Fairtrade and Traceability
Why physical traceability?
Physical traceability means that Fairtrade products must be marked and kept separate from non-Fairtrade products at each stage of production and processing. It reflects FLO’s strategic objective to assure consumers that products bearing the FAIRTRADE Certification Mark are made with Fairtrade ingredients.
Physical traceability was introduced as a requirement for Fairtrade certified producers, traders and licensees in the February 2009 Generic Trade Standard (GTS). Before this, traceability was implicit in the Fairtrade Standards. The GTS gives producers and traders two years to comply with physical traceability requirements.
The difficulty of implementing physical traceability
When the GTS was introduced, FLO already recognized that physical traceability may not be possible for certain products without bringing harm to many farmers and workers – and often the most vulnerable. For products where producers have no control over processing, these farmers and workers would have no chance to sell on Fairtrade terms when the manufacturer does not keep the product physically separate. Sugar, fruit juice, tea and cocoa were exempt until FLO could do further research.
After extensive consultation with producers and traders, the FLO Standards Committee decided in February that the physical traceability requirements under the Generic Trade Standards would not be compulsory for cane sugar and orange juice and decided the same in July for other fruit juices, cocoa and tea.
Certifying traceability for sugar, juices, tea and cocoa
Certified producers and traders of the above products must demonstrate traceability through detailed documents which show where a product was sourced and to where it was sold. FLO-CERT conducts stringent checks of the documents to make sure equivalent amounts of Fairtrade product were bought and sold, thus tracking the quantity of Fairtrade product through the supply chain.
Among Fairtrade sugar farmers, most sell their sugarcane to a processing mill which transforms the raw cane into sugar within 48 hours after harvest and then sells to the export market. Only a minority of Fairtrade sugar farmers organizations are able to process the sugar themselves since this requires significant investment and expertise.
When producers sell their cane to the sugar mill they lose ownership and all control of the process. The mills usually mix Fairtrade and non-Fairtrade sugar for cost-efficient processing since the amount of Fairtrade sugarcane is too small for the mill to process alone. Because of this, a large portion of the current Fairtrade sugar supply can’t be physically traced.
Some Fairtrade producer organizations separate Fairtrade from non-Fairtrade cocoa at the farm level. However, this physical separation is usually lost in the supply chain. Fairtrade and non-Fairtrade cocoa beans are often mixed when collected from individual farms or during transport within the producer country. Once the cocoa reaches the processor, large-scale chocolate companies process cocoa in huge volumes uninterrupted: 24 hours a day, 365 days a year. Large chocolate companies cannot guarantee physical separation without halting their production or switching all their chocolate to Fairtrade. Artisanal chocolatiers also expressed their difficulties to segregate.
Requiring physical traceability would likely prevent these companies from engaging in Fairtrade. This would stop millions of Euros of Fairtrade Premium income from reaching vulnerable cocoa farmers. All Fairtrade operators (producers and traders) are therefore exempt from physical traceability, a decision which was generally supported by the producers and traders FLO consulted.
Most Fairtrade juice comes from small volume fruit producers who sell to large volume juice manufacturers. Producers rarely own their own juice processing facilities since this means major investments in machinery and knowledge of food industries engineering and quality.
The independent juice manufacturers mix Fairtrade and non-Fairtrade fruit since the volume of Fairtrade fruit is too small to keep separate without very high costs. If the Fairtrade Standards required physical traceability for juice, most existing Fairtrade producers would not be able to sell their fruit to the manufacturer on Fairtrade terms.
Once tea leaves are picked, they must be processed within hours or else they dry and lose their value. Most small holders who supply Fairtrade tea estates or who are members of Small Producer Organizations (SPOs) do not have the capacity or finance for their own processing facilities.
They must send their tea leaves to the nearest tea factory for processing where it is in some cases mixed with non-Fairtrade tea. Farmers are usually spread out in remote locations with one option where to send their tea. Physical separation at the point of production would cause undue hardship to small farmers and out-growers – specifically the most vulnerable ones. Physical traceability of Fairtrade products is also not economically viable for several Fairtrade certified tea factories and tea packers/blenders.
Balancing principles with reality
While Fairtrade holds firm to the principle of physical traceability, in practice it may be very damaging for farmers and workers within certain trade chains. FLO’s goal is to succeed in the delicate balance of delivering on the expectations of consumers and companies in the market with the meeting the very real needs of Fairtrade farmers and workers on the ground.