Fairtrade International – Standards & Pricing

SC Paper- FSI Extension to Coffee

Purpose of document: For approval

To: Standards Committee
From: Standards & Pricing, Jebet Yegon, Senior
Project Manager
Date of presentation 14/07/2021
Confidentiality: Medium
Degree of reading need of core paper Compulsory

Table of Contents
1 Executive summary ............................................................................................................ 2
2 Intended results .................................................................................................................. 2
3 Background ........................................................................................................................ 2
4 Previous relevant SC decisions .......................................................................................... 2
5 Description of the planning and research process .............................................................. 2
6 Consultation overview......................................................................................................... 3
7 Analysis .............................................................................................................................. 5
8 Points for decision making by the Standards Committee .................................................... 7
9 Next Steps .......................................................................................................................... 8

List of Acronyms

ATCB All That Can Be

CLAC Latin American and Caribbean Network of Fair Trade Small Producers and
Workers
FI Fairtrade International
FSI Fairtrade Sourcing Ingredients
FSP Fairtrade Sourced Programs
GA General Assembly
HL Hired Labour
NFO National Fairtrade Organization
O2B Offer to business
PN Producer Network
PO Producer Organization
SC Standards Committee
S&P Standards and Pricing Unit

SPO Small Producer Organization

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1 Executive summary
During the meeting that took place in October 2020, the Board approved the extension of
Fairtrade Sourcing Ingredients (FSI) to include coffee and processed bananas. S&P was given a
mandate by the Board to run a consultation in order to provide an opportunity for everybody in
the system to express their views on this topic. This paper therefore presents the results of the
FSI extension to coffee review and recommendations to the Standards Committee (SC) on the
changes to the Trader Standard.

2 Intended results
The SC is informed about the review process, understands the recommended changes to the
Trader Standard and approves the recommendations proposed by S&P.

3 Background
Fairtrade Sourcing Programs for cocoa, sugar and cotton were introduced in 2014 to connect
Fairtrade farmers with companies wanting to buy these specific commodities on Fairtrade terms.
Rather than focusing on all the ingredients that can be Fairtrade for one finished composite
product, companies make commitments to sourcing one or more specific commodities for use as
ingredients in finished composite products across ranges, or even their whole business.
In 2017, as part of the implementation of the global strategy 2015-2020, the Board and the
General Assembly (GA) approved the extension of Fairtrade Sourcing Programs (FSP) from
cocoa, sugar and cotton to all Fairtrade product categories with the exception of coffee and
bananas. The model was then renamed into Fairtrade Sourced Ingredients (FSI). Since then, FSI
has been successful, especially for cocoa. Consequently, several National Fairtrade
Organisations (NFOs) have advocated for the Board/GA to reconsider the decision to exclude
bananas and coffee.
During the meeting that took place in October 2020, the Board approved the extension of FSI to
include coffee and processed bananas, in line with the Fairtrade’s global strategy 2021-2025
which in its strategic pillar of growth and innovation aims at delivering greater volumes of existing
Fairtrade-certified products sold on Fairtrade terms, and introducing new products and services
to drive the overall strength and sustainability of the Fairtrade movement by fully utilizing our offer
to business (O2B).
During the research process, a decision was made to only consult on coffee because there was
still a need for more clarity on a way forward in regard to FSI extension for processed bananas.

4 Previous relevant SC decisions

 Endorsing standards stakeholder engagement phase of FSP – SC 59
 Extension of FSP to all products except coffee and bananas – SC 76

5 Description of the planning and research process

The project started in December 2020 with the launch of the project assignment.
The progress to date and next steps are described below:

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Timeline Activity
November 2020  Scoping
 Research
Nov – Dec 2020

May–June 2021  Consultation

June 2021  Drafting final proposal

July 2021  SC decision

August 2021  Publication

August 2021  Implementation

6 Consultation overview
Stakeholders received an invitation to participate in the consultation via email and were asked to
fill in an online survey or a Word consultation document returned via email. In addition, the
consultation was posted on Fairtrade International’s website. The online survey and consultation
document were made available to stakeholders in three languages: English, Spanish and
Portuguese.
The specific target groups S&P had identified are:
 Coffee producers certified or interested in becoming certified under the Coffee
Standard
 Coffee licensees, trader, brands and other commercial partners who are certified or
interested in becoming Fairtrade certified.
 Coffee importers and exporters certified or interested in becoming certified
 Producer Networks (PNs), National Fairtrade Organizations (NFOs), Fairtrade
International, FLOCERT, NGOs, researchers and other stakeholders.

Three questions were presented during the consultation, one on whether stakeholders had
feedback to the decision taken by the FI Board to extend the FSI model to coffee and another on
the implementation period. Stakeholders also had the opportunity to provide any additional
feedback regarding the consultation.

In total 93 consultation responses were received from 26 countries. The first graph below shows
the distribution of respondents by country and the second graph shows the consultation response
according to stakeholder’s role in the supply chain.

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The CLAC also sent a report providing their comments and observations to the consultation
process and the results obtained. In general, the participation was quite low (16%) and they
attributed this to the fact that the consultation coincided with other large coffee activities e.g.
golden cup among others. The consultation dates were also moved making it difficult for the field
staff to do proper planning and there was therefore no time to organize virtual workshops and
explain the topic of the consultation that is not well known by all organizations. A summary of the
feedback from the CLAC report is presented in the next section.
The table below gives a summary of the participants per country.

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Country PE ME HO CO NI CR GU ELS BR BO TOTAL

Total # 190 47 66 96 34 7 19 6 33 14 512
SPOs
SPOs that 21 2 8 20 2 3 9 1 16 0 82
participated
% 11.05 4.26 12.12 20.83 5.88 42.86 47.37 16.67 48.48 0.00 16.02

7 Analysis
This section provides a summary of all responses received for each survey question

Q 1.1 Do you have any feedback to the decision taken by the FI Board to extend the FSI
model to coffee?
In general, most stakeholders (97%) are in agreement with the decision taken by the FI Board to
extend the FSI model to coffee.
The stakeholders in agreement stated that this diversification would boost sales and would
expand market opportunities for Fairtrade coffee producers. It will also be a chance to attract more
brands especially the ready to drink and other beverage brands who are interested to be a part
of Fairtrade but are unable to source all the ingredients as Fairtrade. The FSI model will be
important to grow markets and some NFOs already have prospects lined up to use the FSI model
in the ready to drink products.
Despite being in agreement, some stakeholders wanted to have clear next steps in terms of how
this will be marketed and whether there will be enough resources and good strategies to tap the
opportunity. Another stakeholder also mentioned that they would see some potential risk if the
fee structure is not managed properly and stated that FI should be cautious of this.
3% of the stakeholders who responded did not agree with the proposal. One stakeholder
mentioned that the risks outweigh the benefits and that the fact that there will be Fairtrade
products with a Fairtrade content of less than 1 % in the market will be way too risky for coffee.
Another stakeholder said that if physical traceability would not be in place, then this would pose
a huge risk for Fairtrade.
Feedback from the CLAC report indicated that it is important to extend the FSI model to coffee
because it increases the opportunities to commercialize more coffee from Fairtrade certified
producers. The sentiment expressed by most of the organizations that responded was that if
Fairtrade does not enter this market, other labels would seize the opportunity. They, however
stated that the following points need to be taken into consideration:
 Guarantee that 100% of the main product is Fairtrade
 Confirm physical and documentary traceability
 No mass balance should be applied
 Establish monitoring and control mechanisms to ensure that the minimum Fairtrade price
is not affected.
 Take into account the existing risks in other products
 Take special care not to lose the credibility of Fairtrade’s mission and vision when
promoting the FSI model because it cannot be guaranteed that the other ingredients in
the composite product share the same mission and vision as Fairtrade.

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Those who are not in agreement with the decision made by the Board, from the report shared by
the CLAC provided the following comments:
 There must be a stipulation of a minimum quantity of ingredients in the product that must
be Fairtrade, in order to use the product label
 How would a product produced with 100% Fairtrade organic coffee mixed with a non-
organic ingredients be labeled?
 The model will reduce the consumption of fully certified Fairtrade product.
 FSI results from other products, especially the benefits to producers should first be
presented before this can be incorporated to coffee.
To address the concerns raised regarding traceability (physical and documentary) and mass
balance, it is important to point out that for coffee, traceability is compulsory and mass balance is
not applicable. Therefore, S&P confirms that for the FSI coffee model, traceability will remain
compulsory and mass balance will not be applicable for coffee.
It is also worth mentioning that as stipulated in the Trader Standard, products under the FSI model
contain 100 % of the relevant commodity and this will also be applicable for FSI coffee.
In terms of risk assessment, experience from other FSI models shows that almost no volume of
other Fairtrade ingredients was lost through FSI and neither have concerns around volume loss
for producers in other categories, diminished brand trust and customer loyalty, or increased label
confusion materialized.

Q 1.2 The proposed implementation period of the revised requirement is August 2021. Do
you agree with the proposed implementation period?

71% of the stakeholders strongly agree to this question. The feedback provided, stated that a
clear action plan on how to promote and communicate FSI coffee would be necessary. Though
in agreement, a stakeholder mentioned that amendments in packaging would need a longer
timeline.

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The rest of the stakeholders who partially agreed (23%) or disagree (6%) with the implementation
period proposed stated that the FSI model is not known by many and that training would first be
essential before the implementation takes place. Lastly, given the pandemic and challenges
organizations and business have gone through, a longer implementation timeline might be
needed.
From the CLAC report 80% of the organisations that responded strongly agree with the
implementation proposed while 17% partially agree and 4% disagree.
Additional feedback from stakeholders
Stakeholders were also invited to provide any additional feedback to the consultation. Most
stakeholders who responded in this section mentioned that there was a need for training on the
FSI model as many stakeholders especially producers are not aware of the model. Once
approved, the stakeholders wanted to know whether there will be webinars carried so that they
get a better understanding on what will be needed from them. A clear plan for action will also be
needed to promote and communicate the FSI model.

8 Points for decision making by the Standards Committee

Based on the feedback received during the consultation, S&P makes the following
recommendations to the SC:
 Extend the FSI model to coffee in the Trader Standard. This would mean amending the
relevant Trader Standard clauses which set out the requirements for FSI to also apply to
coffee. The applicability of FSI is defined in the scope and definition sections of the Trader
Standard and therefore the extension of FSI to coffee requires minor changes in these
sections.
 The implementation period to start as proposed in August especially because some
markets have already confirmed prospects lined up to use the FSI coffee model in the
ready to drink products.
 Delegate to the Director of S&P any non-substantive changes and final wording of the
standard.
Following the recommendations above the SC is requested to take the following decisions:

Decision 1
Do you agree with S&P’s recommendation to extend the FSI model to coffee and
therefore make the necessary changes in the Trader Standard?

Decision 2
Do you agree with the implementation period of August 2021 as proposed by S&P?

Decision 3
Do you agree to delegate the approval of non-substantive changes and final wording to
the director of S&P?

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9 Next Steps
 Upon approval by the SC, changes will be implemented in the Trader Standard.
 Following the feedback from stakeholders to receive training on the FSI model for coffee,
S&P will follow up with the Assurance and oversight manager as well as the Brand,
Trademark and Licensing unit to ensure that stakeholders receive a training and guidance
materials.

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