Sourcing Products From Suppliers Certified Under Other Fair Trade Schemes

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1 Sourcing Products From Suppliers Certified Under Other Fair Trade Schemes A Guide for Fair for Life certified Handlers Version April 2014 Table of Content Overview Fair for Life Product Sourcing... 1 Buying from TRADERS certified according to recognized scheme (FLO, Fair Trade USA, Ecocert Fair Trade, Soil Association Ethical Trade)... 3 Buying from PRODUCERS certified according to recognized scheme (FLO, Ecocert Fair Trade, Soil Association Ethical Trade)... 4 Buying from other Fair Trade certified traders or producers Definitions: The rules for buying from other Fair Trade schemes differ slightly according to the type of Fair Trade suppliers the Fair for Life operation sources from: Handlers: operation or portion of an operation that receives or otherwise acquires Fair Trade certified products and then processes, packages, stores and/or markets such products (except final retailers of products that do not process the products further) Producer operation: a Fair Trade certified company or organisation which effectively produces and markets an agricultural Fair Trade product. This is typically a producer group, a company contracting smallholder producers or plantation with processing and export unit. 1. Overview and Rationale Product Sourcing from Fair Trade other Schemes Fair for Life certified handling operations normally source Fair for Life Fair Trade certified ingredients and products, but they may also buy from suppliers certified under other credible Fair Trade certification schemes for use in Fair for Life or For Life certified products or marketing as Fair for Life products. Fair for Life has endorsed recognition of existing other Fair Trade product certification programmes since the beginning of the programme, similar to organic production where certificates of other control bodies and according to other similar (even if not identical) standards is commonly practices. and has gradually recognized more well established Fair Trade schemes after due evaluation of the Fair for Life Handler Guide Sourcing products certified under other Certification Schemes 1/6

2 standard and audit and certification methodology, evaluation of sample cases and in consideration of the scheme s reputation, importance and willingness to collaborate. Module 1, Annex 2 of the Fair for Life Social & Fair Trade Programme lists all schemes that are accepted as equivalent to Fair Trade and Social Responsibility if defined basic conditions are met. Mutual Recognition means that Fair for Life operations can sell to operators of the other scheme as Fair Trade certified, and vice versa. Also, both schemes agree to verify product flows, fair pricing and premium payments also to/from operations certified according to the other scheme. If recognition is not mutual (e.g. FLO), Fair for Life buyers may buy from operations certified under that scheme as Fair Trade, but not the other way round, as each certification scheme sets its own policy with regard to accepting any other schemes or not. In this case some basic principles of Fair trade are agreed directly between the supplier and the Fair for Life buyer (e.g. accountable premium management) as not necessarily systematically audited by the other scheme. The recognized Fair Trade schemes and basic conditions are (Status 12/2013): Ecocert Fair Trade (ESR) standard FLO certification Soil Association Ethical Trade Programme FT USA Recognized Fair Trade Certification Schemes Mutual recognition of fair trade certification, Some additional restrictions may apply (e.g. review of domestic fair trade projects, organic certification for acceptance by Ecocert). Remark: in MoU between buyer and seller additional clauses.e.g. on publication of supply chain information may be necessary for selling to Ecocert Fair Trade buyers. Recognition of producer and trader certification by FLO-Cert. No mutual recognition. Remark: The term Fairtrade is trademarked by FLO. In agreements with FLO suppliers the term Fair Trade (in two words) should be used and reference made to the Fair for Life programme; Suppliers may require confirmation that products are not sold as Fairtrade, i.e. under FLO certification. Mutual recognition of fair trade certification. Additional conditions may apply (e.g. fair trade premium for international fair trade producer operations). Recognition of FT USA trader certification for all products originating from producer operations certified under equivalent schemes (e.g. FLOcertified). No mutual recognition. Remark: Fair Trade USA producer certification not yet recognized, but individual assessment based on certification documents possible as IMO and Fair Trade USA collaborate on equivalency. Fair Trade USA is currently working on their own equivalency approach to possibly accept other fair trade certification schemes. Basic Conditions for accepting products from equivalent schemes (as indicated in Module 4) The two trade partners agree on the terms of fair trade and certain key Fair for Life principles (transparency, traceability) in the commercial contract or other written agreement (e.g. Memorandum of Understanding). The product is traceable back to fair trade certified producer operations and the entire chain of custody and certification status declared (to IMO or the Fair for Life handler) The final product to be labelled as Fair for Life certified will be assessed against the Fair for Life labelling and composition criteria based on the certification status of raw ingredients. For semi- Fair for Life Handler Guide Sourcing products certified under other Certification Schemes 2/6

3 processed / multi-ingredient products the FT certified ingredients and FT certified content must be specified. If this information is not provided, the products cannot be recognized as fair trade certified raw materials. Products certified under other fair trade product certification schemes than those listed above can in some instances be assessed case by case, on behalf of any Fair for Life or For Life certified handling operation, based on inspection reports and assessment results of the certified supplier, to determine their fair trade status. Please see section 4. Individual Equivalence Assessment). This guide explains the specific steps and procedures required to buy from suppliers certified under other Fair Trade certification schemes. 2. Buying from HANDLERs certified according to recognized schemes (Ecocert Fair Trade, FLO, Fair Trade USA Handlers, Soil Association Ethical Trade) When buying from handlers certified according to other, recognized fair trade certified products, detailed trade contracts or Memorandums of Understanding (MoUs) are needed (Module 4, section 4.1.3: (c)). The following minimum documentation must be provided and below listed aspects must be covered in sales contracts, an MoU or other written agreements: Proof of trader certification under the other scheme, e.g. certificate, certifier s online data base, etc. Supply chain information (origin and certification) of the products, including intermediate traders. Only products originating from producer operations certified under schemes recognised by Fair for Life can be accepted as equivalent. The sample MoUs provide for a separate annex with supply chain information that your supplier can send directly to IMO, if required. The FFL handler must at the very least be informed about the country, producer project (e.g. smallholder producer group) and certification status of the raw material producers. Fair trade content and certified ingredients must be disclosed. Information can be provided separately directly to the CB you may use the sample MoU s Annex document that can be sent directly to IMO. If sent directly to IMO, the actual or minimum % of fair trade content and list of certified ingredients must also be given to the FFL handler. Obligation to inform the buyer in case the products are no longer fair trade certified. Confirmation of traceability and separation of fair trade products from production to final sale unless an exception has been granted by IMO. In case of schemes without mutual recognition (FLO, Fair Trade USA): explicit confirmation that the products o o originate from the Fair Trade producer operations (incl. defined producer sub-groups, if agreed between the trade partners) certified under a recognised scheme and have been traded according to the recognized fair trade standard (prices, premiums, payment conditions) Sample MoUs are available on request (can be adapted). Alternatively the information as listed above can be integrated into the company s own agreements and contracts with its suppliers e-g- by using the Annex-document of the Sample Handler MoU. Fair for Life Handler Guide Sourcing products certified under other Certification Schemes 3/6

4 How to add a new FT-recognized certified supplier to your FT supplier list: Check fair trade certification status of supplier and supply chain. The automatic recognition by FFL applies only if also all intermediate traders and the primary producer operation(s) are certified according to a FFL recognized scheme. You need to sign an MoU / trade contract with this supplier. Download the applicable sample MoU from or include the relevant details (see above) in your own agreement. Update the supplier details including all supply chain details in your IMO II Product & Supplier Approval List. Submit the updated documents together with certificate(s) of supplier and producers and the MoU / trade contract to IMO for assessment and approval. If your supplier does not disclose the full supply chain information and composition details, this data can be sent directly to IMO (use annex form in sample MoU), but please note that IMO will charge for the extra time required to assess the request in this case. If all information is complete, IMO will return the new IMO approved product & supplier list IMO II (Product Approval List) back to you. 3. Buying from PRODUCERS certified according to recognized scheme (Ecocert Fair Trade, FLO, Soil Association Ethical Trade) The same procedures and requirements apply as described above for traders certified according to recognized schemes: MoU s / trade contracts with the same basic details as above are required, but additionally the agreement with producer operations must specify: Agreed primary producer operations (e.g. producer cooperative sub-groups) which are covered in the producer s FT certification. Agreed floor price / minimum price and agreed Fair Trade Premium. Premium and floor price are set as required by the fair trade scheme that the producer operation is certified to (i.e. FLO minimum prices if market price is below minimum price, plus FLO social premium). Procedures for payment of premium; as required by producer FT standard, (e.g. FLO Trader Standards: separate fair trade premium account for hired labour and contract production; for producer groups, the premium is paid directly to the group) Additional requirement for FLO producer operations (as use of premium paid by Fair for Life buyer may be not verified in the FLO audit): The producer operation must submit an annual report on the use of the premium paid by the Fair for Life buyer. This report will be reviewed as part of the Fair for Life handling audit. The buyer must have the right to request copies of receipts for use of the money as the Fair for Life certification body may request to verify these receipts. Well defined terms of trade, including pre-payment (according to the FT standards of the producer operation), intention of long term collaboration; details on support (if applicable) Sample MoUs are available on request (can be adapted). Alternatively the respective information as listed above can be integrated into the company s own agreements and contracts with its suppliers. Fair for Life Handler Guide Sourcing products certified under other Certification Schemes 4/6

5 4. Individual Equivalence Assessment of suppliers certified under Fair Trade Schemes that are not listed as equivalent If your supplier or the originating producer operation is certified by a fair trade product certification scheme that is not listed as recognized scheme (e.g. Naturland Fair, Fair Trade USA producer certification), you can potentially still get the respective products recognized as fair trade certified ingredient/material, based on an Individual Equivalence Assessment (IEA) of the supply chain. A standard lump sum fee applies for all equivalence assessments. During an individual performance assessment, the implementation of all core Fair for Life principles of the supplier is evaluated, based on assessment of standard scope, standard certification methodology and actual performance of the supplier against the core principles (which may be above formal standard requirements). Additional conditions may be set to accept the supplier s products as fair trade certified into Fair for Life supply chains. Individual Equivalence Assessment (IEA) is done only on behalf of Fair for Life handlers (or producers) and is only possible if either of the following 2 conditions is met: 1. The Fair for Life handler buys directly from the fair trade certified producer operation. If there is an intermediate trader, but the FFL handler has also a good direct link with the producer operation and monitors prices, premiums, support and terms of trade with the producer operation, then this can also be accepted as direct trading relationship. The direct link is necessary as there may be additional conditions or requirements for accepting this supplier as fair trade certified, which the FFL handler needs to agree on and supervise with the producer operation and this can then be audited in the FFL handler audit. 2. The Fair for Life handler buys from a trader certified according to a Fair Trade scheme with which Fair for Life has a collaboration agreement regarding standard recognition. This is the case with Fair Trade USA, Naturland Fair as well as Ecocert Fair Trade and Soil Association. Please note that the certification of the trader as well as the primary producer operation is considered for the recognition of products as Fair Trade certified. The IEA of the supply chain has to be updated annually, based on update reports and documentation. Please note that IMO will need to coordinate open questions with the fair trade certification body of the supplier and producer operation and may exchange some basic data on fair pricing in order to have sufficient basis for assessment of fair trading practices on both sides. How to apply for an IEA of a supplier certified according to fair trade schemes not listed as equivalent You need to complete the Application Form for Individual Equivalence Assessment. o Complete supply chain must be disclosed o In the annex section your supplier needs to give his consent to the process and is informed what documents IMO needs to receive A fee of 550 Euro / 790 USD is charged for this service if the required audit and certification documents are submitted by the applicant. If IMO is charged with the task to obtain the reports, etc. from the certification body, this extra time may be charged to the FFL certified handler. Once IMO receives the complete application form and all required reports and certification documents about the supply chain, and pre-payment of the fee, the individual assessment starts. Fair for Life Handler Guide Sourcing products certified under other Certification Schemes 5/6

6 The Fair for Life handler applicant receives a written notification with the result of the assessment and possibly conditions for approval of the supplier. Then the standard process to add a new supplier certified according to other fair trade schemes applies: MoU must be signed (see sections above for traders or producer operations), the IMO Product & Supplier Approval list is updated and all documents sent to IMO for approval. For more information about Fair for Life - Social and FairTrade Certified by IMO, please visit or contact us: IMOswiss AG, Weststrasse 51 CH Weinfelden Fon: , Fax: Fair for Life Handler Guide Sourcing products certified under other Certification Schemes 6/6

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