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Resilience and fair trade

Bob Doherty, Research lead for Food Resilience and Sustainability at the York Environmental Sustainability Institute, University of York, investigates the resilience of agricultural supply chains and the extent to which ethical initiatives, such as Fair Trade, can contribute to resilience.

There is a growing interest in the resilience of agri-food supply chains. Questions are emerging regarding the features of a resilient supply chain and how resilience can be enhanced, particularly with respect to food production and supply given the ‘perfect storm’ facing the nexus between food, climate, energy and water. The new UN Sustainable Development goals (goal 2.4) call for resilient agricultural practices as an important part of achieving food security and sustainable agriculture [1]. Furthermore, global shortfalls in supply are forecast for a number of valuable commodities e.g. cocoa. As a response, corporates have been implementing sustainability initiatives with smallholder farmers to secure future supply.  Despite this predicted food supply crisis there is a limited amount of academic research on resilience in agri-food supply chains.

Currently resilience is interpreted in different ways by different disciplines. According to some experts, resilience is a function of the food system to absorb external shocks, such as climate change, and maintain core functions of food production and distribution. This classic engineering interpretation of resilience refers to how quickly a system returns to a steady state or equilibrium after a stress, shock or disturbance. This recovery view is also the dominant approach in supply chain logistics, where a return to equilibrium within an acceptable time period at an acceptable cost appears to be the goal. The problem with this view of resilience is that it tends to prioritise the needs of the focal firm in the supply chain and the buyer rather than the supplier e.g. farmers/producers in supply chains and their communities. There is some very useful work in sustainable supply chain research, particularly from an environmental management perspective, but this says little about resilience and social justice. In contrast, those working on ecosystem resilience call for the promotion of biological understanding, social and ecological diversity and the promotion of social capital. This ecosystem view sees resilience as a more adaptive and dynamic process; the system may change when certain thresholds or tipping points are reached, creating a new equilibrium. Thus resilience is the ability of the system to return not to the original state, but to a new equilibrium where the key functions of the system are still delivered. Some political economists are also critical of current resilience thinking and argue that research fails to acknowledge that food systems are disconnected from the communities and societies they serve and fail to tackle the issues of social justice and food governance.

current research on resilience has thus far failed to integrate the different perspectives of resilience and incorporate a multi-stakeholder integrated whole sytem approach

It is clear that current research on resilience has thus far failed to integrate the different perspectives of resilience and incorporate a multi-stakeholder integrated whole system approach, inclusive of consumers, farmers (small and large) and their communities etc. Resilience research has prioritised economic measures at the expense of social and environmental considerations. Hence, there is a call for new interdisciplinary approaches to integrate social justice and environmental considerations along with economic measures across a whole system perspective. Thus food system resilience can be defined as ‘the ability of a food system (made-up of stakeholders who include producers and their communities, processors, transporters, distributors, retailers and consumers of food) to adapt to stresses and disturbances whilst providing both stable levels of nutritious food to the public and a sustainable livelihood for producers’.

This new integrated approach to resilience is even more urgent considering that recent evidence suggests that agricultural industrialisation has made food systems less resilient and more vulnerable to external shocks. The highly connected and concentrated nature of food systems coupled with a lack of diversity and decisionmaking autonomy for farmers has resulted in a food system that is more vulnerable to shocks. Reduced diversity resulting from more homogenous cropping systems and less crop rotation, makes crops more prone to pest outbreaks and price instabilities. This also has a negative impact on soil fertility. Furthermore, there is less diversity of food actors due to concentration of power at farm, processing, manufacturing and retail levels, meaning any disturbances to the food system are amplified. The concentration of power at buyer level has resulted in an unfair price squeeze on farmers causing some to struggle to cover costs of production. Also the highly integrated nature of agricultural production, particularly livestock production, makes the food system more vulnerable to fast disease spread e.g. Porcine Epidemic Diarrhoea virus (PEDv), which has resulted in a 10% death of the US pig population. So while we currently enjoy an extremely productive food system that results in a large quantity of inexpensive food for consumers, these benefits have come at a significant environmental and social cost.

Moreover, engagement with supply chain practitioners has highlighted a gap between the academic literature and practice among various stakeholders (farmers, companies, NGOs etc.) in different parts of the food system. Actors, particularly producers, are calling for:

  • more information sharing and education along the supply chain from consumer to producer;
  • diversification or sharing out production to a wide number of geographically diverse suppliers rather than relying on a few large producers;
  • more risk sharing particularly with regard to pricing; • more diverse forms of ownership of production;
  • co-operation; 
  • flexibility and adaptability;
  • improved regulation (of water, forests and other eco-system services and of prices and wages);
  • application of technology to enhance risk prediction;
  • more innovative incentive and finance mechanisms for producers.

One multistakeholder, socioeconomic approach to improving resilience in supply chains is Fair Trade.

One multi-stakeholder, socioeconomic approach to improving resilience in supply chains is Fair Trade and its associated third party certification mechanism. Fairtrade is defined as ‘a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade’. In practice, Fairtrade certification actively supports producers in developing countries through importing and retailing their products. Moreover, acting as a social movement, Fairtrade campaigns for changes in the conventional terms and conditions of international trade, which disadvantage producers in developing economies. Fairtrade prioritises socio-economic factors by working to facilitate market access for producers, paying producers a fair minimum price (floor price), even when the world market price falls below this level.

In addition, whatever the conventional market price, producers in the Fairtrade system are also paid a social premium per tonne of produce (e.g. cocoa is $200 per tonne), which is used for community infrastructure projects in areas, such as education, water provision, health services, income generating projects for women and agronomy developments, such as crop diversification. An example of water provision is pictured below. In addition, Fairtrade works directly with producer organisations to help them build their own capacity and organisational strength. For example, it has worked with Kuapa Kokoo, a cooperative of 85,000 smallscale cocoa farmers in Ghana, to decentralise and strengthen the democracy of this producer organisation by encouraging its members to buy a share in the cooperative. The fair trade movement has also given birth to some very interesting financial institutions, such as Shared Interest, Oikocredit and Cordaid. These provide social finance for innovative trade mechanisms, such as pre-finance for individual orders, credits and loans for stock facilities and pre-harvest loans when cash flow is a major problem for producers. Fairtrade International also has an Access to Finance programme with Incofin and Grameen for smallholder organisations.

Since 2011 Fairtrade certification has also strengthened its environmental impact by including some compulsory and continuous improvement criteria. Firstly, farmers in the Fairtrade system must protect areas with high conservation value as defined by the Forestry Stewardship Scheme (FSC) and secondly wild harvesting from uncultivated areas needs to be in line with collected species survivability. The environmental standards also include requirements for integrated pest management, prevention of soil erosion, improvement of soil fertility, sustainable use of water sources, sustainable waste management, prohibition of GMOs, protection of biodiversity, use of renewable energy and reduction of greenhouse gas emissions. In 2015, Fairtrade International developed the Fairtrade Climate Standard as a way for smallholders and rural communities to gain access to the carbon market while also improving their capability to face climate change. The standard sets the requirement for projects which reduce emissions in producer and rural communities, making them eligible for Fairtrade Carbon Credits. A minimum price ensures the costs of running the projects are covered. In addition, producers will receive a Fairtrade Premium for each credit sold: money to support them to adapt to climate change in their communities.

A major project for Fairtrade International has been to initiate innovative approaches to climate change resilience for smallholder farmers via a range of climate change adaptation projects including supporting coffee farmers with their battle against coffee leaf rust in Latin America, which has increased due to changing weather patterns, and supporting banana farmers in Peru in their battle against the insect red rust thrips, which can reduce banana yields by 40%. Working with local NGOs, universities and producer cooperatives, Fairtrade International has been funding work to develop a range of pest control solutions including insect colour traps, fence plants around the banana plots to attract thrips, testing of commercial organic biocides and using local plants and garlic extracts to repel the insects. Furthermore, a partnership between the Dutch Fairtrade initiative Max Havelaar and the Dutch Post Code Lottery has raised 328 million Euros funding for a Climate Change Academy in East Africa to work with NGOs, producers, Government and business to encourage innovative approaches to climate change adaptation.

The Fairtrade sector is far from homogenous and some fair trade organisations go beyond the Fairtrade minimum standards in their work with producers providing additional socialeconomic benefits. Firstly, a number of fair trade pioneers have incorporated produce ownership into the governance structure of their business models. In the case of Divine Chocolate, 44% of its shares are owned by Kuapa Kokoo farmer’s cooperative in Ghana. The International Nut Producers cooperative (nut producers across 3 continents) owns 42% share of Liberation Nuts and producers who supply to Cafédirect own 5% of Cafedirect plc, through a similar cooperative structure - Cafédirect Producers’ Limited. This producer ownership and board representation provides an increased opportunity for shared learning and problem solving between supply chain actors coupled with share dividend and a share capital against which producers can borrow money for capacity building projects. The Cafedirect Producers Foundation working with smallholder tea and coffee farmers have just raised a new 4-year fund secured from UK Charity Comic Relief of £600,600 for a programme to support producers to develop innovative solutions to challenges they face including climate change, income diversification and product quality management. This new funding built on a successful first three years for the Cafédirect Producers’ Foundation, during which a total of 33 projects benefiting 55,000 people were funded (2009-2012). These included work on climate change adaptation, crop diversification and a communications platform, WeFarm, that connects producers via mobile phones, allowing farmers from 3 continents to share best practice and information via SMS mobile phone technology.  

Fairtrade delivers an integrated, multi- stakeholder approach across social, economic and environmental dimensions of resilience.

These fair trade pioneer enterprises also provide Producer Support and Development funds (usually 2% of turnover) for additional resilience building projects, such as support with diversifying producer income and supply, climate change adaptation work, gender equality initiatives and technological farm innovation. Divine Chocolate has been working with fledgling producer groups in East Africa to diversify its cocoa supply. Working with Rwenzori Farmer’s Cooperative Union in Western Uganda, Divine has supported the development of cocoa production and the additional payments from the Fairtrade systems have funded the training of producers in cocoa production, demonstration farm plots and model farm tours for cooperative members. In 2015, Rwenzori cooperative supplied 25 tonnes of cocoa for Divine. It is clear that Fairtrade delivers an integrated, multi-stakeholder approach across social, economic and environmental dimensions of resilience. The system is not perfect as Fairtrade is often working in complex environments, but it does provide a more cooperative, risk sharing approach compared to conventional food supply chains. However, as some major retailers continue to reset their product ranges based purely on economic measures, Fairtrade appears to be losing ground in the mainstream with a number of fair trade pioneers losing their UK supermarket shelf position to cheaper alternatives. As a result, Fairtrade sales declined by nearly 4% in 2014 for the first time in 25 years.

This decline is a concern; however, Fairtrade is not the only initiative working to strengthen resilience in the food system.  Local food networks, such as ‘SpeiseLokal’ in Austria, plus social movements, such as ‘Slow Food’ and ‘Via Campesina’, are alternative ways of organising food systems, which encourage increased civic participation to produce ecologically sound and culturally diverse foods. There is also an increasing interest in diversified farming systems which design ecologically sensitive farming approaches. It is clear that further interdisciplinary work is required on the key features of multistakeholder resilient food system which will work at multiple spatial and temporal scales. Future challenges include: how data can be used to support decision making associated with resilience, how ecosystem services can be better regulated and how to develop a scale to measure resilience.

Professor Bob Doherty (Acting Dean, The York Management School) is the Research lead for Food Resilience and Sustainability at the York Environmental Sustainability Institute (YESI) University of York. His research is focused on what role social enterprises and fair trade can play in delivering more resilient food systems. He is also principal investigator for the BBSRC (Biotechnology and Biosciences Research Council) new 4-year ‘IKnowFood: Integrating Knowledge for Food Systems Resilience’ programme.’ The York Management School, University of York, York, YO10 5GD, UK. Tel: 01904325038 Email: bob.doherty@york.ac.uk

References

1. https://sustainabledevelopment.un.org/?menu=1300



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