British supermarkets in discussions about joining forces for Fairtrade products

Several British supermarkets are in talks with the Fairtrade Foundation about joining forces to buy ethically produced bananas, coffee and cocoa from farmers in developing countries under long-term contracts in what would be the first ‘buying coalition’ of its kind.

The retailers, including a handful of major supermarkets, are in talks after the competition watchdog recently said they would not face fines for breaching competition law. A pilot project is now underway.

The Competition and Markets Authority’s guidelines were a “game changer”, Fairtrade said, as “taking industry collective action” to pay farmers was hampered for fear of breaching antitrust law.

Bananas, coffee and cocoa bought under the scheme, known as the Shared Impact Initiative, could be on British supermarket shelves within months, the British non-governmental organization added. The initiative would increase the amount of Fairtrade products available to consumers, the report said.

The cooperative is currently participating in a pilot with only cocoa, but coffee and bananas would be next. Sainsbury’s and Tesco, Britain’s two largest supermarkets, are in talks over the plan, according to people familiar with the matter.

Emily Pearce, the Co-op’s senior manager of sustainable sourcing and international development, said the pilot aimed to “find solutions to scale impact, working together for the millions of small-scale farmers and workers who are disproportionately affected by the impacts of climate change and fluctuating commodity prices”.

Anna Mann, associate director for corporate responsibility at Fairtrade, said: “We don’t think we will achieve environmental sustainability – or any sustainability for that matter – in supply chains without companies working more together.”

Last November the CMA issued an “informal directive” to Fairtrade, the first of its kind under a new open-door policy on environmental initiatives, saying it “does not expect to take any enforcement action” as a result of the scheme.

The CMA’s informal ruling would give supermarkets more power to solve major sustainability issues – such as child labour, living wages and deforestation – more cost-effectively, she said.

However, one supermarket warned that it still feared the wrath of the CMA if it teamed up with competitors, and had therefore only cautiously gone ahead with the plan.

The CMA said the initiative is unlikely to increase prices for consumers and would have neutral or even “positive effects” on competition by giving shoppers a greater choice of Fairtrade products.

British supermarkets already sell significant quantities of bananas, coffee and cocoa that are Fairtrade certified or Rainforest Alliance branded, but a coalition would provide greater visibility into supply chains and make contracts less fragmented.

The idea is to offer farmers in countries such as Ivory Coast, Ghana, Kenya and Colombia the security of three- to five-year contracts so they can invest in practices to combat the impact of climate change, according to Fairtrade and the CMA.

Mann said the initiative would allow supermarkets to work together to pay farmers a minimum price and a premium, allowing them to invest in sustainable practices such as pruning, agroforestry and the use of organic fertilizers. Until now, contracts with farmers have often been short-term, dependent on a single buyer and subject to sudden changes, she said.

For supermarkets, forming a “buying coalition” would help them achieve difficult goals such as eradicating child labor on West African cocoa farms, or paying banana producers a living wage by 2027, she added.

Ruben Njuki, a coffee farmer with one hectare of land in central Kenya’s Kirinyaga county, said fluctuating prices prevented him from planning properly and that the current income he received was “not sufficient” to build a permanent house or his send children to university.

Kenyan farmers have been ravaged by flooding this year, the impact of which could have been mitigated if farmers had invested in mitigation, Fairtrade said.

Njuki sells his coffee to the Mutira Farmers’ Cooperative Society, which could export coffee to Britain under the new initiative.

In its guidance, the CMA said the proposed pilot project was unlikely to breach competition policy given its size, but if it were to be significantly scaled up it would require a fresh look.

Fairtrade said that once proof-of-principle was established in Britain, it hoped to expand to other markets in Europe, including Belgium and the Netherlands, and eventually to the US.

According to the International Trade Centre, Britain is the seventh largest importer of bananas, importing £592 million in 2023. In the same year, it imported £1.1 billion of coffee and £2.9 billion of cocoa and cocoa preparations.

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