30 Sep 2020

Fairtrade Extends Flexible Premium Use to Help Battle COVID-19

Fairtrade International has extended the flexible use of Premium for hired labour organizations to the end of December, to help them take immediate action in response to the COVID-19 pandemic. The Fairtrade Standards Committee endorsed the extension as continued support for those who are among the hardest hit by loss of sales, disruptions in supply chains or inability to harvest.

The announcement follows the Committee’s decision in March that allowed for more flexible decision-making on the use of Fairtrade Premium and its distribution, enabling producers to act more quickly to protect the health and livelihoods of farmers, workers and their communities. That initial move to change or confirm existing standards covers all types of Fairtrade-certified producers - from small-scale farmer cooperatives to larger farms with a hired workforce.

For hired labour organizations, it means their worker-led Fairtrade Premium Committees can continue to distribute up 100% of Premium in cash to their workers without having to make a formal request to FLOCERT, the independent certifier. This is an increase from the usual 20% permitted or 50% in exceptional cases. For small-scale producers and contract production, an existing provision in the Fairtrade Standards already allows flexibility on the use of Premium within the context of COVID-19.

The flexible Premium use enables all Fairtrade certified organizations to spend those funds on COVID-19 responses without having to wait for approval at their required annual General Assembly, which is normally the case. Once an assembly of members is possible, expenditure will be granted retroactively when the organization demonstrates the investments were made to minimize the spread of the disease or to mitigate potential negative effects. This can include covering the cost of personal protective equipment, implementing health and safety measures, distribution of food or providing extra income.

The Fairtrade Premium is an additional amount on top of the selling price that producer organizations earn on every Fairtrade sale, and invest in projects of their choice to benefit their businesses and communities. In 2018, Fairtrade producers earned more than €187 million in Premium. The flexible Premium use has so far supported producers in a number of different ways since the start of the pandemic.

For example, Kenyan flower farms have spent over half a million euros in Premium money on food packages and hygiene items such as soap and sanitizers to help protect workers’ health. More than 17,000 people - including laid-off workers and people from the surrounding communities - have benefitted. In Columbia, 16 banana companies are contributing US$55,000 of Fairtrade Premium money towards an emergency COVID-19 diagnostic test centre set up by the local university. And in Sri Lanka, 16 small producer organizations have taken up various disaster relief initiatives to support its farmer members and their communities. Premium funds are being utilized to meet the essential health and safety, food and medication needs of their members.

By extending the flexible Premium use, Fairtrade aims to ease some of the pandemic’s negative impacts for workers and farmers. Nevertheless, Fairtrade continues to count on the efforts of all producer organizations, traders and commercial partners in the Fairtrade system to minimize harm related to COVID-19, wherever possible.

The Standards Committee will continue to monitor the situation and the flexible Premium use extension for hired labour organizations will be re-evaluated at the end of November.