See the on-line version of this Baby Milk Action press release at  http://www.babymilkaction.org/press/press23sept05.html for links to supporting documents.

Fairtrade mark could be damaged by Nestlé application warn campaigners

Leading campaigning organizations are warning of the risks of the Fairtrade Foundation awarding a Fairtrade mark to Nestlé, the UK's most boycotted company (note 1), recently found to be the world's ‘least responsible' corporation in a global internet vote (note 2).

Nestlé is the target of a boycott because of its aggressive marketing of baby foods and campaigners also highlight its trade union busting activities, involvement in child labour, environmental destruction of its water bottling business, use of GM technology and other causes of concern (note 3).

Public statements from Nestlé, one of the world's big four coffee producers, demonstrate it is ideologically opposed to Fair Trade as anything other than a niche market and its use of the mark, if awarded, will undoubtedly be used as part of the company's public relations strategy to divert criticism, claim campaigners (note 4).

Given the strength of feeling Nestlé abuses arouse in ethical shoppers campaigners suggest that the Fairtrade mark will be devalued by association with the company, so hitting genuine Fair Trade companies and demotivating those who have been promoting Fair Trade, often as a parallel strategy to promoting the Nestlé boycott.

Patti Rundall OBE, Policy Director at Baby Milk Action, which coordinates the international Nestlé boycott, launched by groups in 20 countries, said:

“To give a FT mark to a company whose baby food trade systematically violates child rights on such a massive scale, contributing as it does, to the deaths of millions of children, would make an absolute mockery of what the public believes the Fairtrade Mark stands for and would show disregard for the feeling of thousands of people who've worked hard to promote the Fair Trade principles. It would certainly bring the mark into disrepute – something the Fair Trade rules themselves don't permit." (note 5)

Nestlé is singled out for boycott action because independent monitoring conducted by the International Baby Food Action Network (IBFAN) finds it to be the largest single source of violations of the World Health Organisation and UNICEF's International Code of Marketing of Breast-milk Substitutes and subsequent, relevant World Health Assembly Resolutions. As the biggest food company in the world, with a $67 billion turnover and thousands of brands, Nestlé is powerful. It dominates the baby food market and takes the lead in attempting to undermine implementation of these measures by governments. Nestlé operates in just about every country in the world, promoting its brands where it can in every hospital, clinic and school.

It is seen as inevitable that Nestlé will use the Fairtrade mark to try to cover up its bad practice and link its name to prestigious charities. When Oxfam launched a campaign in defence of coffee farmers in 2003 Nestlé shared the platform and claimed in public statements and to shareholders it was working in partnership with Oxfam while delivering virtually nothing Oxfam was calling for. In 1999 Saatchi and Saatchi advised Nestlé to “aggressively advertise its links with charities and good causes” precisely to offset bad publicity (Marketing Week Feb 1999) Its latest PR offensive is The Nestlé Commitment to Africa report in which Nestlé claims that it monitors its practices scrupulously and takes corrective action immediately on the tiny number of shortfalls that occur (see Nestlé's Public Relations Machine Exposed at  http://www.babymilkaction.org/) .

John Hilary, Campaigns and Policy Director at War on Want, issued a statement saying:

"The fair trade movement was set up to challenge the practices of companies like Nestlé, which have traditionally amassed huge profits by paying their suppliers rock bottom prices. Nestlé still opposes any expansion of fair trade beyond the niche market it currently enjoys, arguing in its recent coffee report against the mainstreaming of fair trade principles. How can such a company deserve the fair trade mark?"

Benedict Southwarth, Director of the World Development Movement, said in a statement:

"The launch of a Nestlé FAIRTRADE coffee is more likely to be an attempt to cash in a growing market or a cynical marketing exercise than represent the beginning of a fundamental shift in Nestlé's business model. If Nestlé really believes in FAIRTRADE coffee it will alter its business practices, lobbying strategies and radically overhaul its business to ensure that all coffee farmers get a fair return for their efforts. Until then Nestlé will remain part of the problem not the solution.”

Julian Oram, Policy Officer at ActionAid is quoted in the Guardian saying:

"Anything that leads to companies such as Nestlé having a fairer relationship with suppliers is good. But the FT mark could be used as a fig leaf to deflect attention away from some of the other issues that it has not resolved. If this is a genuine attempt to introduce fairtrade sourcing throughout all of its product lines, it's a step in the right direction and definitely welcome. But we have to bear in mind that the company might be doing this to be seen to be ethical, so it can get into places it doesn't sell in now, such as student unions and church groups. But if it's going to remain a fraction of its total coffee market, it is being done for the wrong reasons."

For further information

Baby Milk Action, Patti Rundall (Policy Director) on 07786523493 or Mike Brady (Campaigns and Networking Coordinator) on 07986 736179.

Fairtrade Foundation,  http://www.fairtrade.org.uk/

Notes for editors
1. The Guardian reported on 1 September 2005: "What do Nike, Coca Cola, McDonald's and Nestlé have in common? Apart from being among the world's most well-known brands, they happen to be the most boycotted brands on the planet. That finding came from this week's global GMIPoll, an online opinion poll that surveyed 15,500 consumers in 17 countries. Nestlé emerges as the most the most boycotted brand in the UK because of what respondents consider its "unethical use and promotion of formula feed for babies in third world countries."

2. Nestlé won a global internet poll for the world's 'least responsible company' coinciding with the World Economic Forum in Davos in January 2005. Nestlé received 29% of the votes. This was more than twice that of joint second Monsanto and Dow Chemicals (of Bhopal infamy), each on 14%.

3. For information on baby food marketing malpractice see the codewatch and boycott sections of the website  http://www.babymilkaction.org/. The Corporate Watch website has a detailed report on Nestlé. The BBC Radio 4 programme Face the Facts reported on the destruction caused by Nestlé's water bottling activities in Brazil and the US on 22 July 2005. Swiss church and campaigning organisations are holding a tribunal into Nestlé's trade union busting activities in Colombia and other corporate crimes on 29 and 30 October 2005.

4. Nestlé's 2005 coffee report states: "Nestlé recognises that Fair Trade is a useful way to raise consciousness about the coffee issue and for individual consumers to express their solidarity with a group of coffee farmers in the developing world. However, if on a broad basis, coffee farmers were paid Fair Trade prices exceeding the market price the result would be to encourage those farmers to increase coffee production, further distorting the imbalance between supply and demand and, therefore, depressing prices for green coffee. Worldwide, the Fair Trade movement accounts for less than 25 000 tonnes of green coffee. Nestlé's direct purchasing accounts for 110 000 tonnes of green coffee per year. This system enables the farmer to retain a greater portion of the price paid by Nestlé, therefore improving his income." (see page 6). Note that Nestlé's claim about buying direct does not indicate it is paying a fair price for the coffee. The farmer would receive a greater portion of the price paid by Nestlé even if the company paid less than commercial market rates.

5. Excerpt from FLO Trader Application Evaluation Policy

6.2.5 Bringing FLO Fairtrade into Disrepute

FLO reserves the right to exclude traders that engage in behaviours that, even though are not directly related to Fairtrade transactions, are so bad that FLO's association with the trader would seriously undermine the legitimacy of FLO Fairtrade in the minds of consumers. FLO shall take into consideration any relevant information it receives regarding the trader from FLO National Members and others. To justify denial of the application, the behaviour would have to be severe and the trader has not taken any measures to rectify the situation. In some cases, this criteria may cause the applicant to take corrective and preventative action. FLO therefore takes a rehabilitative approach to traders, and will respond to any criticism of their acceptance in this manner. Therefore, where the applicant has engaged in serious and repeated;

• predatory commercial practises that resulted in disadvantage to producers,

• fraudulent product labelling; or

• contravention of core ILO covenants

o Covenant 87 Freedom of Association and Right to Organise, 1948

o Covenant 98 Right to Organise and Collective Bargaining Convention, 1949

o Covenant 100 Equal Remuneration Convention, 1951

o Covenant 111 Discrimination, 1958

o Covenant 29 Forced Labour, 1930

o Covenant 105 Abolition of Forced Labour Convention, 1957

o Covenant 138 Minimum Age Convention, 1973

o Covenant 110 Plantations Convention, 1958

o Covenant 155 Occupational Safety and Health Convention, 1981

for which it has not taken any measures to rectify, then the application may be denied. The test is intentionally made difficult in order to prevent spurious denials of trader applications.All FLO Trader Contracts shall provide that the trader shall not engage in any of the above activities that might bring FLO Fairtrade into disrepute.