Partners in poverty? What part should food businesses play in international development?

As businesses and consumers try to make sense of competing certification schemes like Fairtrade and Rainforest Alliance, this report published in August 2009 by the Food Ethics Council argues that they need to consider the pros and cons of different labels, and wider questions over corporate accountability for international development claims and poverty reduction.

What are the advantages and disadvantages of different schemes, both for businesses and for the communities they work with? What part should accreditation schemes play within companies' overall commitments to contribute to tackling poverty? Which companies have been pioneering good practice as partners for international development? How can businesses assess the effects they have on poverty and develop their business models to address the needs of poor people? Should businesses be expected to 'do good' for international development, or just to ‘do no harm’?

The July 2009 meeting of the Food Ethics Council's (FEC) Business Forum discussed such issues. The key points are as follows:

• Ethical standards and schemes have reshaped the public debate about trade justice.
• The impact of fair trade and similar schemes on international poverty reduction is open to question. One study showed that the price advantage and social premium generated 3% of the market value extra for producers
• Operating in a buyer’s market has been a major factor in enabling retailers to impose standards on suppliers, but they are now increasingly facing seller’s markets
• Fair trade success stories have so far been limited to nice markets. Another limitation is that they are necessarily selective, with some schemes addressing environmental concerns while ignoring employment problems
• Fair trade standards and schemes have unintended adverse effects – they are, for example, exclusionary by nature.
• To achieve greater impact on poverty reduction, the ethical principles behind fair trade need to be integrated into core business models.
• UK companies need to be more actively engaged in helping smallholders to surmount the difficulties that they face
• We need to develop clear messages for consumers, which take account of the complexities of the issues at stake, and so move away from the current preoccupation with labels
• Although we have learnt a lot from fair trade and similar schemes, there remain numerous unanswered political, ethical and practical questions about the role of businesses in reducing world poverty.

The report also asks the question - ‘where does responsibility lie for addressing the fact that people in the UK have become used to unsustainably cheap food?’ How can retailer competition on price be dampened? Can retailers be left to develop some kind of national initiative, or is there a role for government.

The report also highlights as a promising model the Procurement for Development Forum run by Chatham House and DFID which focuses on how purchasing practices can help development in African countries.