60second interview

Face to face | 8 September 2016
Gidney_Michael

Michael Gidney, chief executive of the Fairtrade Foundation, talks to TFR about trade rather than aid and enabling the world's poorest farmers to capture more value from their produce

The UN Sustainable Development goals with more than 160 proposed targets mean that cross-border trade needs to shape up. What are the main issues?

The global goals really matter - yes they are complicated and too many - but they are the best attempt in a long time where governments around the world pull together to create a coherent framework for the future. The ambitions are incredibly difficult but it is helpful to nail them down and establish the vision as this creates a policy agenda for the next 15 years. There is an underlying sense that globalisation is leaving too many people behind.

We can see increasing disruption in the global economy, and in peace and security. The free trade agenda, as much as it has delivered benefits, has brought casualties with people left behind. 795 million people in the world are hungry - farmers grow food for other people and do not make enough from their trade to put food on the table for their families. The global goals are brave in terms of trying to draw this together an agenda for everyone, where companies are encourage to look beyond the short-term reporting cycle through to the long term sustainable performance, which works for everyone from producers to shareholders.

We know that trade, rather than aid, is the more sustainable route to poverty reduction, but what is being done to make this happen?

There are some interesting trends behind this that speak to the wording in the SDGs. The importance of agriculture is oddly more recognised now than ten years ago. There was a period in the 1990s when there was a rush to encourage farmers to diversify from agriculture such as a service sector in Malawi, one of the poorest countries on earth. And the majority of the world's poor are farmers. The eye was taken off the ball to drive agriculture and now there is a recommitment to sustainable agriculture and to help farmers capture more value. By 2050 we have to feed nine billion people and this goes back to the rise of climate change and the inability of the world economy to feed the world.

In Fairtrade, we have seen a race to certification in the cocoa industry in the past few years. It is partly about brand recognition, traceability. But for the big traders and multinational corporations, it is now about the security of supply. While Côte d'Ivoire is the world's biggest cocoa exporter, 80% of the population live on 40 pence a day and 60% of the farmers run out of money during July and August before the new cocoa season begins. This has had a knock on effect on the way farmers view farming. The trees are aging, so when you add to that climate change and price volatility, the sector is almost on the verge of collapse.

Their children do not want to farm. They are either leaving the farms or ripping up the cocoa bushes and growing narcotics - it's a better return. You have systemic failure of supply. We think this is because the approach has been top down rather than bottom up. Unless you put farmers first and create a living desirable for them, there will be no security of supply. The commodities trade is so often divorced from reality (price speculation happens in financial centres) - but people are beginning to understand what happens at the sharp end and investors are thinking about the reputational risk.

Tell us more about what the Fairtrade certification has done to transform developing world economies

Fairtrade is all about helping producers around the world get a better deal from their produce. If you get trade right, you can fight poverty and create a sustainable living for everyone, but you have to put farmers first. Producers have 50% of the voting rights globally and we work with 1.6 million farmers and workers in 74 countries. The UK is the largest market for fair trade - around £1.6bn. Farmers receive a guaranteed minimum price per kilo and on top of that, a 10% premium goes to their communities. We organise them into groups and we work with them on compliance and environmental standards. The minimum price helps them manage risk. Farming is an incredibly volatile business and we try to manage this through the minimum price which is reviewed constantly.

Impacts and outcomes?

In Mali, school enrolment is 43% but in Fairtrade communities, it is 98%. If they have more money their children are more likely to go school. And Iriaini Tea, near Mount Kenya, worked with us and Marks & Spencer to obtain grant funding from the UK government for a packing facility, and have now captured 60% more value. They now sell tea locally to Kenyan supermarkets. This is the whole point of trade rather than aid.

Michael Gidney is the chief executive of the Fairtrade Foundation

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