Introducing Ethical Trade, UK

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Setting the Scene

What do you understand by the phrase ethical trading? For some it is a utopian vision of free trade and fair wages for all. For others it is a misguided attempt to distort the normal rules of trade that could undermine wealth creation. The truth is more complicated, says Man-Kwun Chan of the NRI. "Ethical trade is trade that attempts to be socially and environmentally responsible. It is trade in which companies take responsibility for the wider impact of their business." But, she adds, "these are still regular businesses out to make a profit, not philanthropic concerns."

But, as we shall see, ethics means different things to different people. In Britain, many supermarket chains have developed codes of conduct that aim to promote ethical practices among their suppliers. But in interviews with shoppers at one major food chain, Sainsbury's, we found widely differing answers about what they thought was meant by ethical trading. One said it meant healthy food that was "not chemical, natural, more vitamins". Another said it meant "farmers should benefit from the profits". Yet another that it "might be able to help children in need."

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Defining the problem

Whatever they understand by the term, for these shoppers the ethical dimension is another aspect of the product -- whether a pineapple or a pair of trainers -- that they may take into account when choosing which brand to buy. But ethical trade should be about more than taste or colour or allowing customers to feel good about what they buy. At root, the call for ethical trading is an attempt to address failings of the global trading system. Failings that range from the exploitation of child labour to racial and gender discrimination in employment policies to poverty wages to using chemicals that harm farmers and consumers alike.

Here we look at just one business with an emerging ethical dimension, the sale of pineapples from Ghana. Pineapples are Ghana's biggest horticultural export, grown often on smallholdings by farmers like Alexander Parry. He is proud of his pineapples, but unhappy about they way they have been traded. "They are natural and healthy and very nutritious, and I want people to take the pineapple as much as possible," he says But the traders who sold his pineapples to Europe until recently took little interest in the conditions under which the crop was grown. "There was agitation between farmers and exporters," he says. Farmers felt they were not receiving a fair price.

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Taking action

That is why Alexander Parry and other pineapple farmers established a marketing co-operative called Farmapine. They wanted to gain more control over trading in their product. Now, says Parry, "we have got into the export business, so there is no more agitation". The farmers get a better price, and he feels they have also become better farmers. "We are more conscious of the need not to overuse chemicals," he says. And that is good for both African farmers and European consumers.

Traders don't like being cast as villains. And there are moves among them to clean up their act. Anthony Pile is founder and managing director of the Blue Skies company, which exports to Europe using ethical standards agreed with his customers. He concentrates on ensuring that fresh products of high quality are delivered by his smallholder suppliers and shipped to his customers in Europe -- fast. His factory cuts and packs and boxes pineapples, and airfreights them from Accra airport to several European cities. "Within 24 hours of harvest we can get products into the country of the consumer."

But perhaps the biggest drive comes from the retailers themselves. Liz Fullelove is the manager in charge of "responsible sourcing" at Sainsbury's, Britain's second biggest food retailer. Her job is to ensure that no workers are exploited and no environment trashed in supplying Sainsbury's 10 million regular British customers in 450 stores.

The company, she says, has a code of conduct that it expects suppliers to meet. Its rules are based on the recommendations of the International Labour Organization. They cover health and safety at work, the employment of children, pay and conditions of work, even the freedom of association of workers. And if she fails, she says, then her customers and the international media will soon find her out.

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The cast

"There was agitation between growers and exporters. Farmers felt they were not receiving a fair price." -- Alexander Parry, a small-scale farmer and member of the Farmapine co-op, describing his past relationship with exporters.

• Edward Twum, owner of Prudent Exports
• Antony Pile, managing director of Blue Skies
• Man-Kwun Chan, NRI
• Liz Fullelove, manager for responsible sourcing at Sainsbury's, UK

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Global Relevance

Man-Kwun Chan and colleagues at the NRI are working with British retailers and African farmers to look at how ethical codes of conduct can be effective in helping poor farmers, workers and the environment. Codes of conduct can help lead to better and healthier workers as well as products, she says, but only if there is real commitment from both retailers and suppliers.

More and more companies in Europe and North America are becoming interested in ethical trading. African producers who supply these companies are being asked to comply with their ethical standards. But Man-Kwun reinforces one lesson: there are extra costs involved in ethical production, and we need to be sure that producers are not burdened with covering all these costs.

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Thinking points

Thinking Points

• Exporters and retailers say they are under pressure from both producers and consumers to get involved in ethical trade.
• Ethical trading means that people at all points on the trading ladder should take responsibility for the social and environmental impacts of their actions.
• And that includes consumers, who may have to pay more.

Research on ethical trade in the UK and Ghana was funded by the UK Department for International Development's Crop Post-Harvest Research Programme.

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