Is Fairtrade fair?
Tuesday, 16 March, 2010
Nikki Lordan, WINE.CO.ZA
The quality of Fairtrade wines in South Africa has always been either
criticised or simply ignored. Although it is accepted as a well known
fact that a Fairtrade logo does wonders for wine sales in the US and UK
market, it seems South Africa is not yet as ready to embrace this
initiative aimed to empower the producers of third world countries.
The Fairtrade initiative has often been referred to as "fairly traded agriculture that helps the planet" but the slow and very expensive turning of the Fairtrade administration wheel raises the question whether the time and money invested to become Fairtrade accredited is really worth the effort. Vernon Henn, CEO of small-time producer Thandi believes it is "difficult to manage Fairtrade in a cost-effective way", especially with the 5% increase in applications fees from January 2010, while the copious amount of paperwork and bureaucracy de-motivates producers.
Thandi Wines started as a joint venture between Paul Cluver Snr of Paul Cluver Wines and the South African Forest Company Ltd (SAFCOL) in 1995. While the community enjoyed a 33% ownership of the land, Thandi only received Fairtrade accreditation eight years later, the sole reason being for "the nice, niche market", according to Henn, to distinguish the brand from the thousands others on international wine shelves.
Wines of South Africa (WOSA) proudly boasts "the most Fairtrade accredited wine producers in the world" as part of their DNA marketing campaign and according to Jo Mason, UK Market Manager, the quality of Fairtrade wines has "increased dramatically" over the last few years. The question of quality however remains wobbly - or is it simply because South African consumers don't get the opportunity to taste these great quality wines? Thandi, according to Henn, exports approximately 95% of their wines, which leaves a meagre 5% for sale in South Africa. The reason for this, says Shoprite/Checkers wine buyer Jeanne-Marie Kritzinger, is that "South Africans are simply not ready for Fairtrade,". To them, Fairtrade "basically means nothing".
Fairtrade operates through a network of "independent, non-profit national organisations" in 20 countries worldwide yet the biggest problem producers seem to have with Fairtrade is the extortionate amount of application fees and set-up costs they have to pay to be accredited. These fees, according to Bronwyn Page-Shipp of FLO-CERT are "strictly confidential and between FLO-CERT and each producer" but a full PDF document with the full (albeit extremely complicated) payment structure can be downloaded from their website. Is this PDF and the confidential fees the same thing?
Thandi wines, considered one of the smallest Fairtrade producers, pay "2600 euros annually to be Fairtrade accredited," says Vernon Henn. This is on top of the initial 500 euro application fee and a further 1200 euros to be set aside in case of an audit failure. These costs need to be paid before any sales are made while social premiums of 5 euro cents per kilogram are generated by the consumer where it is supposed to flow back to the importer to pay the joint body that represents the labour on the farm.
According to Lee Griffin from Stellar Organics it gets even more complicated when you fall in the "Multi Estate" category. So complicated, in fact, that they employed someone on a full-time basis just to cope with the "enormous amounts" of paperwork and red tape. Known as the biggest Fairtrade producer in South Africa, Stellar Organics has increased their local market from 5% to 25% even though the reason for this, Griffin adds, is that their Organic line sells better in South Africa than the Fairtrade wines. Social premiums are paid directly to the workers, in Stellar's case a sum of R1.2 million at the end of the 2009 financial year, which mean all Fairtrade expenses are a cost to the company.
It therefore becomes quite "difficult" for small time producers to be cost-effectively Fairtrade, because of the cost barrier making it tough to survive financially. If it is so time and cost consuming, then why do it? "Because," says Griffin, "we invested 41% of our profit last year back into the social and educational development of our workers (over and above Fairtrade premiums). Our workers own 26% shares in the winery and 50% of Stellar Agri (a farming company). Fairtrade is just who we are. So we commit to the processes of Fairtrade and follow them through."
Bernard Fontannaz of Origin Wine feels the answer lies in volume. "If you want to make a difference, you need the volume" and, he says, you need to fit it into the taste profile and budget of the Fairtrade consumer. Fairhills is considered as one of the 'largest exporters of Fairtrade wines to the US" and with this market being a relatively closed door for most South African producers, Bernard believes they are "in the US because they are Fairtrade" and not because they are a South African brand.
However, a few US distributors feel some South African Fairtrade wines are only sold the first time but then never again, which raises the question of quality again. "Fairtrade is accredited and audited at vineyard level," says Ansgar Flaatten, Fairtrade wine exporter. This means grapes coming from a Fairtrade accredited block must go into the cellar, into fermentation tanks and onto the bottling line, separately. According to Fairtrade regulations, the quality of the grapes therefore determines the quality of the end product and "no blending with non Fairtrade wines" is allowed.
Looking into importing Fairtrade wines, Tom Lynch, of US company Worthwhile Wines, was also "disappointed in the quality" and found only a few to be "good enough to be seen as great value at $10" especially in the current discount era. Unfortunately the quality does not yet exceed the price and consumers, especially in South Africa, are wary of paying too much for a product or a logo they do not know much about. This often results in a situation where supply outweighs demand and not much social premiums are being generated.
The Fairtrade model, says Lynch, if financially viable, seems to "gain credibility and demand" in the US. Labels such as Organic, which according to him, "people relate to bad wine and Biodynamic which too many people unfortunately dismiss as a bit 'crazy'" other lesser-known organisations such as WIETA*, IPW*and BWI* are "unknown in the US and becomes alphabet soup to most people".
South African producers seem wary of the bureaucracy involved in the Fairtrade model especially because of political baggage such as BEE regulations. Marketing his Fairtrade brand overseas, Vernon Henn found black empowerment means nothing for the international consumer: "For them it is about the social upliftment of people". No matter the race or colour.
*WIETA - Wine Industry Ethical Trade Association
*IPW - Integrated Production of Wine
*BWI - Biodiversity & Wine Initiative