Fairtrade producer organizations stand to lose around $380m a year in Fairtrade Premium if they are unable to sell their products.
CEOs of Fairtrade organizations across the globe have written to the Chair of the G20, His Majesty Salman bin Abdulaziz Al Saud, King and Prime Minister of Saudi Arabia, to call on G20 leaders to help protect farmers and workers in developing countries from the worst effects of the COVID-19 crisis.
Smallholder farmers and farm workers, including Fairtrade farmers, supplying global food and clothing supply chains, are at high risk of illness and mortality from COVID-19.
Darío Soto Abril, Chief Executive Officer of Fairtrade International, said: “We are deeply concerned about the effects that the virus will have on farmers and workers across the developing world, including those producing food and other goods that G20 countries rely on. There is an urgent need to provide humanitarian measures to protect people’s health and lives while at the same time support economic measures to ensure continued livelihoods.”
According to the last UN University forecasts, more than half a billion people could be pushed into poverty due to this crisis. The farmers and workers Fairtrade works with are already among the world’s poorest people, living in communities with weak or non-existent safety nets, inadequate health care and safe water and sanitation, and at risk of hunger and malnutrition.
The organization warns that the crisis is disrupting global supply chains. Lockdowns in importing countries, whilst necessary for public safety, are resulting in a rapid and severe drop in orders in some supply chains. This has led to heavy job and income losses amongst groups who were already vulnerable, and will increase poverty unless urgent support is given.
In Kenya, for example, tens of thousands of flower workers have lost their jobs, with no local work alternatives, and there is growing concern about the long-term financial stability of flower farms. A similar situation is happening in Ecuador, where flower workers have started to be layoff or put on hold by organizations due to low sales. Meanwhile, the price of tea in both India and Sri Lanka, already low, is reported to have plunged by almost 40% due to reduced demand.
Global sales of Fairtrade products total around $9bn a year, but Fairtrade producer organizations stand to lose around $380m a year in Fairtrade Premium if they are unable to sell their products. Even if demand for imports does resume, developing countries themselves have begun, or are likely to begin, their own lockdown measures, which will lead to further losses of employment or income unless special assistance is given to farmers and workers.
Abril continued: “We urge G20 leaders to push for a comprehensive response to this crisis for low income countries across five areas where action is needed. The Fairtrade movement supports around 10 million people in total and we stand ready to be a partner to minimize the impact of this crisis on the world’s poorest and most vulnerable communities.
“By supporting producers through this emergency, both economically and in public health, we will support G20 food security during the crisis and in recovery. Now, more than ever, the G20 has a huge shared interest in ensuring the resilience and sustainability of global supply chains.”
Fairtrade’s Five action points
1. Protection for Jobs and Livelihoods
- Whilst necessary for public safety, lockdowns and other restrictions risk significant unemployment or loss of farmer income unless support is given to farmers and workers over this period.
- Many of the low income countries in which we work have weak to non-existent social safety nets, and loss of income will result in increased poverty and hunger.
- We therefore call on G20 governments to work with origin governments, retailers and traders to agree furlough schemes for supply chains that import food or goods from low income countries, focused farmers and workers most at risk from poverty and hunger.
- Furlough schemes could be financed by a mixture of mechanisms, such as;
- donor support from the World Bank and development agencies
- commitments by retailers and manufacturers to provide forward payments or forward contracts to secure their supply chains o provision of trader loan holidays
- VAT and payroll tax holidays for workers that pay taxes
- loans to Small Producer Organizations or commitments by retailers and traders to forward contracting and trader loan holidays for the producers that supply them
- In some cases, a skeleton workforce will be needed to keep the farms open to protect the productive base and future sales of producers. For example, the cost of doing this for the 44 flower farms that Fairtrade works with in Kenya would be €2.8m over 3 months.
- At a minimum, farmers and workers must be provided with adequate food and essentials. For example, providing sufficient food to workers on all Fairtrade flower farms in Kenya would cost €270,000 over 3 months.
2. Personal Protective Equipment
- Where low income country governments are not advising a lockdown of farms and plantations, adequate PPE and training on prevention and social distancing must be provided to farmers and workers.
- Where skeleton workforces are necessary to keep farms and plantations economically viable, farmers and workers must be equipped with adequate PPE. For example, to issue PPE supplies for the 40,000 employees on Fairtrade flower farms in Kenya would cost €5m.
- We urge the G20 governments to work with retailers and traders to ensure this PPE and training is provided.
3. Support healthcare strengthening
- Estimates from Imperial College London suggest there will be 900,000 deaths in Asia, 300,000 in Africa and 160,000 in Latin America and the Caribbean.
- Aid should be given to help developing countries to strengthen public healthcare systems, including measures to prevent and contain the disease.
- Such support should have a particularly emphasis on vulnerable communities in rural, as well as urban, areas.
4. Wider Economic Measures
- We support the call by former Presidents and Prime Ministers with INGOs including Oxfam and Save the Children for a G20 taskforce to coordinate a global response to the Covid-19 crisis.
- We support their call for $150 billion to be given to developing countries to help them with their health care, social safety nets support and other urgent help, and for Special Drawing Rights of $500-$600 billion to be proposed by the IMF.
- We also support calls for the cancellation of debt owed by low income countries, many of who rely on export revenues that have fallen due to this crisis.
- To ensure the continued flow of products from developing countries, we urge G20 countries to keep existing trade arrangements with developing countries in place and to take steps to offset the disruption – including the preventable perishing of food – caused by border closures and delayed customs procedures.
- Whilst protecting jobs and lives is the most urgent short-term need, we urge G20 leaders to seek opportunities to ensure the above investments help global supply chains in food and other goods become more sustainable and climate resilient, in line with the SDGs and initiatives such as the EU’s Green New Deal.
- We should follow this unprecedented halt of the global economy with a fair restart that transforms supply chains. By tying the stimulus packages to sustainability goals and specifically fostering fair supply chains that increase empowerment through living income and wages, we can make producers and workers more resilient towards future crises.
- COP26, whenever it now takes place, will be a key opportunity to agree a new approach.