Ethical food revolution picks up pace with 62% rise

Published on Friday 13 October 2006 01:59

CONSUMERS are increasingly allowing their consciences to do the shopping - to the tune of £2 billion a year.

Spending on ethically produced food, such as Fairtrade, organic and free-range produce, has risen by 62 per cent in four years, a report shows today.

Analysts Mintel say sales of Fairtrade goods are expected to soar this year by nearly one-fifth from 195 million last year.

And there seems no prospect of a halt in sales. Over the next five years, a further 138 per cent growth is predicted, to 547 million.

But as the "ethical food" revolution gathers pace and more products are launched, critics are starting to question how ethical it really is.

With supermarkets and European manufacturers creaming off much of the profit, critics claim little money goes to those it is supposed to help.

Mintel says that with growing affluence, price is becoming less important for British shoppers, who are increasingly willing to pay a premium for ethically produced fare.

In 2002, just 25 "ethical" food products were launched. By last year this had shot up to 70 and Mintel says there have been a further 53 so far this year, led by beverages.

Julie Sloan, a senior market analyst at Mintel, said: "Ethical food suppliers have traded on the fringes of the UK grocery market for many years and until recently only a few sectors, such as free-range eggs, had really established themselves.

"But now many more ethical products have entered the mainstream foods sector, with leading suppliers and retailers becoming increasingly involved."

Their rapid growth is reflected in changing consumer attitudes, according to a Mintel survey of 1,000 people. More than one-third buy Fairtrade "where available", compared to just over a quarter in 2002.

Free-range produce is even more popular, with 40 per cent of those questioned choosing such products "whenever they can" - up from one third.

The ethical sector ranges from produce from farmers' markets to the RSPCA's Freedom Food scheme.

The Fairtrade Foundation, which was set up charities such as Oxfam and Christian Aid, said sales of Fairtrade products had tripled since it was set up in 2002.

Barbara Crowther, its spokeswoman, said: "Mintel's latest insights confirm what we are experiencing on a daily basis - rapidly growing consumer and business interest in Fairtrade and wider ethical food shopping. This shows no signs of abating, and is also moving beyond the food sector."

Supermarkets report booming sales of "ethical" food.

Sainsbury's, which claims to be Britain's "favourite Fairtrade retailer", commands 32 per cent of the market, with 80 lines.

Waitrose said ethical trading was "at the cornerstone" of its business, and it was part of the John Lewis Partnership's constitution.

However, critics argue that Fairtrade distorts free markets, encouraging farmers to stay in unprofitable sectors, and causing oversupply which pushes down prices for other traders.

They also point out that farmers only sell the raw products - such as coffee and cocoa beans - and the lucrative processing and packaging of jars of coffee and chocolate bars is often reaped by European firms.

Payments are also made to co-operatives rather than individual producers, which often ends up going to the banks to pay off the groups' debts.

Philip Oppenheim, a former Conservative trade minister, has accused the supermarkets of cashing in by charging premium prices for Fairtrade goods.

He said while the movement is supposed to pay above-market prices to farmers in developing countries, local producers ended up with only a "minuscule sliver" of the extra price paid by consumers for Fairtrade products.

Good taste?

The most popular Fairtrade products last year were:

1. Coffee - 34 per cent of total UK Fairtrade sales volume

2. Bananas and other fruit - 28 per cent

3. Chocolate - 9 per cent

4. Tea - 8 per cent

5. Sugar - 5 per cent

6. Wine - 3 per cent

7. Cocoa - 2 per cent

8. Other - 10 per cent

Pros

5 million

farmers, workers and their families, 548 producer organisations and more than 650 traders benefit from the Fairtrade labelling network

Income from Fairtrade funds clean drinking water, new schools, educational scholarships, sickness benefits and organic conversion schemes.

50m

has been given back to producers across the globe in Fairtrade sales, which have reached 500m across the 20 consumer countries in the network.

Fairtrade products have been extended to yoghurt, herbs and spices, brazil nuts and roasted salted peanuts, raisins and avocados.

Cafdirect - a Fairtrade brand - is now the sixth largest coffee in the UK.

1,500

products from 212 companies are now certified by the Fairtrade Foundation

Teadirect is Britain's fastest-growing tea brand and the eighth largest in the market.

150

towns in Britain are using and promoting Fairtrade products, along with some 2,000 Fairtrade churches and 22 Fairtrade universities.

Paying a higher Fairtrade price gives farmers the option to invest in quality improvements and gain access to speciality markets or diversify into other crops to reduce their dependence on crops such as coffee.

One in four

of the two million kg of bananas sold by Sainsbury's every week is Fairtrade, and they are frequently among its top 20 top sellers. Sainsbury's sells more than one third of Britain's Fairtrade bananas.

Fairtrade is based on a clear set of internationally-agreed criteria, which are independently assessed and monitored, and the whole system is open and transparent.

Fairtrade says coffee producers earn about twice the world price, while consumers pay only 10-15 per cent more.

1bn

is spent on organic produce in the UK every year, making it the third biggest organic market in the world and accounting for one seventh of total farming.

Cons

98%

of Fairtrade chocolate is manufactured and packaged in Europe. Only 8.5p of a 1.70 bar of Fairtrade chocolate remains in the country of origin.

Critics calculate Fairtrade producers would be better off if consumers bought regular products, not Fairtrade ones, and gave the difference to a development charity.

12p

per pack of coffee is the additional income a farmer gets through the Fairtrade brand. But the typical UK supermarket shopper pays 75p extra compared to other brands.

The cost of buying and shipping Fairtrade bananas from the Windward Islands to the UK is 55p per kg, but they are sold on to the supermarkets for 95p per kg.

30%

higher prices are paid by British shoppers for coffee than in other European countries, despite Britain being a major importer of Fairtrade coffee

Divine chocolate, promoted as "chocolate with a heart", is only one-third owned by farmers.

4p

of the extra 1 cost of a bag of Fairtrade bananas compared to other bananas gets back to the farmer.

Fairtrade subsidies encourage overproduction, just as the Common Agricultural Policy has done in the EU. But in the global coffee market, the central problem is oversupply, which forces down prices for all regular producers.

1/3

more land is required to farm free-range produce than conventional techniques.

Fairtrade is no guarantee of quality. The beans offered by Fairtrade are often far from being the best available. This is because Fairtrade products come from peasant farmers, who don't have the cash to improve quality.

3p

extra is all the farmer gets per 227g pack of coffee beans when purchased at the Fairtrade guaranteed price of 72p per lb.

Critics say fair trade is bad for economic development in the long run. Fairtrade subsidies keep peasant producers, especially in Africa, tied to small-scale, inefficient farming methods when these countries need large-scale, mechanised agriculture.

Fairtrade agreements often favour one group of farmers over another. For instance, it discriminates against the major, low-cost, highly mechanised plantations of Brazil and Vietnam.

20%

fewer crops are produced by organic farming in the same amount of land as conventional production.