Friedel Hütz-Adams from the Südwind Institute for Economics is an expert on cocoa supply chains and expressed the hope in stern that the German supply chain law could achieve what certifiers such as Fairtrade have failed to do: namely, secure human rights and sufficient incomes. He accused the Fairtrade seal of being merely a “sedative pill for the public”.
Fairtrade defends itself against the allegations. Time for a discussion, the star meets Fairtrade board member Claudia Brück at the Fairtrade Germany house in Cologne-Ehrenfeld. Friedel Hütz-Adams sits opposite her.
Ms. Brück, Mr. Hütz-Adams not only criticized the large chocolate companies for price dumping and the precarious conditions on cocoa farms in West Africa, but also Fairtrade as a certifier: “Certification,” he said, “does not guarantee compliance with human rights.”
Brück: I can basically agree with that, there are different certifications. But for our system I would reject it.
He also says: “The Fairtrade minimum price does not guarantee cocoa farms a living income.”
Brück: Our goal is to start with marginalized small farmer organizations and to improve their often very precarious situation so that they can shape their own future. We have developed a large catalog of measures for this, including the Fairtrade standard, consultations and additional projects. The Fairtrade standard requires the payment of a minimum price as a kind of safety net as well as a Fairtrade premium – money that the cooperatives can invest, for example, in community schools or in measures to increase productivity.
Hütz-Adams: The United Nations associates sustainability with the fact that a product is ecologically compatible and people can make a living from their work. Seen this way, Fairtrade products are not always sustainable.
Brück: We cannot guarantee a living income for everyone. For the farmers we work with, the area of land they cultivate is often too small to support a family. In addition, the Fairtrade minimum price and premium are only paid for that part of the harvest that actually finds a Fairtrade buyer on the market. Currently this only applies to around a third of the harvest. There is no demand.
Is this fair to the farmers: a safety net that only ensures security if the market situation allows it?
Brück: That’s what Fairtrade does: we advise. We organize a system that sets standards. We support cooperatives in meeting these criteria. And we are trying to find markets that will buy the Fairtrade harvest at appropriate prices.
Can you understand when Mr. Hütz-Adams says that the Fairtrade seal is little more than a “sedative pill for the public”?
Brück: Well, I find this formulation discrediting! Fairtrade is not perfect. And Fairtrade is not the solution to all problems. But we support small farmers to produce independently. We do lobbying and public relations work for them. We improve your negotiating position on the market. These are many small steps that have been proven to work. In 2021, the Impact Institute demonstrated that Fairtrade farmers in West Africa were able to increase their income by 85 percent. I find it really annoying to dismiss all of this as a “sedative pill”.
Hütz-Adams: I know this study. It also shows that not even one in five people have a living income – more than 40 percent of people live below the absolute poverty line, and a significant proportion live just above it! My criticism is not that Fairtrade does not bring any improvements, but rather that these are often far too small. In addition, there are no deadlines by which a living income must be achieved. Companies can therefore continue to label products as “fair” and “sustainable” even if people’s incomes are far below what they need to meet urgent needs.
Could it be that Fairtrade’s image is too positive? Many people think: If I buy Fairtrade coffee or chocolate, I have the guarantee that everything is fine on the producer side.
Brück: It’s not that simple. What we do is within a development policy context. There are small farmers who were able to afford a bed or a mosquito net for the first time in their lives with the help of the Fairtrade premium. These are small steps – but at least in the right direction! It doesn’t help much when someone from the scientific community comes up with clever sentences and weakens us by sowing doubts about Fairtrade.
Hütz-Adams: My criticism does not only refer to Fairtrade, but also to such certifications in general. However, I wouldn’t put it into perspective. Let’s take a look at the impact of Fairtrade: In the past ten years, the minimum price for cocoa has rarely been above the world market price. And the additional Fairtrade premium paid was, as of last spring, around ten percent of the average price. To achieve a living income in the main production countries of Ghana and Ivory Coast, not a ten percent increase would have been necessary, but a 100 percent increase. And even the ten percent surcharge only applies to a third of the harvest, as we just heard.
The steps in the right direction that Ms. Brück spoke about…
Hütz-Adams: … are much too small. On the other hand, I constantly hear from companies – not just with cocoa, but also with coffee, bananas, cotton and so on -: “Yes, we have a label on it! What else do you actually want from us?” And that’s the point that frustrates me a lot: companies with such labels are offered a cheap fake solution that they can hide behind.
Brück: I completely understand your frustration. But with your “sedative pill” phrase, you’re throwing the baby out with the bathwater! On the one hand, this criticism only relates to the income aspects of Fairtrade – there are other aspects such as advice on increasing productivity or diversification. On the other hand, when it comes to sales prices, you always have to look at what is feasible on the market.
Hütz-Adams: But that leaves us stuck in this system that is based on exploitation.
Brück: It’s no use at all to come up with an ideal price that would solve all the problems – and in the end no one will pay it. As a label organization, Fairtrade is often only the second choice because we have a price component. We are considered too expensive because we are the only ones who impose a minimum price and a premium. A selling price only ever has an effect if a product is sold in quantity.
Hütz-Adams: What good is a minimum price for cocoa or coffee if it doesn’t provide a livelihood for the farmers – and they are then forced to let their children work?
So Fairtrade cannot rule out the possibility of exploitative child labor taking place within its system?
Brück: Exploitative child labor is prohibited in the Fairtrade standard; anyone who violates it will be sanctioned. But I don’t think anyone can completely rule it out. What we are doing is taking measures to reduce it.
What does that mean specifically?
Brück: All of our partner organizations must carry out preventative measures. The most important thing is that farmers understand why exploitative child labor perpetuates rather than breaks the cycle of poverty. We have many educational projects in which the respective community is involved in order to counteract this together.
Hütz-Adams: I once went to a congress in Ivory Coast in which cocoa companies, certifiers and ministries took part. Many cooperatives were there too. At one point a woman from a cooperative stood up and said: “I can’t hear all this talk about child labor anymore! If I send my children to school during the main harvest, part of the harvest will be lost. How will I then feed my family?” That is the reality on the ground. Without a living income, all well-intentioned measures are of no use.
Brück: I think we completely agree that prices must finally be paid in cocoa or coffee production that people can live on decently. But I don’t think it’s wise to publicly attack those who share this goal with harsh criticism.
Who should we actually target together?
Brück: First of all, all these labels that call themselves sustainable without making it clear what this assessment is based on.
And how about a “Fairtrade plus” label for products that guarantee that living wages are paid everywhere along the supply chain?
Brück: As long as something like this happens on a voluntary basis and we are told by retailers that cheap is good, it won’t work.
Hütz-Adams: Well, there are companies that show that it can be done. Tony’s Chocolonely, for example, pays significantly higher premiums, enters into longer-term contracts, builds reliable connections with cooperatives – and has thus massively reduced child labor.
Brück: But you know that Tony’s Chocolonely is Fairtrade certified?
Hütz-Adams: Yes, but they go a few crucial steps further. When you see the progress on their cocoa plantations, you know where the rest of the sector needs to go. Why don’t certifiers like Fairtrade set a deadline for the chocolate companies and say: By 2025 you will pay your producers similarly fair wages – or you will no longer be allowed to put a sustainability label on your chocolate?
Brück: You are overestimating our negotiating position. Without a political framework, it will remain with individual lighthouses – such as Tony’s Chocolonely, Jokolade, Choco Changer from Aldi, Way To Go from Lidl or Very Fair from Rewe. But this does not yet reach the amount that is necessary for a fundamental change in the industry.
Stern and the freelance authors and photographers collective Times Mirror Reports are dedicated to one of the most important new German economic laws – the Supply Chain Due Diligence Act, which came into force in January 2023. What do the new rules mean for German companies? What for the people in the global south? And what for customers and consumers? This project is funded by the European Journalism Center and supported by the Bill
Last year in Germany, the Supply Chain Act set a framework that is intended to ensure more fairness and sustainability along the supply chain.
Brück: However, this law does not contain the obligation to pay living wages – so the very point that is being discussed here is missing.
Hütz-Adams: I’m a little more hopeful. Companies in Germany now have to take a look at what is happening further down the supply chain – something that many simply did not care about until a few years ago. And I am convinced that the law will force companies to explain themselves if they pay a cocoa price in the future that violates human rights and accepts child labor.
Brück: I am also glad that we have the German supply chain law. But we also need an EU supply chain law that ensures the same framework conditions across Europe and has a much greater impact thanks to the large internal market.
The FDP blocked the adoption of the EU supply chain law for a long time. She fears that the bureaucratic burden cannot be overcome.
Brück: That’s total nonsense!
Hütz-Adams: I would say exactly the opposite.
Brück: The opposite of me?
Hütz-Adams: No, the opposite of what the FDP claims. It is true that the bureaucratic effort has reached absurd proportions in recent years. There are countless certifications and standards and reporting. A wild growth! However, the EU supply chain law would provide an opportunity to harmonize standards. reduce bureaucracy. There are many medium-sized companies in the cocoa sector that would fall to their knees in gratitude if uniform EU legislation ended this uncontrolled growth.
