Fair trade for forest products

Lessons learned from assessing best practice in ethical trade schemes are now guiding organisations around the world. Ethical and conventional trading systems were compared for three forest products: cocoa, brazil nuts and timber - in terms of both their impact on local people and their economic viability. Researchers also analysed wider policies, markets and non-forest sectors, to get the big picture. An important conclusion was that assessing impacts on livelihoods and the environment must be a part of ethical trade initiatives. This and other findings have been disseminated through policy briefings and a draft manual on best practices. Lessons learned have already been used by Oxfam and CARE in Peru, Ecuador and South Africa, and by the Ecolabelling Institute of Indonesia (LEI).

Project Ref: FRP19:
Topic: 5. Rural Development Boosters: Improved Marketing, Processing & Storage
Lead Organisation: Natural Resources Institute (NRI), UK
Source: Forestry Research Programme

Contents:		Description
		Validation
		Current Situation
		Environmental Impact
		Annex

Description

Research Programmes:

Forestry Research Programme

Relevant Research Projects:

R7285

Contact:  Valerie Nelson, Natural Resources Institute, University of Greenwich, Chatham Kent ME4 4TB E-mail valairn@ntlworld.com

• The Natural Resources and Ethical Trade Programme (NRET) at NRI:
• Mick Blowfield (ex-NRI, currently Centre for Corporate Citizenship, Boston College, USA.
• Valerie Nelson (NRI)
• Anne Tallontire (NRI)
• Chris Collinson (ex-NRI, now DFID)
• Jane Thornback (independent consultant)
• Bill Maynard (independent forestry consultant)
• The research partners cited in the proposal were:
• Lembaga Ekolabel Indonesia (Dr Mubariq)
• CARE (Ecuador) (Marcelo Leon)
• Just Wood Trading (Fionagh Thomson)
• CSIR South Africa (Jeremy Evans)

Other organisations which participated in the South African work included:

• Oxfam GB; Natal Timber Co-operative (NCT) and Institute for Natural Resources (INR) of the University of Kwa-Zulu Natal. Over time we had more contact with INR than CSIR as the former proved more appropriate for fieldwork with the forest dependent people.

Other organisations that assisted the research in Peru were: Oxfam Peru (Graciela Magan), Candela and in Ecuador Jatun Sacha (David Thomas) and MCCH (Jose Antonio Santos).

Research Outputs, Problems and Solutions:

Trade is increasingly taking centre stage in debates on sustainable and equitable international development, particularly in relation to forest degradation, poverty and sustainable livelihoods. The causes of forest degradation are increasingly being recognised as extra-sectoral, and the role of 'ethical' trade is thus attracting more attention. Greater scrutiny of 'ethical' trading (e.g. fair trade, organic agriculture, forest certification) is required to see how far it can support forest livelihoods and whether such 'ethics' can be sufficiently mainstreamed as to reduce forest degradation. The project aimed to share lessons from best practice.

The Outputs were:

• Identification of the potential of ethical trade: Ethical and conventional trading systems compared in three forest products (cocoa, brazil nuts, timber) with respect to social impact and economic viability. 

• Policy, market and non-forest sector analyses completed and combined with the comparative trading systems studies to provide lessons for the development of a draft manual. A decision-making tool, the manual is aimed at: producers and collectors of forest products; intermediary organisations; traders. Other potential audiences include academics, brokers, buyers, donors, financial institutions and government bodies.

• Project partners (South Africa, Ecuador and Indonesia) identified their own priorities which also fell under the ethical trade banner and were supported by the NRI team in action research: Ethical business planning with community forest association and Care-Ecuador in Ecuador; assessment of small timber growers' perspectives on proposed national forestry standards and certification and support for the representation of their views in the standard development process; development of social typologies of forest use and dependency to inform forest certification in Indonesia.  The lessons were used to draft the manual with project partners and field testing was complemented by feedback from a specially-convened small buyers and NGO group (including Oxfam, Traidcraft and the Body Shop amongst others) organised by the UK Tropical Forestry Forum

• Publication of the draft manual was agreed with IT publications and an external editor identified, but publication did not go ahead due to lack of funding from the donor. 

• Dissemination of findings: A range of policy briefings (four NRET Policy and Practice Papers (2003) on forest product fair trade, sustainable forest standards and small timber growers, FSC certification in the Solomon Islands); A series of targeted briefing notes aimed at governments, NGOs, the private sector etc; Radio and TV programmes with the BBC, a project newsletter and via the NRET website.

Types of Research Output:

Major Commodities Involved:

A range of timber and non-timber forest products was included in the research. Specific in-depth studies were carried out on timber certification, and the impact of ethical trade in cocoa and brazil nuts. The outputs could easily be applied to a whole range of agricultural crops and other enterprise activities undertaken by small producer groups and harvesters of natural products.

Production Systems:

Farming Systems:

Potential for Added Value:

The ETFL project focused on international ethical markets for all forestry products and would benefit from being clustered with the following FRP projects, which consider NTFP commercialisation, but do not extend to ethical markets:

• R8305: resource inventory and management of NTFPs (medicinal bark in Southern Africa) and R8295 (medicinal plants in India and Nepal). Use of the ETFL draft manual would assist the small enterprises involved here to assess the viability of ethical market opportunities.
  
• R7925 NTFP commercialisation (CEPFOR) - value chain and commercialisation of NTFP plant products. Outputs included a book on NTFP commercialisation and value chains for decision-makers, a decision-making support tool for decision-makers to evaluate the potential for successful NTFP commercialisation and a methods manual of practical tools for NTFP value chain analysis. This manual does not cover ethical markets, and so there is an excellent opportunity for integrating the draft ethical trade manual with the CEPFOR manual, to produce a broader output that would assist small forest enterprises to reach international ethical markets, where such opportunities exist.

The outputs from the ETFL project complement the activities of a variety of NGOs working on market access, particularly with respect to ethical markets where certification is required.  NGOs whose work is complementary include:

• AfricaNow now run ethical business services, including assisting small enterprises in accessing markets and in achieving certification, as well as training auditors to carry out different kinds of ethical audits.  They have expressed interest in using the manual and project outputs.
• Traidcraft, particularly through its Market Access Centre
• HIVOS, particularly through its internal quality management systems approach.

Validation

How the outputs were validated:

Social impact assessments were completed comparing ethical trade with the conventional trade in two commodities: cocoa (Ecuador) and brazil nuts (Peru) using a livelihoods methodology. The alternative trade organisations (ATOs) that supported the schemes were the key collaborators providing information and access to local participants. A key objective was to map out the diversity of, participating primary stakeholders, including those who risk being excluded, and the different types of impact of the scheme upon them. 

The financial viability of these schemes was also analysed in comparison to the parallel conventional trade. Again ATOs supporting the producer groups/harvesters in each country were key collaborators. A third study was conducted in the Solomon Islands exploring the impact and viability of timber certification for large and small-scale enterprises.

The policy watching briefs were produced using secondary data and grey literature.

Project partners in South Africa (CSIR), Ecuador (Care), Indonesia (Lembaga Ecolabelling Institute), along with other NGO representatives involved in ethical trade were invited to a planning workshop in Peru, at which they identified forest ethical trade issues for action research relevant to their existing priorities - issues that would simultaneously provide generic lessons for the manual. Project partners with NRI team members then carried out the following:

• in Ecuador, NRI and Care-Ecuador developed an ethical business planning methodology to help a community forest enterprise identify the most viable routes to commercialisation, including reaching ethical markets.
• in South Africa, the views of small timber growers were explored on national forestry standards and certification and support was given to representation of their views in the standard development process; efforts were made to identify forest groups in Kwa Zulu Natal that were trying to sell to ethical markets
• in Indonesia social typologies of forest use were developed to encourage greater attention to social issues in forest certification.

The lessons from the impact studies, policy briefs and action-research processes were combined to produce the first draft of an ethical trade manual - targeted at NGOs that work with producers and harvesters of forest products, as well as traders and producer groups themselves. Throughout the project the UK Tropical Forestry Forum convened two groups: a UK-based small buyers group; and an ATO/NGO group. These groups provided critical feedback to the project team, including a review of the first draft of the manual. The first draft of the manual was also circulated to approximately 85 organisations worldwide (including NGOs, ATOs, buyers, ethical trade experts) in hard copy form and in CD-Rom, accompanied by a feedback sheet. The response was overwhelmingly positive in terms of the value of the content to producer organisations, but many suggested the need for a restructuring of the manual and a narrowing of the target audience to ATOs and NGOs alone. FRP programme management suggested integrating a decision-tree and using a professional editor. An editor was found and a new structure created in liaison with the editor, IT publications (who had agreed to publish the manual) and with FRP. 

Where the Outputs were Validated:

The project was set up (1999) as a joint effort between project partners in South Africa, Ecuador and Indonesia. The Outputs, including the draft manual, were produced in a collaborative process, drawing upon lessons from different field studies, policy analyses, and action research activities. 

The action research process (2000-1) provided an opportunity to field test the manual lessons in practice in Ecuador, South Africa and Indonesia. Project partners identified action research themes in a planning workshop (following completion of the desk-based and policy studies). Drafts of the manual were shared with the partners for comment and the lessons applied in the action research collaboration - an iterative, cyclical process of research and validation.

The overall project aim was to identify the potential of ethical trade to support the livelihoods of forest dependent people. There are different types of ethical trade (a field which is also dynamic and rapidly changing), and many different ways of categorising 'forest-dependent people', but the project synthesized generic findings from the different strands of activity to produce the final draft manual (2001). Feedback on the final draft was gathered in an extensive consultation exercise (involving 85 specialists and ATO representatives, and a workshop presentation to the small buyer/NGO consultative group). The consultative group also provided feedback throughout the project.

The impact studies analysed the range of stakeholders involved at the local level (cocoa and brazil nut trades) and identified excluded groups, and the impact of the scheme on stakeholder access to different assets and livelihood strategies.  The findings were published in a journal article (International Forestry Review).

In South Africa the main focus was on involvement of small timber producers in the national timber certification standard-setting process, but much of the general lesson learning on ethical trade emerged from the collaboration with Oxfam (eastern Kwa Zulu Natal).

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Current Situation

Who are the Users?

The social impact studies have been widely cited and helped to persuade ATOs of the importance of integrating impact assessment into their schemes to maximise equitable livelihood impact and maintain credibility with consumers.

All of the project partners have taken up findings in their work in different ways.  In Indonesia the typology development process has helped LEI to better predict the relationship between different types of forest dependency and forest management to better prepare assessors/expert panels prior to certification. 85 organisations reviewed copies of the draft manual and many have used the lessons in their work (e.g. IIED on fair trade timber).

Methodologically, the studies were innovative in combining analysis of both ethical and conventional trading chains, primary stakeholders and livelihood impacts. The approach has been used by NRI in other innovative work on ethical trade impact assessment (e.g. social impact of codes of practice in agribusiness, a DFID funded 4 year project), and was a key influence on the Ethical Trading Initiative methodology in its code impact assessment (2004-6). Other 'ethical trade' organisations have increased their focus on assessing impact: Fairtrade Foundation; ISEAL Alliance - International Social and Environmental Accreditation and Labelling Alliance (includes the FSC); Fairtrade Labelling Organization International; Food and Agriculture Organisation (summarized social and environmental certification impact studies).

Wider uptake of the Outputs has been limited because the manual was not published, but there is increasing interest in the potential of forest product commercialisation to support rural livelihoods and uptake opportunities abound with organisations supporting small forest enterprises.

Where the outputs have been used:

The Outputs are being used by partner organisations and many NGOs/ATOs are also working on related topics providing possibilities for collaboration:

• USAID FRAME programme:  sustainable commercialisation of natural products (6 case studies, national and international workshops - Latin America, the Philippines, Africa) - 2006.
• FAO NGO manual on community tree/forest product commercialisation.  Field-tested in 11 countries. Market analysis/enterprise development methodology.
• FAO non-wood forest programme NTFP certification studies (Latin America, Africa), (2003).
• Falls Brook Centre - on-going research on NTFP certification/ market development.  Global focus group conducting field trials, policy research, and lobbying.
• Rainforest Alliance Sustainable NTFPs Programme - research, market development (Central America/Nepal) for certified NTFPs, resource manual.  Central America/Mexico sustainable timber, bananas, coffee project (USAID).
• Rainforest Alliance: piloting five market linkage models for communities/small landowners to achieve sustainable forest management/wood product certification.
• IIED project (2005-7) with WWF, FSC and FLO on small forest enterprises and poverty reduction/sustainability, especially fair trade timber. Fieldwork - Brazil, Kenya, Mexico, Papua New Guinea. 
• SNV-FLO partnership (2006) to enhance access of workers/producers to timber/NTFP export markets on Fairtrade terms (Mekong, Himalaya, Amazon-Andes, Central America, West, East, Southern Africa).
• CIAT-Colombia - developing market options for rural agroenterprise via participatory analysis.
• Proforest - manuals on FSC processes/timber certification.
• ISEAL: coordination of members' impact assessment.
• Stellenbosch/Pennsylvania University research on NTFPs (Mozambique, South Africa). 
• AfricaNow: small enterprise commercialisation, ethical trade audit training.
• South Asia: company set up by ex-team member, assisting small forest enterprises to gain certification.

Scale of Current Use:

Pinpointing the direct use of the project lessons as presented in the Manual is difficult as we were not in contact with all of the organisations to which it was distributed. We do know that use of the Outputs has been varied, but has occurred widely amongst project partners.

For example:

• Oxfam-Peru reviewed the ethical trade scheme in brazil nuts and requested that the ATO identify ways of including excluded stakeholder groups (female brazil nut shellers, brazil nut porters) rather than just benefiting concession holders.
• Care-Ecuador employed the ethical business planning in participatory planning with the community forest association.
• Oxfam in Kwa Zulu Natal used their improved understanding of market issues to reappraise the viability of some of the projects they were supporting and decided some were unfeasible.
• LEI changed their social typology variables (based upon case study evidence) and their preparation of assessors/expert panels.

More broadly, organisations that assist rural enterprises have taken up the findings (e.g. widespread acceptance of the need for ethical trade impact assessment).

The valuable content of the draft manual has been less widely used, because of non-publication. Draft versions of the manual have been received enthusiastically and there are a number of areas and pilots in which other organisations have made progress on relevant themes (NTFP commercialisation and certification, timber certification) where collaboration on reaching ethical markets specifically should be undertaken to fully maximise project poverty impact. 

Policy and Institutional Structures, and Key Components for Success:

The project developed its own networks for advice and dissemination (e.g. via the UK Tropical Forestry Forum which organised the small buyers and NGO groups, via project partners etc), and build up dissemination lists (e.g. approaching the FAO non-wood news programme to request access to their database etc). Despite limited resources within the project for dissemination of findings, two series of briefing papers were produced: an NRI series of Natural Resources and Ethical Trade Briefing Papers and a collaboration with FRP which produced briefing papers targeted at different audiences (e.g. developing country governments, donors, NGOs, etc) (www.nri.org/NRET/publications.html). Collaboration with both BBC World TV (Earth Matters Series) and BBC World Service (Hands On Series) led to coverage of the ethical cocoa study in a TV programme and a dedicated radio programme, both with global broadcast.

The project found that it is important to work with existing NGOs and ATOs that are either already working with forest producers or harvesters and/or are interested in exploring the opportunities presented by ethical trade for such groups. This was found to be the case in the studies (on impact, financial viability etc) as well as in the action research phase, and would be the case in further efforts to put this research into use. These NGOs and ATOs have already established relations of trust with the producer groups and are already engaged in capacity building exercises in relation to commercialisation of forest products. Clearly, reaching international ethical markets requires meeting even more demanding standards and having access to even more detailed and relatively inaccessible market information - hence the vital role of supportive NGOs and ATOs. This was the reason that the draft ethical trade manual was designed to help NGOs and ATOs in their capacity building work with producer groups. 

The project also identified some of the specific demands of the ethical markets, beyond those of conventional commercialisation opportunities and the need for a good understanding of the policy framework, nationally and internationally, especially in target markets (this led to policy briefings being produced on issues such as sanitary and phytosanitary standards).

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Environmental Impact

Direct and Indirect Environmental Benefits:

The project was centrally concerned with environmental impact - as it sought to identify how far and in what ways ethical trade could support sustainable rural livelihoods. In the Peruvian brazil nut impact assessment it was found that no monitoring of resource extraction was occurring; this is needed in all natural product harvesting schemes, including ethical trading. As a route out of poverty with simultaneous increased valuing of the forest resource, the particular ethical schemes considered were found to have partial benefits, but not to represent a force that alone could counteract those that are leading to forest degradation. However, as a contributing factor, ethical trade schemes can play a vital role in providing a use for forest products, whilst benefiting local livelihoods. Integrating impact assessment in ethical trade schemes is essential, both on social and environmental issues, with opportunities for participatory approaches to be developed in terms of resource monitoring and wider impact assessment. The draft manual is aimed at improving support to sustainable NTFP and timber commercialisation, promoting both livelihoods and forest conservation.  Publication of this manual would help ATOs and NGOs in their efforts to assist producer groups realise this goal and to conserve forests.

Adverse Environmental Impacts:

None.

Coping with the Effects of Climate Change, or Risk from Natural Disasters:

The project found that ethical trade schemes in forest products can help poor rural producers and harvesters to diversify their livelihoods strategies or intensify their existing strategies - enhancing the returns on their trade. In Ecuador, smallholder cocoa producers were benefiting from more transparent and fairer weighing and grading, better prices, capacity building support, buyers in remote areas where conventional traders might not reach etc. This kind of livelihood diversification and improvement will enable smallholders and harvesters to adapt to climate change and further support is required in their commercialisation activities - particularly in exploring the potential of different crops and new ethical markets.

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Annex

Appendix 1: Structure of the Ethical Trade Manual

1. Introduction How to use this manual Who is this manual for?

2. What is ethical trade? Introduction to ethical trade  (definitions, differences between initiatives, how ET is similar to conventional trade) etc Why engage with ethical trade - ethical trade for producers, traders, intermediary organisations

3. Ethical trade options in agriculture and forestry - Overview Forest and timber certification Organic Fair trade Conservation driven trade Other (include integrated and updated case studies).  Include best practice on lobbying, campaigning, networking etc relating to ethical trade)

4.  Developing an ethical trade strategy The key steps proposed for developing an ethical trade  strategy are as follows: Clarifying organisational vision, values, mission and reviewing whether ethical trade might form one of these options. Identifying entry points - If target groups are already identified (ie. An NGO is already working with a specific community group) then move to participatory action research to explore potential development options.  If not already working with specific target groups then make a selection (refer to overall organisational objectives, potential opportunities for ethical trade, etc).  Social assessment and participatory fieldwork to explore target group priorities, and potential products for marketing if this forms a priority. Compare ethical trade options with target group Carry out economic assessments to establish potential market viability Carry out environmental assessment to consider potential environmental impact Review organisational implications to ensure that the intermediary organisation can provide sufficient support to an ethical trade scheme (e.g. review capacity, different roles e.g. policy lobbying, support for marketing etc). Develop a strategy (bring together vision, change sought, business plan, perceptions, issues, interests, strategies, inclusion, allies and potential partner organisations, risks, action plan, assessment).  Getting started - into action Integrating impact assessment

5.Clarifying objectives and reviewing potential areas for action Review organisational mission, approach, resources, commitment to ensure these are clear and shared.  How might ethical trade fit within this outlook? Consider principles underpinning sustainable development that might need to be considered: Equity, Sustainability and viability? Consider a range of possible roles for external organisations and the different strategies that might be available (e.g. different ethical trade options, ethical trade advocacy, acting as trader etc).

6. Identifying entry points If target groups are already identified (ie. An NGO is already working with a specific community group) then move to participatory action research to explore potential development options.  If not already working with specific target groups then make a selection (refer to overall organisational objectives, potential opportunities for ethical trade, etc).   Consider potential strategies and locations.

7. Social assessment and participatory fieldwork to explore target group priorities, and potential products for marketing if this forms a priority. Participatory approaches - exploring the objectives of local people Working with producers to understand their needs and capacities If these objectives include ethical trade, or your organisation is already working with a producer group continue by exploring potential products (ranking, mapping etc) or improvements that could be made. Consider potential impact of marketing these products on different social groups (e.g. distribution of benefits, areas of intended and unintended impact, tangible and intangible benefits etc). Compare ethical trade options and strategies with target group

8. Compare feasibility of differing ethical trade options in each context Use background knowledge on the opportunities and limitations of the different approaches - international and national market assessments (business basics tools) Carry out economic assessments to establish potential market viability using business basics, ethical business planning and market research Discuss this information with the target group Identify whether potential products exist for ethical marketing

9.  Policy analysis and advocacy as a strategy Policies influencing ethical trade, people and forests (practical guidance on the types of policy that benefit/harm ethical trade and that might need to be considered to inform planning and implementation) Policy change advocacy (practical advice on lobbying strategies, from annex 4, sustainable forest standards example).  Decide whether your organisation needs to include action on policy in its strategy.

10. Environmental assessment Map current institutions and patterns of resource use, access and control  Explore thresholds for sustainable resource use Assess potential environmental impact including trade-offs amongst different stakeholders. If necessary identify mitigating activities.

11. Consider the organisational implications Given the potential strategies identified for action (e.g. products chosen, methods of marketing, resources required) review the organisational implications in terms of organisational capacity (context, organisation, programme, relationships).  Identify training needs, capacity buildingrequirements, funding sources

12. Finalise the strategy Decide what role your organisation will take and finalise strategy (bring together vision, change sought, business plan, perceptions, issues, interests, strategies, inclusion, allies and potential partner organisations, risks, action plan, assessment).

13.  Getting started - putting the strategy into action Tips for getting started

14. Integrating impact assessment Relevance, rationale and approaches Participatory self-assessment and other indicators

15. Conclusion Brief summing up.

16 Resources Further reading Sources of info (websites and contact details) Basic terms - mini-glossary

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Relevant Research Projects, with links to the
Research for Development (R4D) web site
and Technical Reports:

R4D	Project Title	Technical Report
R7285	Viability and potential of ethical trading initiatives as a means of enhancing and safeguarding income generating opportunities for forest-dependent people
R8305	Developing biometric sampling systems and optimal harvesting methods for medicinal tree bark in southern Africa.
R7925	Commercialisation of non-timber forest products: factors influencing success