Fairtrade Foundation submission to the International Development Committee’s inquiry:

Humanitarian crisis monitoring: coronavirus in developing countries: secondary impacts

October 29th 2020

Introduction

1.1. The Fairtrade Foundation welcomes the opportunity to respond to the International Development Committee’s inquiry on the secondary impacts of the coronavirus on developing countries.

1.2. Fairtrade in the UK is part of a global Fairtrade system which supports 1.71 million Fairtrade workers in 73 countries around the world. Our vision is to make trade fair and secure a better deal for farmers and workers, contributing to the UK’s wider international development efforts and achievement of the Sustainable Development Goals (SDGs).

1.3. The Fairtrade Foundation has been monitoring the impact on Fairtrade producers, smallholder farmers and workers in developing countries during the COVID-19 emergency. We are continuing to see a devastating impact across sectors, leading to heavy job and/or income losses amongst groups who were already vulnerable, which will increase poverty unless urgent support is given.

Key messages

2.1 The coronavirus pandemic is continuing to have a devastating effect on the livelihoods and health of farmers and workers in the Global South and has revealed the fragility and inequality at the heart of the way we produce and consume our food. From a humanitarian response perspective, affected groups are not those typically prioritised in emergency response and recovery, as they have hitherto been in relatively stable (though often very low paid) employment.

2.2 The COVID-19 pandemic shows us the stress placed on global supply chains by a major external shock. Fairtrade supply chains saw widescale disruptions to trade, logistical challenges and increases in the costs of production in many core food and perishable goods sectors, such as fresh fruit and vegetables. While UK food retailers “rode the storm”, costs rose and production levels dropped severely due to workplace and logistical disruption. For example, ‘non-essential’ goods such as flowers saw huge drops in sales, sometimes in a matter of days, leading to widescale job losses [1].

2.3 The impact of the shock of the pandemic shows us the kind of impacts which could arise from future shocks, especially arising from the climate crisis. With the effects of the COVID-19 crisis and the worsening climate crisis likely to drive more farmers and workers into poverty in the coming years, government responses need to prioritise the resilience of smallholder farmers and workers at the bottom of our food supply chains.

2.4 While many Fairtrade producers were able, to some extent, to buffer the immediate impacts of the crisis (through use of the Fairtrade Premium and Fairtrade Relief Fund), there remains an urgent need for UK development spending to be focused on long-term resilience and support.

2.5 The Fairtrade Foundation is pleased to receive support from the Government’s Vulnerable Supply Chain Facility (VSCF), which we believe is a good practice example of effective collaboration between government aid spending, the private sector, and civil society. We would like to see this kind of programme scaled up to support even more producer communities.

2.6 Fairtrade and DFID (later FCDO) have been in regular communication on COVID-19 response since mid-March 2020. VSCF funding was awarded in June, with contracts finalized in July (see section 4 for further details).

2.7 The recent merger of DFID and the FCO took place during the crisis response period. Fairtrade is keen that the FCDO is supported by retaining strong oversight and accountability mechanisms for UK ODA, retains the principles of aid transparency and effectiveness, with a commitment to poverty reduction, reaching the most vulnerable, sustainable development, and to ‘leave no one behind’.

Secondary Impacts of the pandemic

3.1 As referenced in our previous submission [2] the impact on jobs and livelihoods in developing countries was rapid and deep, with hundreds of thousands of farmers and workers experiencing job losses and loss of income.

3.2 This resulted in high levels of need amongst groups of people who normally are not priorities for emergency assistance or recovery programmes, as they are in relatively stable (if very low paid) employment, and not necessarily in the lowest income countries. This is a key targeting issue for planning recovery and ongoing relief assistance.

3.3 Many producers in developing countries, who produce 10-15% of our imported food [3] such as bananas and coffee, are already living close to the poverty line and often have little in the way of savings or resilience to market, health or environmental shocks. A typical cocoa farmer in West Africa might earn 75 pence per day, well under the extreme poverty line. The prevalence of “in work poor” such as these in the UK’s supply chains suggests that they should be a priority for policy makers, even without the pandemic. The shock of COVID-19 has resulted in widespread market uncertainty, huge risks to public health, widespread job losses and difficulties in transporting products to the UK – challenging the production of some of the UK’s food supplies and risking the well-being of entire communities.

3.4 The wide scale loss of livelihoods in some sectors is likely to cause longer term challenges for farmers – and make responding safely to the virus even harder. The International Labour Organisation estimates that 94% of the world’s workforce are living with some form of workplace closure [4].

3.5 Without a livelihood, many farmers and workers will struggle to get enough food to feed themselves and their families and is likely to have devastating consequences for food security for countries in the Global South. Affected families will similarly see problems in accessing other essential services and paying for basic needs. The United Nations has estimated that nearly 50 million more people will be pushed into extreme poverty [5]. Recent figures suggest that the number of people at risk of acute food insecurity in at-risk developing and middle-income countries could increase from an estimated 149 million (pre-COVID-19) to 270 million before the end of the year. In Africa alone, negative growth figures mean that 48 million people could fall into extreme poverty [6].

3.6 The devastation caused by the COVID-19 pandemic also needs to be seen within the context of another great threat – the climate crisis. Farmers and workers are already on the front line of the climate crisis [7], and are already hit by increasing droughts, floods and unpredictable, changing weather. The impact on livelihoods will make it harder for producers and farmers to invest in adapting to the impact of climate change.

3.7 With around 10-15%[8] of the UK’s overseas food imports coming from Asia, Africa and Latin America, UK food security is inextricably linked to the health of economies and the stability of societies in the global south. Our food supply chain is only as strong as its weakest link. While some “onshoring” is possible and desirable the UK does not have the capacity to grow all its own food. Some food such as tropical fruit cannot be grown in the UK.

3.8 Weather related crop damage, exacerbated by climate change, and long-term damage to agricultural production from changing weather patterns, coupled with the chronic underpayment of agricultural workers and smallholder farmers, is likely to lead to a situation in which underpaid workers cannot access proper healthcare, invest in climate adaptation, and are very vulnerable to human rights abuse. A typical cocoa farmer in west Africa earns under £1 per day and there are serious gaps to living wage for workers growing much of the UK’s other food imports.

3.9 In addition to meeting our responsibilities to support those in need, an effective response and building resilience also directly supports the food security of the UK. This is not just a government responsibility, but obviously demands action from the food businesses and retailers involved. However, government needs to set a strong enabling framework which incentivises food businesses to invest at farm level and ensures that businesses which take action are not exposed against competitors with weaker commitments to sustainability. The UK therefore needs to work with food businesses and civil society, incentivising sustainability investments, ensuring a supportive trade policy and development aid framework which deliver a step change in supply chain resilience. Such investments are relatively low cost and will greatly strengthen future resilience.

3.10 Fairtrade has previously raised concern at the impact the pandemic is likely to have on child labour [9]. School closures, coupled with limits on migrant labour and the loss of employment, mean that boys and girls are more vulnerable to child labour. If parents become infected with the virus, children and youth, particularly girls, may end up assuming greater responsibilities for their family’s survival. Longer term, the economic downturn will drive even more people into poverty and, as a likely result, more children into child labour. Proposals have already been made to adjust the legal requirements for young workers (age 16 and above) to cope with labour shortages in the coffee sector [10]. It is probable that other sectors and countries will follow, reversing hard-won gains. Weaker laws and stretched government budgets will result in more child labour, especially in rural and agricultural sectors.

3.11 Women are also likely to face an increased risk of rights violations during the pandemic [11]. School closures mean women are more likely to be expected to take on extra childcare responsibilities and unpaid labour, affecting their ability to earn a decent livelihood. Many women in agricultural settings already earn well below men. In Ghana and Cote D’Ivoire, the average cocoa farmer earns just 75p a day – women farmers are far worse off, working longer hours and working less. It is estimated that in Cote D’Ivoire, women carry out 68% if the labour involved in cocoa farming, but earn just 21% of the income generated [12]. Just 25% of women cocoa farmers own their own land. As the impact of the pandemic on livelihoods continues, women are therefore less likely to be able to withstand potential loss of livelihood.

3.12 Human rights at work are also under pressure as a result of the pandemic. The pressure to accept poor working terms and conditions is very high. The movement restrictions operating at present also mean that workplaces are not seeing the usual level of scrutiny from independent observers, NGOs and human rights monitors, researchers, auditors and journalists. Some plantations (for example, many in North East India) “locked down” on public health grounds, deliberately restricting access to reduce virus spread, but heightening concerns over scrutiny in a context where human rights problems are regularly raised.

UK Development spending to support secondary impacts

4.1 The Fairtrade Foundation is very pleased to be part of the government’s recently launched Vulnerable Supply Chains Facility (VSCF), which aims to help nearly a million people by ensuring vulnerable workers and suppliers overseas – and their families – are prepared for the economic and social shocks of COVID-19.

4.2 The newly launched VSCF established by DFID (later FCDO) offers an important pilot model for the forms of trade and supply chain models that foreign and development policy should be promoting. The scheme works across the private, government and civil society sector to support agricultural producers and garment workers in developing countries during the pandemic, and to build longer term resilience in their core supply chains. A total of £2m of the match funding included in the scheme (across all grant partners) was contributed by UK and international businesses. Using this funding, the Fairtrade Foundation is working closely with its business partners to support some of the most vulnerable flower and cocoa producers in Kenya and Ghana respectively, partnering with MM Flowers, Mondelēz International, Co-op, M&S, Tesco, Coventry University, FNET, Women Working Worldwide and Partner Africa.

4.3 The VSCF does not grant funds to the businesses involved, but the business partners contribute funds alongside the FCDO, with Fairtrade implementing the work. Across Fairtrade’s two projects, the split is £780,000 from commercial partners and £700,000 from the FCDO.

4.4 The Fairtrade Foundation is keen to see the scaling up of programme interventions working alongside civil society and the private sector through a comprehensive government approach to economic development and future resilience. We believe this scheme sets out a future model for how the government, civil society and businesses can work together to support vulnerable farmers and workers and to build back better.

4.5 The Fairtrade Foundation and DFID (later FCDO) were in regular contact by email and video calls from 18th March, to share situation updates, to compare notes on strategy and explore partnership funding opportunities. DFID invited proposals for the VSCF on 7th May for submission by 20th May, and we learnt in early June that two bids had been successful. After due diligence contracts were signed on 20th July. The grant facility manager for the VSCF is Mott Macdonald.

4.6 There are many more producer groups in similar categories to those currently supported by the VSCF, and the recovery period will be a long one. We would like to see the Government scale up its approach, commit significant resources and funding to future resilience building for producers in the Global South. Strengthening producers’ resilience against future shocks to changes in demand, market or climate includes protecting the productive base and exploring alternative income streams for diversification and greater food security at farm level. The payment of living incomes/living wages for producers is very important for household and community resilience – stronger communities which have built up community and household assets have more ability to face a shock (such as a temporary loss of income) without being pushed into distress strategies. This will also support the Government’s commitment to poverty reduction, the SDGs, and future UK food security.

4.7 The recent merger of DFID and the FCO took place during the crisis response period, resulting in debates about the direction of UK aid strategy. The damage caused by the pandemic means that the need for the UK to invest in meeting shared global challenges has never been greater or more timely.

4.8 The UK government must continue to spend aid in accordance with OECD DAC rules, with a continued commitment to the 0.7% spend. It is critical that the new Foreign Commonwealth and Development Office (FCDO) upholds the highest standards in UK aid, including in support of climate action and responsible business, to support the delivery of the SDGs and to “leave no-one behind”. This will be best achieved through a robust accountability and monitoring framework across all departments receiving and spending ODA, including those outside the FCDO. We strongly support the need for a parliamentary committee with the sole task of scrutinising UK aid spend across government.

Concluding comments

5.1 The impact of the pandemic is likely to lead to long term economic impacts on producer livelihoods and the economic stability of many countries in the Global South. This has the potential to profoundly undermine the UK government’s progress towards the Sustainable Development Goals (SDGs) and the fight against global poverty.

5.2 The Fairtrade Foundation would like to see ODA spending directed towards building the resilience of UK supply chains, especially where producers are experiencing endemic “in work poverty”. This means supporting producers in the Global South to achieve living incomes and wages, diversify crops in the face of climate change, and strengthen food security. Doing so is vital not only to deal with the long term secondary impacts of the coronavirus pandemic, but to better enable producers in the Global South to mitigate against the impacts of the climate crisis.

5.3 This requires a new kind of partnership with business – not one that results in taxpayer money meeting business costs, but which incentivises and facilitates responsible business’ own investment in tackling poverty and sustainability issues on the ground. The VSCF facility is an important opportunity to learn and we would welcome a scaling up of the approach, both in the COVID response and more generally in future programming.

5.4 Supporting farmers and workers in the Global South is of vital importance in building back fairer in recovery from the pandemic, and to support the Government’s commitment to the SDGs. The vulnerability of our supply chains is moreover a key global and domestic challenge for UK food security and consequently for the UK consumer and UK businesses. This highlights the importance of a renewed commitment to building fair and sustainable supply chains that are resilient for the future. Our supply chains will only ever be as strong as their weakest link – we should not miss the chance to strengthen them in COVID recovery programmes.

5.5 The ongoing Integrated Review, which will look at the UK’s Foreign, Development, Security and Defense policy and inform the Government’s long-term strategic aims, should look closely at how economic development programmes can best be structured so that resulting programmes are high quality and reach vulnerable producer groups effectively.

5.6 The UK Presidency of COP26 next year is a great opportunity for the UK government to accelerate action on the climate crisis. It is important for the UK to align its work on economic development / COVID recovery to help build the kind of resilient supply chains which also help to prepare us for a changing climate and to help reduce global emissions.

For more information please contact Alice Lucas, Advocacy and Policy Manager, alice.lucas@fairtrade.org.uk

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