Fair Trade Eyes Indian Market

Recently,  a group of farmers, business owners, retailers and civil society representatives launched the Fairtrade FoundationIndia, hoping to build on the success of fair trade abroad and tap into the growing ethical-consumer market here, replicating similar foundations in Brazil, Kenya and South Africa…


fair-trade-eyes-indian-markIndian farmers have sold products such as cotton, bananas and nuts under the fair-trade tag in international markets for nearly 20 years, helping to create a multi-billion-dollar worldwide industry. But with India’s growing middle class and more disposable income, the movement is now shifting its focus towards selling Indian-made fair-trade items in the market here. Recently, a group of farmers, business owners, retailers and civil society representatives launched the Fairtrade Foundation India, hoping to build on the success of fair trade abroad and tap into the growing ethical-consumer market here, replicating similar foundations in Brazil, Kenyaand South Africa.
“In terms of consumers, the historical emphasis was Europe and America, but that is very rapidly changing,” said Abhishek Jani, chief executive of the Fairtrade Foundation India. Fair trade is an internationally recognised labeling system monitored by German-based Fairtrade International, which offers farmers in developing nations higher than the market prices for their products if they comply with certain social, labor and environmental standards. The objective is to empower producers and enable them to earn a sustainable living, Mr. Jani said.
Fairtrade International, which represents 28 fair-trade organisations from around the world, said consumers spent 4.8 billion euros on fair trade food, cosmetics and other items last year. Fair trade-certified goods have been made in India for many years, but with the launch of the Indian initiative, the goal is to scale up operations and make products more readily available to consumers here by partnering with retailers.
French brand Auchan, which has 14 supermarkets across India operated by Max Hypermarket as part of a franchise agreement signed last year, is one of them. It has just opened a dedicated space in each of its four stores in Bangalore to sell around 16 Indian-produced fair-trade food products including green tea, rice and spices. Max Hypermarket says more products will be added and the range will shortly be introduced in all its other stores. Senior vice president of buying and merchandising, Ponnu Subramanian, says it’s too early to tell how customers will respond, but he said he was “very confident that the sales performance will be good.”
“We want to promote the concept of fair trade so that more and more farmers and producers develop confidence in us as their partners,” Mr. Subramanian added. Currently, fair trade is a niche concept in India, but there are signs that the ethical-consumer market is picking up pace. Research firm TechNavio, headquartered in London, forecasts the organic food sector in India will grow at a compound annual growth rate of 21.34% between 2012 and 2016, with one of the key driving factors being growing health awareness among shoppers with more disposable incomes. ”It’s very exciting,” said Mr. Jani.
“The organic food movement shows that despite prices being significantly more than conventional food, Indian consumers are still engaging with it,” he said. Marisha Kirtane from The Third Eye, a qualitative market research agency based in New Delhi and Mumbai, says many Indian consumers are seeking out organic food because they are unhappy with the low quality of produce available in their local markets and see it as an individual rather than social benefit. When it comes to fair trade, most Indian shoppers simply don’t know what it is, Ms. Kirtane said.
“It’s a question of awareness. Ethical trade practices are not part of the current Indian consciousness. The truth is no one knows about it. And at the moment, the mass market is enjoying consumerism in India and not evaluating it,” she said. The Fairtrade Foundation India acknowledges that the movement is at a very nascent stage in the country, so it plans to begin education programs in schools and colleges, and is trying to persuade companies, for example, to provide fair-trade tea and coffee for their vending machines.
The hope is to imitate successes seen in South Africa, which in 2009 became the first country to produce and consume fair-trade goods. Last year, shoppers there spent $23.2 million on fair-trade products, a 220 per cent increase from the year before, according to Fairtrade Label South Africa, an umbrella body based in Cape Town. Some in the movement are motivated by the desire to alleviate poverty. Apurva Kothari says he set up his fair-trade and organic t-shirt business in Mumbai when he found out that as many as 270,000 Indian farmers had taken their own lives since 1995 because of poverty, he noticed that consumer action to tackle the problem was missing.
“Fair trade as a concept has come from the West, it’s been around for decades, and there are people from around the world helping Indian farmers and to reduce suicides, and I thought Indian consumers need to do the same,” Mr. Kothari said. Since March, Mr. Kothari’s business No Nasties, started in 2011, has held a license issued by FLO-CERT, an independent international certification body for fair trade production processes and goods, allowing it to use the fair trade tag on its t-shirts.
“There is skepticism among the India consumer, so for cynical customers, the mark brings value and trust,” he said. The certification also allows the company to be transparent in an industry, which, as it becomes more profitable, becomes prone to corrupt practices with people cutting corners, he added. Currently, there are over 121,000 fair-trade-certified producers in India who received 2.4 million euros in 2012 through the fair-trade premium, above what they would otherwise have earned in the market , giving them extra money, which it is hoped they will invest in educating their children, healthcare and other social needs.
Mr. Jani, of the new Fairtrade Foundation India, says the initial focus will be to help existing producers sell their goods to Indian consumers, but the plan is also to increase the number of farmers who produce under the banner of fair-trade. “We want it to be a vibrant movement as much as it is on the consumer side as it is on the producer side,” he added.
– WSJ

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