Thank you very much.
Good afternoon, Mr. Chair, and members of the committee. Thank you for the opportunity to speak today.
My name is Tom Smith. I'm the executive director of Fairtrade Canada, and I've worked in the fair trade movement and with co-operative organizations, both in Canada and internationally, for over 20 years.
Fairtrade Canada is the Canadian member of Fairtrade International. Fairtrade is the most widely recognized ethical label in the world. Our vision for fair trade is a world where trade justice and sustainable development principles are developed globally, thereby moving world farmers and workers from a position of vulnerability to security and economic self-sufficiency.
Currently the global fair trade movement is made up of 26 national fair trade organizations, primarily in northern purchasing countries, with more than 1,200 producer organizations worldwide, primarily in southern developing countries. In fact, producer organizations now own 50% of the global fair trade system, through a governance change in 2013, ensuring that workers and farmers are represented at every step of the way.
We just passed the first anniversary of Rana Plaza in Bangladesh, the worst industrial accident in living memory. Over 1,000 people were killed because laws and company codes were openly disregarded. However, all too often such an incident hits the headlines and then fades away. Meanwhile, millions of men, women, and children continue to labour day in and day out in tough and hazardous conditions, earning a subsistence living in order to produce the food we put in our mouths and the clothes we put on our backs.
Standard free-market doctrine is convinced that trade is crucial for economic growth and will create trickle-down effects that will eventually reduce poverty. Fairtrade believes in the first but not in the second. Trade alone is not sufficient. It must be accompanied by measures that promote equality, human rights, and environmental protection.
Finding the right balance between facilitating trade development and compliance is an arduous task that requires continuous improvement and fine tuning. Fairtrade has been doing this for 25 years, and our experience has taught us valuable lessons. In the process we have learned a great deal about how to meet the often conflicting needs of the private sector and disadvantaged producers and workers, and we're still learning.
Growth solves some problems, but inevitably breeds others. Fairtrade has seen farmers take shortcuts with organic certification, turn to bad labour practices to meet deadlines, or cut down forests to increase production. We have also confronted significant human rights abuses. Fair trade producer communities are not immune to the difficulties faced across the developing world, and indeed the developed world. Power dynamics can manifest themselves at every level, from co-operative boardrooms to the lives of individual farmers and workers.
Today I'd like to share with you three key ingredients, which we would encourage the Government of Canada to incorporate in its approach to ensure an end to not just the Rana Plazas, but to the constant grinding poverty and hardship of millions of small producers and workers across the globe.
Let me begin with ingredient one, where fair trade begins, which is best practice in standards and certification. Fair trade standards are set in accordance with the requirements of the ISEAL code of good practice for setting social and environmental standards. This means that standards are set on the basis of consultation with major stakeholders in the fair trade system. Standard setting in fair trade is not a one-time exercise. The realities on the ground, as well as new challenges and changes to external environment, dictate that we constantly review and fine-tune our standards.
While Fairtrade International sets the standards and supports producers to meet them, a separate certification company, which is ISO-65 accredited for fair trade certification, FLOCERT, regularly inspects and certifies producers and traders against the standards. FLOCERT auditors are experts in their field. They are familiar with the local and sector-specific realities that they are facing on site. They know the elements and the fair trade standards that carry the highest risk for non-conformities. As well, auditors receive regular training on identification and response required to mitigate those risks.
The second key ingredient to fair supply chains is fair pricing. At its heart, we get what we pay for. If products and goods are too cheap, there is a cost. Value is still too unevenly spread. Market concentration in food retail is getting worse. Competition is so fierce that there is a real risk of a race to the bottom in key commodities. Fairtrade wants to stop the race to the bottom, whereby suppliers in different countries compete against each other by lowering terms and conditions of work in order to receive business from the north. An example of this would be flower plantations moving from Kenya to Ethiopia, where wages are lower and tax incentives are given to new investors, or clothing brands moving their sourcing from China to Bangladesh after wage levels in China had begun to rise following strikes.
Half the world's hungry are farmers. This is not only a moral outrage but also a critical business risk for the security of supply. It is impossible to achieve sustainability if producers cannot capture an adequate share of value to fund sustainable business practice. Farmers are bearing the brunt of this squeeze. Smallholders are giving up, and plantations are casualizing labour and suppressing sustainable wages. We also see the cost in poor or unfair contracts, in failure to move towards living wages and in the supply chain’s trapping plantation workers or factory workers in a cycle of poverty, or in poorer worker rights. An example would be less freedom of association.
The Fairtrade minimum price is a vital protection for producers; however, it's not enough. Overall, we need to pay more for our goods if we want to see our supply chains delivering an end to poverty and promoting human rights rather than trapping people in poverty and preventing progress on rights. Higher living wages cost money, so do safer factories, so does environmentally sustainable farming, and so does paying the full cost of sustainable production.
Fairtrade has been a trailblazer for a living wage in the rural sector by commissioning the development of a living wage estimation and methodology. So far, we have developed robust living wage estimations for South Africa, Dominican Republic, Malawi, and Kenya. We have formed partnerships in industry and civil society, to help workers move towards a living wage, but we also need governments on our side.
In Europe, the Dutch and German governments organized the living wage conference in Berlin, in November 2013, to a common declaration with industry, unions, and NGOs. We encourage the Canadian government to follow this example.
Ingredient three is empowering farmers and workers, and bottom-up governance. The challenge faced by farmers and workers in developing countries goes beyond the scope of any certification system. Fairtrade International is building expertise in various program areas that can affect farmers and workers across all products, and is developing global strategies to help the most vulnerable.
For example, the last five years have taught us that our standards based on relevant international laws must go beyond producer groups and their members’ simply being able to recite fair trade requirements on child labour. Instead, we see an increasing leading role for producer organizations to become change agents in the fight against unacceptable social practices.
In order to support producers to fulfill this role, Fairtrade has adopted a children-first approach. Fairtrade has conducted rights-based focus groups with approximately 500 children and youth in fair trade organizations and their communities. Working children can teach us about their lives, the impact of their work on themselves and their peers, and the alternatives as they understand them. Of those participating, only five children and youth in these communities saw any prospect of a sustainable livelihood in agriculture—a warning shot across the bow to those who buy and consume commodities produced by their parents.
In conclusion, we encourage the Government of Canada to promote fairness in trade by requiring credible efforts of Canadian companies sourcing from developing countries and an expectation of business to respect human rights, including a living wage for workers. This will send a strong message. This has been embedded in the United Nations guiding principles on business and human rights as the leading international framework for governments and businesses to respect, prevent and, where necessary, remediate adverse impacts on human rights.
Transparency is key. Without transparency, business is simply marking its own homework as far as rights and wages are concerned. Transparency needs to be systematic. This is where credible standards and certification play a leading role. Another step that the Government of Canada could do to is to follow in the footsteps of the EU and lead by example by revisiting the federal government's public procurement standards to choose Fairtrade certified products and other sustainable procurement considerations. Other Canadian institutions are currently doing this with our Fairtrade towns, cities, and campus programs.
Finally, but most importantly, we need to invest in strengthening communities, farmers, and workers themselves. When people have the strength and capacity to speak for themselves and negotiate, conditions and wages improve. Without the space and permission for workers to advocate for their own rights, at the end of the day, regulation can only go so far.
Thank you very much for your attention. I look forward to your questions.
