Industry Realities of the Tea Business: Fair Trade Is it Really? Part 2

Industry Realities of the Tea Business: Fair Trade Is it Really? Part 2

Last time I spoke about the hard Realities of the Tea Business that I have seen involved in the Fair Trade certification process in China. I spoke about how the Fair Trade certification process seemed almost like a farce, and definitely useless. See that article here.


I have since posted this on Linkedin and got some interesting responses which, I posted below this article for those of you who do not have Linkedin for you to get more perspectives on the situation.

Today I made quite an important and interesting discovery in the world of Fair Trade and a possible answer to the Fair Trade dilemma. I met quite an extraordinary woman in the tea business in China. We will call her Shelly Wang for privacy sake. This woman has her own tea plantations since 1999. Her tea plantations are no ordinary tea plantations and her customers are no ordinary customers such as Twinnings and Lipton being among the few. Her tea plantations are what I call BiodiversiTEA style tea plantations where there are serious amounts of effort to not only protect the local ecology of the environment, but also to integrate the tea trees into the local ecology creating a semi-wild tea, and also certifiable organic and non-invasive tea tree. In an article I wrote a long time ago on Wild Tea for Sustainability about the damage done by mass tea plantations I suggested that the BiodiversiTEA style tea plantations would be the ones of the future as people would wake up and want to know where their tea is coming from, supporting the tea plantations that are protecting the environment and not just massive deforestation and mass planting just to maximize profits. There are already a few tea plantation owners that have caught onto this trend. She is one of them, but not for the love of money, but love of the environment.

How does this relate to Fair Trade? Well, the answer lies in The Rainforest Alliance. I have no affiliation with this company, nor do I get any type of commission for the promotion of this company. What I do suggest here is that they are not only an alternative to Fair Trade, but even better!

One of the big gripes I have with Fair Trade is that from a US office they sent a representative from India to China to do the certification process. Not only does he not understand Chinese business culture, but he does not even speak the language. Why does this chain need to be so long? For the The Rainforest Alliance certification process, Shelly told me their auditors are independent. For this particular case an American auditor was sent to her planation. Not only that, every single year the auditor is different. The supplier cannot connect with the same person every year making it harder for corruption to seep into the relationship. They not only certify you in your level of environmental protection but also protection of the local wildlife. They require a balance in the way the tea trees grow with other plants and species in the local environment. If this is not enough they require that the farmers are well trained in organic farming methods, how to ensure no damage to the local ecology, etc. Both Rainforest Alliance and Fair Trade require social equity as the main criteria for the certification process. They look at the how the farmers are living to ensure they are living in clean, stable conditions. Unlike Fair Trade Rainforest Alliance sees the whole picture as the condition of the tea plantation also in relation to how the farmers are living. For example, Rainforest Alliance require the plantation owner to make the farmers houses close to the tea plantation as they consider this important offering the farmers convenient, quick access to the plantation and their living conditions do not cause any environmental damage. Fair Trade doesn’t even consider this a factor. I would say this is above and beyond Fair Trade.

Rainforest Alliance and Fair Trade both require proper training for the farmers in proper farming techniques, but Fair Trade only has a few ambiguous sentences in their rules about which kind of chemicals the farmers can use, but they don’t enforce this. Rainforest Alliance focuses on training the farmers how to grow a healthy tea plantation, which can take up to 1-3 years of supervision. Rainforest Alliance will send their auditors to ensure these guidelines are being met. Rainforest Alliance will send their staff to the plantation beforehand to train the farmers and plantation owners in growing techniques and requirements of the certification process. Fair Trade says they do, but my close friend who worked directly with Fair Trade doing the certification for their plantation revealed to me Fair Trade did not actually do this.

Fair Trade requires the farmers to form a group and apply directly for Fair Trade. This is obviously impossible for most farmers in China simply because they don’t speak English, don’t have a standard education and have no idea what Fair Trade even is. That left me asking, “How were the tea plantations getting certified?” What happens is the tea companies will go and organize a group themselves of tea farmers. In reality, the tea companies organize their own inside staff members to represent the farmers unbeknownst to Fair Trade. They tell the Fair Trade auditor that all of them are the actual farmers. Even the translator really works for the company, even though this is against Fair Trade’s rules.

“The harshest reality of it all is that the tea companies can up their price on their products, which is supposed to go back to the farmers, but in the end it only increases the tea export company’s profits who more often than not gives nothing back to the farmers.”

Fair Trade is supposed to give the certification to the actual tea farmers, but the tea farmers do not have the right to export, only the tea export company does. Then the tea export company is required to apply for Fair Trade certification. After this, the tea company importing into the US or whatever other country it is going to must also have this certification. This seems like it makes sense. When the product is finally sold on the shelves of retail stores nationwide, the importing tea company’s profits go up, the export tea companies profits go up, but how can we verify the tea farmers’ profits have gone up? Every year the Fair Trade auditor will visit the tea export company to review their accounting books, which shows the quantity and price purchased by the export company from the tea farmer group. They also audit the tea farmers accounting books to ensure that the two books’ records match. The books as anyone can easily guess are easily fudged. Not only that, how would these farmers know accounting? Those profits are supposed to be used to build schools, hospitals, etc., but this is never verified by Fair Trade. The harshest reality of it all is that the tea companies can up their price on their products, which is supposed to go back to the farmers, but in the end it only increases the tea export company’s profits who more often than not gives nothing back to the farmers.

Below are my Q&A from Linkedin:

Linkedin Q&A:

Beverly-Claire Wainwright • Like Jay I am growing/making tea, although in Sri Lanka. We used to sell our leaf to a fair trade buyer (at a loss). Yes they paid more for our leaf than a non-organic buyer on a kilo basis but they “rejected” 20% of my leaf – price fixing? I have since discovered the local non-fairtrade buyer pays for 100%.

The same fairtrade buyer (and I think there may well only be ONE in Sri Lanka??) will no longer collect leaf from us saying we don’t produce enough… do I need to be a big producer then? In reality, they only wanted to buy organic leaf.. plenty of small growers in my valley to buy from who could really benefit from a better “fairtrade” leaf price!

When I wanted to use the development fund for the farm they tried to sell us something rather than give me the money to spend. It has taken months and several emails/letters to get money due to us since they stopped buying our leaf .

We planted lemongrass at the request of the same fair-trade buyer on a “buy back arrangement” however they won’t now buy the lemongrass. They said that due to “bad management” they instructed too many farmers to plant and now have too much. Bad management or market manipulation to get a cheap supply of lemongrass? It is quite simply unfair trade!

I understand perfectly that consumers want reassurance, and I can see that wherever an industry uses dangerous practises, child labour, commits human rights abuses etc. then yes, independent monitoring is very much needed and pressure for change from certifiers such as these may be relevent.

It may be useful for the consumer to consider whether this kind of certification is needed on a country and industry basis as opposed to having a “blanket” approach.. lets not forget that most governments have their own monitoring and certification programmes. I would like to know how much fairtrade/certification bodies actually check the validity/efficacy of a country’s own systems to see whether or not these additional certifications are actually needed. If not, why not?

One problem with fairtrade and the plethora of certification bodies that are now emerging as this industry grows is that it/they can not work directly with small growers… in terms of the actual certification process, think about it, how could a small farmer afford or manage the process of certification? .

There are a number of issues that I think need to be looked at.

1. Monitoring crossover between Fairtade/Rainforest alliance/Ethical tea/country specific fair-trade organisations.. the monitoring industry is BOOMING and they mostly monitor the same stuff but with slight variations. This was touched upon at the recent tea convention in Colombo and the three bodies I mention said they would be looking at this crossover problem.. to make it easier for people to get several certifications… for the producer the reality of this unfortunately is likely to be yet more paperwork and cost!

2. Should the monitoring (Fair Trade) industry consider limiting it’s self to working with bigger businesses and to ensure that small producers/small businesses don’t get excluded from trade due to lack of certification. Instead small business growth needs to be nurtured with the provision of better access to help for value addition. OR at very least to figure out simple/cheap direct access to fair Trade certification by small growers/producers themselves (as opposed to large fairtrade middle-men).

3. Monitoring of the fair-trade “middle-men” I agree with Jay this needs to be tightened up. Is Fair trade monitoring the monitoring?

4. The perception that if it isn’t fair-trade then it isn’t fair does need to be both challenged and clarified. Many businesses operate ethically without having a piece of paper. As mentioned above small producers simply can’t afford to pay for this kind of certification nor cope with the administrative burden of doing this.

My Response:

Jay Hunter • Hi Beverly-You also see firsthand how complicated this issue really is. I think you raise a very valid point: the small farmers cannot afford Fair Trade certification let alone organic certification. In reality these are probably the only people doing truly Fair Trade. Why is it that their certification agents are so easily duped? I mean sending a man from India to a tea plantation in China??? Does this make sense to any of you? I would think it is only a matter of common sense to have an agency within China as they can know more easily if they are being duped. #1 they speak the language #2 they know the culture #3 it is harder to dupe someone who is familiar with local business practices, speaks the same language and comes from the same culture. This is a basic thing that has to change within the certification process.

I think your monitoring process is an interesting idea, but then what to do about the additional costs? I would think that my idea of a localized Fair Trade agent office might answer that.

2. Should the monitoring (fairtrade) industry consider limiting it’s self to working with bigger businesses and to ensure that small producers/small businesses don’t get excluded from trade due to lack of certification.
A: I think that we could have a sort of discounted cost for the smaller farmer so that they could afford this certification.

Linkedin Q:

Angelina Yannuccelli • Hi Jay – thank you for the post. This is something that interests me a lot.

Having worked in various development roles prior to a career change to tea, I have seen first hand how many programs that start with good intentions can be gamed and, unfortunately do not end up helping those who they are meant to help. Fair trade certification and similar programs are obviously a valuable asset to a business, and unfortunately is not immune to this.

I would be interested in peoples’ opinions about how widespread the issue is. And, are there parts of the world where the fairtrade type programs are working particularly well or otherwise?

While I think these type of programs are necessary and good to have, there is the risk that people can become complacent in their purchasing and may feel that no other investigation is necessary if a product is certified (this can apply to any type of product that has any authoritative ‘stamp of approval’). Sometimes this is also at the exclusion of other producers/suppliers in the industry, who may be doing all the right things but cannot afford the certification.

From a tea retailer’s perspective, I am interested in ensuring that people have not been exploited in creating the products that I buy. Of course, customers are also interested in this. While I am not a Fairtrade certified business, I do try to do as much homework as possible on my sources by asking questions and doing my own research.

I would be interested in what people consider to be reliable alternative ways to assure themselves about whether producers are receiving fair prices (where direct sourcing is not viable for you), whether workers are receiving fair wages and conditions, and whether sustainable farming practices are being used. I should note I ask this question not to bypass or replace the existing programs, but to supplement and bolster them.

My Response:

Jay Hunter • Hi Angelina, good questions and comments. My experience in asking questions in China is they will give you whatever answer pleases them. If you ask a tea company in the US they will give you the same answer the tea supplier gave them. My experience shows that the only way to know is not only to go in person but go unexpectedly. If it is not possible to go unexpectedly to a plantation or factory you must believe your eyes if something is not right. In addition, you need to find a way to speak to the factory workers or tea pickers without the boss around. These are not the easiest things to do, but they are possible. There are some really large tea companies in the US that are touting themselves as Fair Trade certified organic, etc. and direct from the source when in reality they are buying from a large factory who is sourcing their teas from all over. The truth is if you are buying teas in large quantities like 2 tons and up I find it hard to believe it is possible to have truly Fair Trade teas. Yes, you are right it is a catch 22. We need Fair Trade, but we need to define what is it really? How can we police the people doing Fair Trade certification? How can those people even know when they are being duped. It is not an easy task to take on, but if people are really serious about Fair Trade and not just simply as a “feel good” marketing tool we need to take a hard look at these questions of the fundamentals of Fair Trade..




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