We are in a momentous time… a dialogue with Rob Cameron

02 febrero 2009

We are in a momentous time; a period of great change. I believe that, on behalf of all our stakeholders, Fairtrade has to engage in the conversation about change and what that change will look like. This is personal perspective but aims to reflect some of the issues from a Fairtrade point of view. Each month we’ll publish these personal observations not least to stimulate a response: to explore our own thinking but also hear what others say. This isn’t a platform for official Fairtrade or FLO policy but rather a beginning of a dialogue both internal and external.

I’m looking forward to the debate!

The year of living dangerously

Most of us couldn’t wait to see the end of 2008 – it was a shocking year in so many ways. And yet now, in January 2009, the month when you’d expect the year to be nothing but a puppy and as I listen to the morning news from the BBC, 2009 already appears to a great big, growling, scary old dog of a year.

The markets have crashed (again) with one of the biggest falls on record – that is, since the last record fall. Governments are running out of capacity and ideas to support a diseased banking system. Global banks are being as good as nationalised and yet, so inured accustomed are we to financial calamity, it only makes the second or third page of the newspaper. Serious forecasters say many countries appear set to break recessionary records of maybe more than two whole years of negative growth (why can’t they call it contraction or shrinkage?) and the UK is set for its worst year since 1930. Chinese growth has slowed and there are worrying forecasts concerning its future.

And yet, and yet … I can’t help wondering how we will look back on this time. Will it prove to be the leading edge of total discontinuity; the beginning of a system collapse in which economic dysfunctionality, climate change and access to core resources – oil, energy, and water – combine to create a mutual reinforcing breakdown of our very civilisation? Will we look back and see it as a “dry run” – a dress rehearsal for a show that will play out fully some time soon because we failed to act? Or will we look back on the latter part of the decade as the time the alarm bell went off and, for a change, we listened, took action, and changed. The period when we put our skills and creativity to the best possible use and began fixing what was broke.The time when capitalism’s greatest asset – its capacity to reinvent itself – proved to be of benefit to the world at large and all its inhabitants.

The old expression says “if it ain’t broke don’t fix it”. So the corollary must be if it it’s broke – it’s time to redesign. To paraphrase Mao, change must come from the barrel of a gun. And right now it seems we are staring down the barrel. So as Barack Obama kept telling us: change is no longer an option. And just a few days ago Barack Obama strode to the podium to address millions in Washington as his long awaited presidency began. The “Obama moment” is here and we owe it to ourselves to recognise the opportunity this will bring.

Before looking ahead though, how will history judge 2008? I think we will look back on 2008 as the year in which if there was anyone, with any doubt, that age of corporate responsibility was upon us, then the collapse of the financial system was their answer.  2008 was the year when we finally discovered what many of us in the fair trade world have believed for years: that unfettered, free trade with next-to-zero regulation leads to bad outcomes for all, including the principle actors (ask anyone with a stake in Madoff). In seeking the business case for corporate responsibility, it is as well to ask what the business case might be for “irresponsibility”. Now we have our answer.

2008 was also the year in which we saw the failure of the global institutions designed to ensure such a collapse would never happen. Whether we think of the IMF, World Bank or the WTO, there was no clear warning or prediction from any of them of what happened, nor a particularly coherent response.

Ultimately, we have to hope that 2008 was the end of the beginning of a crisis and not literally the beginning of the end. If so, then we can be optimistic – the redesign has begun and change is the zeitgeist. Governments the world over are working on new packages of action. Davos is about to get underway with the title “Shaping the Post-Crisis World” and it is good to know that Paul Rice is there representing Fairtrade because we need to be involved in shaping that change. Once new thinking coalesces, there will be little opportunity to redesign the redesign!

But change can be both an opportunity and a threat. So what does 2009 hold for Fairtrade?

The crisis and Fairtrade

Six months ago the biggest general threat to most Fairtrade producers was the rising oil price. Oil has fallen back to something more manageable. But let’s be clear: the price spike of 2008 is only a taste of what is to come in the future. Oil is going to be very expensive over the next 10 years. Now though, the economic crisis represents a whole range of new threats for producers such as access to markets, access to capital, rising costs and reducing sales, and the distinct possibility of history repeating itself with an increase in protectionism and trade tariffs.

In the developed world, recessions mean tighter household budgets, the threat of redundancy and fear of the future. But the impact on the south, for producers, can be so much more threatening. With the gathering gloom, it seems all the more likely that the need for Fairtrade is to be greater than it has ever been before. So too is the need for Fairtrade to be easier to engage with and for us to be clearer, more flexible as our new strategy aims to ensure.

The producer voice has to be heard more loudly and ever more clearly. The changes we have made and will continue to make in our governance and operating model will ensure that producer needs, as they change through the crisis, will be listened to and be reflected in our operations.

Producers need to sell has to be matched with a consumer desire to buy. From the evidence we have been able to gather so far, consumer support for Fairtrade remains remarkably strong. Labelling Initiatives are reporting continued growth in the latter months of 2008. Surveys suggest that Fairtrade is very low on the list of things that consumers would be willing to sacrifice in responding to the recession. My guess is that consumers will indeed continue to want to buy Fairtrade. My worry is that business, challenged by the gloomy prognoses, will make decisions on behalf of consumers and might be less inclined to offer a Fairtrade option. That would be a big mistake. Research evidence demonstrates incontrovertibly that consumers’ expectations of business are rising and that satisfaction with business’s responsibility performance is falling. So the case is clear: business has to demonstrate that it is willing to address its impact.

I expect that some businesses will indeed find it hard to enter into Fairtrade. Some may resort to alternative, less impactful or robust “labels”. But I strongly believe that not only our committed partners will stay with us, but that as business looks to the recovery, they and others will see the opportunities that we bring. So our job is to continue making the case for fairer trade conditions, for producers’ rights for a brighter future – and showing that sticking to principles does not have to mean being difficult to work with. Our new strategy and our planned investments in product and key account management are well timed to help us do this.                                                                                       

The recession will also mean a big drop in tax revenues and consequently place pressure on government spending, including aid and development funds. Non-governmental donors may also experience pressure. As a result, Fairtrade, like all recipients of donor funding, will be required more than ever to demonstrate the impact of our work and the value for money we offer. Our revenue model relies more on market revenues than donor income but donor income is an absolute essential to us so in 2009 we will need to work evermore collaboratively and closely with our funders and supporters.

Over the past couple of years we have seen a surge from other “ethical labels”. The “Obama moment” will drive business to show “we care and take “responsibility seriously”. But the focus on reducing costs will almost lead to a rapidly increasing number of cheaper and easier labels and endorsements. For Fairtrade this means that we must maintain our integrity but also be simpler and easier to work with.

We may well look back on 2009 as the comeback year for national governments. Since the Reagan/Thatcher years, the trend has been for deregulation and to reduce the impact of the state. Now, Obama is changing the question from big or small government to one of good or better government. Only time will tell what this “new government” will look like and if we will agree on “good”, but clearly there is going to be trends towards stronger regulation, and greater intervention. As an ethical label that uses a form of market intervention to achieve development outcomes this is a trend that is potentially helpful to our cause.

As a multilateral movement, we should learn from the recent failures of unaccountable monolithic institutions. One response to these failures will be a sharper focus on governance and accountability – an area we are looking at in Fairtrade already. Another will be new partnerships and collaborations: through alignment of mutual interests, a recognition of the connected nature of the challenges that face us (for example, climate change is not simply an environmental issue) and a realisation that none of us has the answer. New approaches will emerge that bring together organisations from different backgrounds and places to find new solutions. Labour will work with environmentalists; charities will collaborate more closely with business, governments will work with civil society more than ever before.

In Fairtrade this will mean that we need to be even better at working with each other across national boundaries and more open to possibilities of working with others. We know our model is strong but we must also recognise our own limitations and be willing to engage.

Which brings us back to the beginning: it’s time to start talking!

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