FLO International Announces Fairtrade Minimum Prices for Rooibos Tea
FLO International is pleased to announce another milestone in the development of Fairtrade Standards: the introduction of the first Fairtrade Minimum Prices for Rooibos tea, which will be integrated starting January 1st, 2008.
The Fairtrade Minimum Price for small producer organisations of Rooibos will be set at 30 ZAR/kg, while the Fairtrade Premium will be 5 ZAR/kg. In the case of hired labour situations, the Fairtrade Minimum Price will be set at 23 ZAR/kg and the Premium 12 ZAR/kg.
Conventional prices for Rooibos fluctuate greatly depending on climate conditions and rainfall patterns: while prices have steadily risen in the past years, record harvests in 2006/2007 have led to a sharp decline in market prices.
Recognizing the implications of these fluctuations for small producer organizations and hired labour, FLO has judged necessary to integrate a price protection mechanism to Rooibos standards. Minimum Prices will ensure Rooibos producers receive a guaranteed Fairtrade Price for their produce, therefore shielding them from market volatility. This assurance in the face of wider market uncertainty has been tested and implemented with several other products and is a core principle of the Fairtrade labelling system.
This particular pricing model adopted for Rooibos tea attempts to balance the need to contribute to different costs of production of small producers and hired labour situations. The difference between small producers and hired labour situations will be bridged by a higher Fairtrade Premium for workers in hired labour situations, which will allow them to invest it back in the development of their communities. Through this system, FLO ensures that small farmer organizations and plantations have the same market access opportunities for their Rooibos tea and that the workers, in the hired labour context, are benefiting most from Fairtrade Certification.
The decision to introduce Minimum Prices for Rooibos is the result of an extensive research and consultation process, following ISEAL best-practices for standard-setting. The Minimum Prices for Roiboos have been developed on the basis of cost of sustainable production (COSP) analyses, market research and numerous consultations with Fairtrade Rooibos producers, traders, retailers, and Labelling Initiatives.
Two price research studies and three consultation rounds were carried out since 2005. A workshop on pricing with producer representatives of both small producers and hired labour situations was also organized in Stellenbosch in October 2007.
As a result of this process, FLO International is confident that this initiative coincides with the core values of the Fairtrade Labelling System to guarantee producers a fair and stable price that cover their cost of sustainable production and a Fairtrade Premium that helps to build the necessary infrastructure for sustainable development.