Michael Kitt (Galway East, Fianna Fail)

I thank the Members for the opportunity to present a statement on Fairtrade to the Seanad and to set out Irish Aid supports provided to Fairtrade.

Irish Aid is among the largest donors to Fairtrade in the world. We have supported the Irish Fairtrade Network since 2002 and approved grants of more than €8.5 million in support of producers in developing countries and development education work in Ireland. Irish Aid has a longstanding record of support for Fairtrade producers in Central America. Due to the success of this work, similar programmes of support are being considered for East Africa producers.

As set out in the programme for Government, the Government is committed to ensuring that the sourcing of Fairtrade goods, where possible, is part of the purchasing policy of all Departments. As Senators are aware, the White Paper on Irish Aid published last year put the case for trade and development when it states:

Increased trade, regionally and globally, is central to sustained economic growth for the world's least developed countries, but we recognize that developing countries need assistance to enhance their capacity to produce, deliver and sell goods and services.

We are committed to increase our financial support for initiatives which promote fair and ethical trade.

The World Development Report 2008: Agriculture for Development concludes that investment in agriculture is four times as effective as any other investment in reducing poverty. In particular, the report explored how what is termed "decommodification", through brand identity such as Fairtrade, of some traditional agricultural products opened alternative markets for higher value products.

Increased investment in international trade in agriculture will have a significant impact on poverty reduction. However, this will be true only if prices paid to farmers are sufficient to cover their costs, provide them with a decent livelihood and allow enough of a surplus for investment in the future. Fairtrade markets offer a fair price for farmers' produce and a social premium for local development. The price is sustained even through times of market fluctuations that cause loss of income, often with a tragic impact on rural families.

Business development requires access to markets for farmers in developing countries where many of the products we consume are produced. Equally, Irish and EU businesses require a constant guaranteed supply of high quality products. This is the basis for a mutually beneficial long-term partnership between farmers in developing countries and Irish businesses.

Fairtrade provides independently certified direct links between Irish companies and the producers in the countries concerned and the major benefit to small farmers lies in better access to markets in Europe and North America as well as in Ireland. Irish Aid is working with organisations such as the Irish Fair Trade Network to improve the livelihoods of people in some of the poorest countries in the world. For this reason, I am pleased that Ireland is one of the largest international donors to fair trade world-wide. We provide funding to support farmers and agricultural workers to improve the quality of their products so that they can access fair trade certified markets.

Fairtrade Mark Ireland is the main project of the Irish Fair Trade Network, a registered charity which was set up in 1992 with the support of individuals and all the main Third World charities in Ireland. The objective of the organisation is to promote justice in trade between people in Ireland and people in Third World countries. Fairtrade Mark Ireland awards a consumer label, the Fairtrade Mark, to products which meet internationally recognised standards of fair trade. It is a small charity based in Dublin supported by Amnesty International, Actionaid Ireland, Christian Aid, Comhlámh, Concern, Oxfam Ireland, Trócaire and the Irish Congress of Trade Unions.

Fair trade is active throughout Ireland via a supporter network of dedicated volunteers, involved in the promotion of fair trade, such as the Fairtrade Towns project, and Fairtrade Mark products. There are now 31 fair trade towns and cities throughout the country and 30 more are seeking fair trade town status. Dublin city was awarded fair trade capital status. The growth in fair trade towns and the increasing awareness of the importance of fair trade among Irish consumers is principally due to the work of 61 voluntary committees, North and South. According to a Millard Brown IMS consumer survey, awareness of the fair trade label in Ireland has grown from 16% of Irish adults in 2002 to 53% of Irish adults in 2007.

Fair trade also plays a key role in engaging the public with development issues and deepening public understanding about the role Ireland is playing in tackling global poverty. Irish Aid is committed to supporting development education and, by using the role of fair trade in building this understanding, will continue to support work in this important area. For many years Irish Aid has funded the Irish Fair Trade Network via the development education funding scheme. The network received €125,000 in 2005, €135,000 in 2006 and €150,000 in 2007. This development education work aims to increase public awareness of the values of fair trade through educational materials and events and projects including Fairtrade Fortnight and fair trade towns.

The positive impacts of the fair trade campaign are easy to grasp. For this reason it attracts people with a broad interest in development issues and encourages them to learn more. This is reflected in the hundreds of individual initiatives throughout the country, from the conversion of school cafeterias to fair trade, to education programmes in schools and universities. Fair trade is also part of the Irish school curriculum and features in subject areas such as civic, social and political education, CSPE, and geography. Leaving certificate geography examinations now include questions on fair trade.

Irish Aid has played an important role in supporting capacity building for small producers in Central America through its funding for Fairtrade Labelling Organizations (FLO) International, of which Irish Fair Trade Network, IFN, is the Irish member, under our Central America programme. This funding amounted to €567,000 for the period 2003-06.

The focus of the Central America programme has been to increase the quality and quantity of coffee supplied to fair trade certified niche markets, principally in Ireland and elsewhere in Europe. Key elements include market access and mutual support to guarantee timely supply to international coffee roasters.

The programme also funds conversion to organic coffee, GPS mapping of farms, development of processing plant and infrastructure, improving product quality, efficient and reliable business management, personnel training and consolidating links with Irish coffee roasters, including Bewley's, and other large European coffee companies.

I would like to cite some concrete examples of the impact of this support. The programme has had an immediate impact by stabilising small producers' income during the most recent collapse of international coffee prices, which reached their lowest level in 35 years in 2002-03. It helped by changing the focus of the producers from marketing a product based on volume to one based on improving quality, producing specialist coffees, segmenting their market, identifying niche markets and converting to organic products. That integrated approach contributed to an increase in local employment.

Fair trade is helping to diversify out of monoculture, with coffee growers developing citrus fruits, banana farmers moving into other premium tropical products and other rural communities investing in eco-tourism. In this context, Irish Fair Trade Network received grant approval for €7.5 million from Irish Aid in support for two initiatives in the fair trade sector in Central America over the period 2006-2010.

A total of €3.25 million is provided to increase support for the Fairtrade Labelling Organisations' capacity building programme for small producers and builds on the elements of the previous programme. Funding is also provided to Irish Fair Trade Network to support UTZ Certified, the world's largest established certification body for mainstream coffee and other products. That funding of €3.25 million provides support to coffee producers in Central America to enable them meet acceptable quality, social and environmental standards similar to the ISO2000 approach.

Building on the success of the Irish Aid support to Fairtrade producers in Central America, the Irish Fair Trade Network is now preparing a similar programme for Tanzania, Kenya, Ethiopia and Uganda. It is hoped this work can commence in 2008. Progress can be made only to the extent to which donors, large and small, work jointly.

Irish Aid participates in a European donor co-ordination group designed to support the expansion of access to Fairtrade certified markets. Although most Fairtrade products are produced by small-scale farmers, some of the products also come from large farms and plantations. Irish Aid also supports the work of the Fairtrade movement in encouraging plantations to comply with labour and environmental legislation. This includes paying decent wages, guaranteeing the right to join trade unions and providing good and safe conditions for their workers in accordance with International Labour Organisation core conventions.

In Ireland companies such as Bewley's, Blakes Organic Chocolate Company, Cafedirect, Java Republic Roasting Company, Robert Roberts, Fyffes, O'Brien's Sandwich Bars, Insomnia Coffee Company, Superquinn, Tesco, SuperValu, Dunnes Stores, Marks & Spencer and many more now offer consumers a range of Fairtrade products.

In Ireland and other developed economies Fairtrade has become a viable and growing niche market for products from developing country producers. Irish Aid is committed to working with Fairtrade and with Irish companies to promote fair trading. It is probably not surprising that as Fairtrade grows, it is becoming the subject of comment, praise and criticism. It has many advocates but it also has some critics.

To coincide with Fairtrade Fortnight this year, a London based conservative think-tank, the Adam Smith Institute, issued a critical report. It suggests that Fairtrade benefits a small number of farmers in developing countries and is wrong in principle. It suggests that more free trade is what is needed. It also suggests that the impact of Fairtrade is less than it claims for itself.

Professor Frank Barry, professor of international development and business at Trinity College Dublin, states:

By seeking to influence the behaviour of consumers, the [Fairtrade] movement harnesses that most powerful instrument — the market mechanism — to affect economic outcomes by strengthening the hand of impoverished developing-country producers.

He goes on to state:

Although still relatively small — global sales of Fairtrade certified products amounted to about €1.5 billion in 2006 — this was almost a 100% increase on the 2005 figure, so it is growing fast. One and a half million disadvantaged developing-country producers have benefited directly from the Fairtrade initiative, while an additional four to five million are benefiting from the community development projects and rural infrastructure that the Fairtrade premia have funded. A Trojan horse for protectionism it is not.

I assure the House that Irish Aid's current financial support for Fairtrade and ethical trade certification schemes is carefully monitored. In addition, longer-term studies of impact are now under way to ensure that the Fairtrade system does what it says and to indicate areas in which it might be improved if this proves necessary.

I should make clear that Irish Aid funding is not used to engage in some kind of market fixing or price support. It is used to improve agricultural practices to ensure that the small farmers' organisations concerned can meet the standards required to gain Fairtrade certification. That includes agricultural advice and training, small investment in equipment, small credit funds, proper administration and marketing systems and the like.

The Fairtrade system has won prestigious international human rights and development awards, including the King Baudouin Prize, Europe's premier human rights award. The continued growth in awareness of Fairtrade and purchases of certified products by the Irish public is mirrored by support for Fairtrade by Irish Aid and the Government. I look forward to working with the Members in this endeavour.