.7 There must be purchase contracts which are agreed between both parties, and they must be clear:
a) on the price to be paid (or the means by which it is to be calculated),
b) on the extent of the commitment to purchase (minimum price, quantity and quality), c) on any pre-finance/credit arrangements.
5.8 If a purchaser requires a delay of the delivery beyond the limits of sound practice (eg a certain time after harvest, as set in contract) the costs of storage, interest and insurance must be covered by the purchaser.
5.9 Where co-operatives are part of relationships covered by these ethically traded organic standards, they must conform to the rules for co-operatives below.
Restricted
5.10 Exclusivity agreements – only where they are fair to the producer.
Exclusive agreements must be shown to be necessary for the relationship to prosper
effectively by reducing risk on both sides. The expectation is that these agreements increase the level of confidence of the purchaser, who will then drive sales of the product to the benefit of both parties. The agreement must obviously still meet the criteria on fair pricing in
paragraph 5.5.
6. RULES FOR CO-OPERATIVES
Principles
6.1 Co-operatives allow small and large producers to come together on an equal footing, enabling them to pool their resources and benefit from economies of scale that the individual members would not be able to do on their own.
Recommended
6.2 The formation and operation of co-operatives to facilitate fair trading relationships.
Required
6.3 Co-operatives are essentially a form of trading relationship and are therefore treated as such and must comply with section 5 above where appropriate.
6.4 Members of a co-operative who are themselves employers must also comply with section 4 of these standards in order for the co-operative to be registered as ethically traded organic.
6.5 Co-operatives must be independent, democratically controlled by its members and established for the benefits of its members. They must not be controlled by any political party or interest group.
A majority of the members should be ‘active’, ie actively involved in the business of the cooperative that it was set up to do/serve. Financiers and other non-active members should therefore be in the minority.
6.6 The organisational policy and running of a co-operative must be controlled by a board that meets regularly and consists largely of members directly and regularly elected by the full membership.
6.7 There must be an annual meeting for the membership, at which or around which elections for membership of the board would normally take place. Voting is on the basis of one person: one vote.
There must be an annual meeting of the cooperative, but elections of board members may take place less frequently, eg every two or three years, provided there are adequate means for members to dismiss the board or specific individuals in the event of problems.
6.8 Co-operative policies and activities must be based on and promote transparency in order to help control fraud and prevent dominance by any one group or individual.
6.9 Terms of membership must be clearly defined, and membership must be open to all those who meet these terms. Membership must not discriminate against poor or disadvantaged workers, political beliefs, race, religion, caste, sex or sexual orientation.
6.10 Co-operatives must be financially and administratively sound. Minutes of all meetings (including the board of directors and any sub-committees), voting records, annual accounts and other records of co-operative activities must be made available to members.
Where weaknesses exist, organisational development and the improvement of the managerial and administrative capacity of the actual and future leadership of the co-op may be required.
6.11 Payments must be distributed to members within a reasonable time span. The level of payment should be based on sales.
Except in exceptional circumstances, payment should be made within one month of receipt.
6.12 Co-operatives must have a contract with the members that includes:
a) Payment rules (including any distribution of social premiums if appropriate).
b) Obligations of the co-operative (including the supply of any services, materials, packaging or tools).
c) Obligations of the members (including delivery and quality parameters).
d) Disciplinary rules.
6.13 Where pre-payments by the purchaser are made in order to allow the co-operative access to cash for buying from its members, these must be adapted to the real needs of the co-operative and the terms must be clear.
6.14 The level of any pre-payment made should conform to the following:
a) It must be the percentage set in the contract and be based on fixed/unfixed prices.
Whether fixed or unfixed, it must cover all purchase costs of the product.
b) In the case of several shipments, the spread of the pre-finance must be fixed in the contracts.
It is not always necessary to pre-finance the whole amount before the first shipment.
7. SOCIAL AND CULTURAL CONDITIONS
Principles
7.1 Organic farms and organic businesses are social and cultural entities.
7.2 Organic farms and organic businesses have a central role to play in the social and cultural life of their communities and of society in general.
Recommended
7.3 Operators should work to ensure that all their activities are planned and implemented with a view of optimizing their social and cultural value, both internally within the operators business and externally in the wider community.
7.4 Active participation in and the contribution towards the social and cultural health of the local and wider community.
Required
7.5 Operators must ensure that their operation makes a positive social and cultural contribution over and above their legal obligations. This will be assessed in the following categories:
a) Staff organic training
b) Additional on-site services to staff (eg provision of organic food) c) Profit sharing or equity interest
d) Support of the organic movement e) Education of the public
f) Farm visits / access / demonstration g) Support of or involvement in research h) Support for community cultural activities i) Composting and recycling programmes j) Local marketing of own products
7.6 Compliance with the above standard will be based on an assessment by the certification body of whether the operator does or does not make a positive contribution in each of the identified categories. The following minimum numbers of positives are required:
a) Small farms (less than 4 employees) 3 c) Large farms (more than 4 employees) 5 d) Processors and others 6
8. LABELLING
Principles
8.1 Labelling of ethically traded organic is clear and is consistent with existing labelling of organic products.
Recommended Best Practice
8.2 All the organic ingredients in an ethically traded organic product should be certified as ethically traded organic.
Required
8.3 For a product to be labelled as ‘ethically traded organic’ a minimum of 95% by weight of its agricultural ingredients must be produced and traded in accordance with these ethically traded organic standards.
8.4 For a product to be labelled as ‘made with/containing xx% ethically traded organic
ingredients’ a minimum of 70% by weight of its agricultural ingredients must be produced and traded in accordance with these ethically traded organic standards. The nature and percentage of ethically traded organic ingredients must appear on the label in the same field of vision as the sales description.
It is intended that more comprehensive scoring system for assessing compliance will be investigated. Furthermore it is expected that the total minimum score would rise progressively over time.
8.5 The ‘ethically traded organic’ symbol may only be displayed on products containing 70% or more ethically traded organic ingredients.
Permitted
8.6 Until 31st December 2003, an individual ingredient may be labelled as being ‘ethically traded organic’ provided that:
- all that ingredient is produced in accordance with these standards;
- the ingredient makes up more than 30% by weight of the product;
- the percentage by weight of the ingredient is stated on the label;
- the product complies with all other relevant aspects of these standards.
Prohibited
8.7 Products cannot contain the same ingredient derived both as ethically traded organic and (non- ethically traded) organic.
Ends.
Appendix III
Fairtrade standards for Fresh Fruit
APPENDIX III
FAIRTRADE LABELLING ORGANIZATIONS INTERNATIONAL
F
AIRTRADES
TANDARDSFOR
FRESH FRUIT
(except Bananas)
Fairtrade, an Alternative for Small Farmers and Workers 2 PART A Generic Fairtrade Standards for Small Farmer’s Organisations 3
1 Social Development 3
1.1 Fairtrade adds Development Potential 3
1.2 Members are Small Producers 3
1.3 Democracy, Participation and Transparency 3
1.4 Non-Discrimination 4
2 Economic Development 4
2.1 Fairtrade Premium 4
2.2 Export Ability 4
2.3 Economic Strengthening of the Organisation 5
3 Environmental Development 5
3.1 Environment Protection 5
4 Standards on Labour Conditions
(applicable if the organisation employs a considerable amount of workers)
4.1 Forced Labour and Child Labour 5
4.2 Freedom of Association & Collective Bargaining 6
4.3 Conditions of Employment 6
4.4 Occupational Health and Safety 7
PART B Product Specific Standards for Fresh Fruit (except Bananas) 9
PART C Trade Standards for Fresh Fruit (except Bananas) 10 Version January 2003
Fairtrade, an Alternative for Small Farmers and Workers
Fairtrade is an initiative for small farmers and wage workers in the South, who have been restrained in their economical and / or social development by the conditions of trade. If fair access to markets under better conditions of trade can help to overcome the restraints of development, they can join Fairtrade.
Small farmers can join Fairtrade if they have formed organisations (in co-operatives, associations or other organisational forms1) which are able to contribute to the social and economic development of their members and their communities and are democratically controlled by their members.
Organisations can be certified by FLO if they comply with the requirements in this document.
Workers can participate in Fairtrade if they are organised, normally in unions, and if the company they work for is prepared to promote workers’ development and to pass on to the workers the additional revenues generated by Fairtrade. Such companies working with hired labour (farms, plantations, etc.), can be certified if they comply with the requirements in this document.
In setting its Standards FLO follows certain internationally recognised standards and conventions, especially those of the ILO (International Labour Organisation), as these form the basic labour rights most widely accepted throughout the world. In this document each Standard is formulated in general terms, and, where applicable, reference is made to external standards which FLO follows.
The Standard is then followed by the requirements against which producers will actually be inspected. The requirements are divided into:
• minimum requirements, which all producer organisations must meet from the moment they join Fairtrade, or within a specified period; and
• progress requirements, on which producer organisations must show permanent improvement.
A report on the achievement of progress requirements should be made each year.
Minimum in this sense is meant to ensure that:
1. Fairtrade benefits reach the small farmers and/or workers.
2. The small farmers' organisation and/or the workers has/have potential for development.
3. Fairtrade instruments can take effect and lead to a development which cannot be achieved otherwise.
The degree of progress, which FLO requires from each producer organisation, depends on the level of economic benefits it receives from Fairtrade and on its specific context.
FLO also requires that producer organisations always abide by national legislation. Furthermore, national legislation prevails if it sets higher standards on particular issues than FLO.
The Standards laid out in this document apply to small farmers' organisations ONLY. For Standards related to hired labour situations please see the respective document.
Generic Fairtrade Standards for Small Farmers’ Organisations Version January 2003
1 In the rest of the document the term organisation will be used, which should be read as to include all types of organisational forms.
Generic Fairtrade Standards for Fresh Fruit
Version January 2003 III-2
PART A Generic Fairtrade Standards for Small Farmer’s Organisations 1 Social Development
1.1 Fairtrade adds Development Potential
Fairtrade should make a difference in development for certified producers.
1.1.1 Minimum Requirement
1.1.1.1 The producer organisation can demonstrate that Fairtrade revenues will promote social and economical development of small farmers.
1.1.2 Progress Requirement
1.1.2.1 A monitored plan should be developed under which the benefits of Fairtrade (including the Premium) are shared based on a democratic decision taken by the beneficiaries.
1.2 Members are Small Producers
By small producers are understood those that are not structurally dependent on permanent hired labour, managing their farm mainly with their own and their family's labour-force.
1.2.1 Minimum Requirement
1.2.1.1 The majority of the members of the organisation are small producers.
1.2.1.2 Of every Fairtrade-certified product sold by the organisation, more than 50% of the volume must be produced by small producers.
1.2.2 Progress Requirement
1.2.2.1 Where a minority of small producers from within a small producer organisation is producing a particular Fairtrade-product, special attention needs to be given to ensure that they will always receive a cost-covering price for their product from the small producers' organisation.
The small producer organisation will establish an adequate system for this respectively.
1.3 Democracy, Participation and Transparency
The organisation must be an instrument for the social and economical development of the members, and in particular the benefits of Fairtrade must come to the members. The organisation must therefore have a democratic structure and transparent administration, which enables an effective control by the members and its Board over the management, including the decisions about how the benefits are shared. Furthermore, there must be no discrimination regarding membership and participation.
1.3.1 Minimum requirements
1.3.1.1 An organisational structure is in place which enables control by the members. There is a General Assembly with voting rights for all members as the supreme decision taking body and an elected Board. The staff answers through the Board to the General Assembly.
1.3.1.2 The organisation holds a General Assembly at least once a year.
1.3.1.3 The annual report and accounts are presented to and approved by the General Assembly.
1.3.1.4 Administration is in place.
1.3.2 Progress requirements
1.3.2.1 The organisation works towards transparent planning of the business. Organisations are encouraged to make annual business plans, cash flow predictions and longer term strategic plans. Such plans will be approved by the General Assembly.
Generic Fairtrade Standards for Fresh Fruit
Version January 2003 III-3
