Saturday, December 19, 2009

Industry survey suggests Fairtrade mark has been damaged by being awarded to Nestlé's token products

A report on a survey conducted by the industry body, IGD, suggests that the Fairtrade brand has been harmed by it being added to Nestlé products.

As followers of this blog will know, Nestlé has received Fairtrade certification for two products. Partners' Blend coffee, involving just 0.1% of the coffee farmers dependent on it has been used in national advertising campaigns since it was awarded in 2005, diverting attention from criticism that Nestlé's predatory pricing practices drive down farmers' income, sometimes below the cost of production. Suggestions that the award would be a Trojan horse, transforming Nestlé's relationship with coffee farmers have so far proved unfounded.

This month it was announced 4-finger KitKats in the UK and Ireland will be Fairtrade certified in January, representing just over 1% of Nestlé's cocoa purchase. Media coverage generally failed to mention how small a percentage was involved or the fact that Nestlé has been taken to court in the US for failing to act on a 2001 agreement to end child slavery within its cocoa supply chain within five years. Indeed, media coverage has implied Nestlé's Fairtrade move is addressing the problem of child slavery, rather than being a token move that is diverting attention from the broader concerns.

The amount Nestlé is spending on the Fairtrade Premium for the cocoa it will buy in 2010 (less than £400,000) is less than 1% of its expenditure on its current UK Nescafé advertising campaign (£43 million). Not only has it generated unwarranted good publicity, a UK Minister has used Fairtrade KitKat to dodge a question at a UN press conference on Nestlé's negative impact in developing countries. See:

According to the Food and Drink Digital report on the IGD poll, entitled Food shoppers sceptical of ethical shopping influence:

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There are several forms of certification that food and drink products can be accredited with, such as Fairtrade, the Rainforest Alliance or Freedom Foods.

However, many of these labels have attracted controversy, damaging consumer confidence. Fairtrade certification applies to products, not to companies, recently allowing Nestle to gain Fairtrade certification for the Kit Kat, despite ongoing allegations about its business practices relating to other brands.
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US Fair Trade organisations have questioned Nestlé's commitment to sourcing cocoa more responsibly. See the press release at:

---Extract begins
Bama Athreya, Executive Director of the International Labor Rights Forum, said, "Nestlé cannot claim to be sourcing responsible cocoa by using a small amount of Fair Trade Certified cocoa when the majority of its cocoa could be produced by forced labor and child labor. As the largest food company in the world, Nestlé must make a stronger commitment to protecting worker rights in its cocoa supply chain as well as in its production facilities and in the sourcing of other agricultural products."

When Nestlé received its Fairtrade coffee certification from the UK Fairtrade Foundation for a product representing just 0.02% of its coffee purchase, another Fair Trade organisation suggested that a far greater commitment should have been extracted from Nestlé before giving it the right to use the logo:

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Equal Exchange's co-director, Rob Everts said, "We understand what it takes to commit to more equitable relationships with small coffee farmers. We have long recommended that for large corporations the Fair Trade starting point should be 5% of their total imports. Given Nestlé's dismal track record on many fronts in the developing world, they have an even steeper credibility hill to climb than most, and should in fact begin even higher than 5%. Large companies tend to subsidize their modest Fair Trade purchases by paying farmers much lower prices on the rest of their coffee imports."
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A quick survey of Baby Milk Action supporters in 2005 found that 47% incorrectly thought the award of Fairtrade certification signified the Fairtrade Foundation had verified that there are no serious ethical concerns with a company. Only 17% realised there could be concerns and the mark relates only to the suppliers of the product that bears it and not all suppliers to the company. Many said their view of the mark would change if Nestlé received an award.

This misunderstanding of the limited scope of the Fairtrade mark that has presumably led to the damage to its reputation as it does not compute that a company with such an appalling record as Nestlé should receive it.

Nestlé is one of the four most boycotted companies on the planet, according to GMIPoll (as reported in The Guardian in 2005), over it aggressive marketing of baby foods.

An international coalition of civil society organisations is currently campaigning for Nestlé to be excluded from the UN Global Compact for bringing this voluntary corporate social responsibility initiative into disrepute by using it for Public Relations purposes while continuing with egregious violations of the Global Compact Principles in various aspects of its business. See:

It is, therefore, perhaps not surprising that the good reputation that the Fairtrade mark has built up over years through the hard work of grassroots supporters (including my own small personal involvement in the campaign to earn Cambridge certification as a Fairtrade city) has been damaged by being handed to Nestlé for so little while Nestlé's systematic breaches of baby food marketing requirements and human rights abuses continue.

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