Organic news this quarter has been dominated by the Soil Association’s (SA) launch of its second stage of consultation on the future of airfreighted organic food imports, and the fresh produce industry has promptly risen to the bait and responded robustly to the certification body’s proposals.
The SA has proposed that airfreighted organic produce should meet its Ethical Trade standards or similar standards, such as those of the Fairtrade Foundation; should be monitored by licensees, and the information submitted as part of an annual organic inspection; and should be the subject of a plan for reducing the amount of airfreight utilised in the transport of fresh produce, where possible.
In its recommendations published in March, the SA stated: “Throughout the airfreight consultation, the SA’s position on airfreight was regularly misrepresented. The Standards Board considers that maintaining market access for producers in developing countries should be central to the recommendations. We feel it necessary to state explicitly that this approach will not change in the coming years.”
But at a recent round table organised by FlyingMatters - a coalition representing the interests of those supporting sustainable growth in the aviation sector - passions ran high among the airline and produce fraternities.
Mawunyo Puplampu, general manager of Blue Skies Ghana, a fresh-cut fruit exporter which relies heavily on airfreight for its value-added products, told attendees: “When airfreighted fruit and veg only accounts for 0.2 per cent of the UK’s greenhouse gas emissions, why is there so much focus on airfreight? Organic farming is sustainable farming, and organic lines fetch a premium for our growers, which is important.
“The SA debate has created a vast deal of uncertainty in the African organic farming community. Blue Skies is already certified to the standards that the SA is proposing organic exporters using airfreight must adhere to, but speaking for Africa as a whole, getting these certifications is very expensive and time-consuming. UK farmers get subsidies for certification, but Ghanaians do not, and this could deter farmers who want to go into organic production from doing so. If these proposals are accepted, growers who do not already have the certification will lose contacts and business, and will see a decline in their living standards.”
Blue Skies has 80 organic farmers, and organics accounts for seven to 10 per cent of its total production. “These farmers all support an extended family system. Introducing these stringent economic measures without subsidy would have a severe economic impact,” said Puplampu.
Simon Derrick from Blue Skies added: “We have held back from further investment into our organic production for the UK market while this debate is going on.”
The Fresh Produce Consortium (FPC) has made its viewpoint very clear since the first stage of the SA’s consultation was launched last year. “Last summer’s first consultation caused a great deal of disquiet,” says the trade body in a statement. “ The FPC, in conjunction with other organisations including the United Nations, argued against this on the basis that the economic impact on developing economies would be disastrous.”
Recent findings from the Intergovernmental Panel on Climate Change indicate that the fastest emissions growth rate is in power generation, not transport. “Of this, international marine and aviation emissions grow at just 0.7 per cent per year compared to the residential/commercial transport sector, emissions from which are growing at an annual rate of one per cent,” says the FPC.
However, science aside, one of the key concerns shared by the FPC and others is the practical reality of complying with the SA’s potential requirements in order to maintain trade and safeguard livelihoods.
A joint response from the department for international development (DFID) and Defra reads: “The focus on airfreight ignores the climate impact from other stages of the production cycle, and it ignores the much bigger impact on the climate from the production of other foods.
“The green paper does not consider what impact prioritising the environment over social justice will have on the wider organic movement. The criteria for organic certification are used internationally, so changes in the SA criteria to remove airfreighted products will have implications on the international organic market, that the SA green paper does not consider.”
The DFID concludes: “In the short term, the SA should not change the current situation, as this would undermine the opportunities for developing countries to export high-value products to the UK. Even though the number of producers that would be excluded from SA certification by an airfreight ban is small, a ban would send a message that could have a much wider impact on the millions farmers and their families that depend on fruit and vegetable exports to the UK.
“The government’s next preferred option would be for the SA’s organic standard to include a requirement that all the greenhouse gases emitted as a result of the production and transport of all organic products are offset, but that the cost of this should not be borne by African farmers, who are responsible for a very low level of greenhouse gas emissions.”
One suggestion to counteract the critics tabled at the meeting was the creation of a brand identity for products that incorporate carbon offsetting costs - not just for organic goods from Africa, but for the continent’s produce as a whole. Andrew Ross from Global Garden told the group: “We are launching a brand for flowers from Kenya.
“We have amortised the cost of airfreighting Kenyan flowers down into the cost of a bouquet at Sainsbury’s, so the cost of carbon offsetting is incorporated into the product. The carbon cost on a 300g bouquet amounts to 1p per 100g - so 3p for the whole bouquet. “Branding products means we can put the extra money back into reforestation and habitat generation in Kenya, and can plough donations into things like the World Wildlife Fund. The concept of incorporated costs is a positive way of ensuring people look after their own livelihoods.”
The FPC concludes in its statement: “It is deeply regrettable that the association sees fit to implement these proposals in a way which demonstrates to consumers that it is ‘doing something’, without any real understanding of what the impacts will be. We urge the SA to undertake further research into projected likely outcomes before making decisions and commitments about the future of airfreighted organic food.”
Insiders suspect that as there are other commercial organic certification bodies, and in fact the EU has its own set of organic criteria, the EU will be watching the UK market with interest now in light of this debate.
The SA will consult on the specific changes to the standards proposed and on related issues, and this stage of consultation will close on May 30.
WORLD FIRST ON THE MONEY
World first UK Ltd deals with private and corporate clients, helping them buy and sell currencies to purchase products, says Alex Sullivan, manager of corporate foreign exchange at the foreign exchange and finance service, which has helped several organic companies reduce their costs.
A business can go to a bank for exchange services, but their rates for small- to medium-sized enterprises (SMEs) tend not to be as competitive as ours. All banks buy and sell at the inter-bank market rate, and then the discount from that rate depends on the size of the company. In our experience, the difference at which a bank will buy and sell for an SME is very large. Lots of small businesses think the only cost they are incurring in exchanging money is the cost of wiring that cash into different bank accounts - but that is just a fraction of the overall costs. The bank’s rate may not be the best.
World First buys rates from the banks, as with our volume of exchanges we can afford to deal in their prices - because World First buys on behalf of a large number of clients it is able to gain preferential rates from the bank. But we make a smaller profit on the deal, and wire currency directly to the beneficiary overseas.
A large part of our job is to assist clients and tell them when to make timely transactions regarding the risk of currencies changing value. We can also set up open contracts that eliminate any exchange rate risk.
On the service side, we consider every one of our clients very important, no matter how big or small, and we offer them a very high level of service. We have a small number of large clients, but the hub of our business comes from SMEs, which in our experience tend to receive poorer rates from the banks.
We have around 30 fruit, veg and flower clients, around 10 of whom are organic. Some are also Fairtrade clients. There is a certain synergy between our organic produce clients and us - we both tend to be very service-based, and proud of what we do. Organic firms seem to get a lower-than-average rate and level of service from the banks, and we have never really worked out why.
A lot of organic firms have totally transformed inside three years, changing from small firms that people started up almost for fun, to big businesses turning over £10 million. They have grown so quickly that they have not necessarily given a lot of thought to where they can save money. If you are from a farming background, why would you understand the risks and costs of foreign exchange? You would imagine your bank is doing the best it can for you. But the perception that you are only losing £30 a year is wrong - you could actually be losing anything from thousands to tens of thousands, or possibly hundreds of thousands, a year in charges, depending on your size.
One of our organic clients is Farmaround, an organic delivery company based in New Covent Garden Market. In 2007, we saved Farmaround £10,000.
Another of our clients is Organico, which has two major brands: Organico for Mediterranean and slow food, and Fish4Ever, the only range of sustainable canned fish. In 2007, we saved Organico £16,000 on rates alone - that is, purely the difference between our rates and the banks’ rates. They also managed to buy forward contracts before the euro fell, saving them four per cent - that is a £20,000 difference on fixing exchange rates.
Charles Redfern from Organico says about using World First: “It’s more direct, easier administratively, and good to have someone straight in the market able to give us market comments and fix forwards.”
Our clients find we are an easy-to-use service. Mistakes can and do happen with international wires, but we can solve that sort of issue really quickly for a client, whereas it takes a lot longer for a bank to fix a problem because of its number of staff, departments and clients.
Foreign exchange brokerage has only been around for about five to six years, and World First is just four years old. We have done well in that time. We have an office in Battersea, London, and have recently set one up in New Zealand. Our success is largely due to our friendly approach, and the fact that every client is important to us. The people we deal with obviously generate profits for us, but they also like the fact that we are open about that. They can easily see the savings they are making, and there are no hidden charges. We have had good growth in four years, and now employ 55 people. We have 2,000 corporate clients.
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