KEY POINTS:
The founder of global tea brand Dilmah says the Fairtrade labelling scheme is a well-intentioned "farce" that does little but put money into the pockets of middle-sellers.
Sri Lankan businessman Merrill J. Fernando - well-known for his television advertisements inviting us to try Dilmah tea - spoke to
the Herald on a visit to New Zealand last week with his son Dilhan.
"It's no more than another marketing strategy," he said of the Fairtrade label, which is designed to give a warrant of ethics to produce from developing countries.
"It's well-intentioned but the administration is poor."
Fernando said little of the premium price attached to Fairtrade products ever reached growers in developing countries. "You're not supporting [real] fair trade at all, you're supporting all the middle-men."
Dilmah tea is not Fairtrade-certified but Fernando said the firm had a strong emphasis on staff welfare.
And 10 per cent of his gross profit aids disadvantaged people though his MJF Charitable Foundation.
Fernando said rather than using Fairtrade, it would be better for each country to have its own certification body to visit producers in developing countries.
Such bodies would be truly independent and not just another trendy brand, as he alleges Fairtrade has become.
"If they want to come to Dilmah, we will throw open our doors and they can come and look."
But a spokesman for New Zealand fair trade organisation Trade Aid said Fernando's comments were motivated by competition with Fairtrade tea producers. Justin Purser, food manager for Trade Aid Importers, said Dilmah could not match Fairtrade's assurances about its growers' methods.
"Dilmah don't get audited and monitored. They are a company without any external certification that will say what they choose to."
Purser said Dilmah's upmarket teas competed in the same value-added market as Trade Aid's Fairtrade tea. "It sounds to me like market rivalry."
He admitted Fairtrade was "not a perfect system".
But he strongly defended the brand's ability to improve lives.
Purser said a visit to Trade Aid's tea supplier in Sri Lanka had shown him how much the system improved conditions for workers.
The Fairtrade plantation had schools, a bank, medical centres and spacious housing - in contrast to the bulk of Sri Lankan tea estates, where half the industry's 450,000 workers lived in cramped conditions without running water.
Purser said initiatives like Dilmah's charitable fund were no substitute for fair trade.
"That sort of charity is what we're railing against with Fairtrade. We think farmers need a fair price upfront so they don't need these handouts."
But Fernando said a better way to improve living conditions would be to encourage tea growers to add value to their raw produce. At present, much Sri Lankan tea is shipped off for processing and packaging by multinational corporations, who then pocket the bulk of the profit.
But the tea baron was optimistic customers and shareholders would eventually pressure companies into adopting fairer trading practices.
HOW IT WORKS
* The Fairtrade brand was created by umbrella body the Fairtrade Labelling Organisation in 1997, to address concerns about the low earnings, poor working conditions and environmental damage facing food producers in developing countries.
* Fairtrade-certified producers are visited by inspectors, who check their products against agreed environmental, labour and development standards.
* There are Fairtrade-certified producers of bananas, honey, oranges, cocoa, cotton, dried and fresh fruits and vegetables, juices, nuts and oil seeds, quinoa, rice, spices, sugar, tea and wine.
