When we started explaining the idea that would become Darvaza Teas, the immediate comment was about getting a fair trade certification. Of course, we looked into it.
After drinking many litres of tea during countless hours spent studying the fair trade certification, we decided that we would not apply for one.
We are certain to do the right thing, but we also understand that taking this decision while creating an ethical business requires some explaining. So here is the explaining.
Put it simply, we have three arguments: the quality, and the fact that the Fairtrade system is about both too little and too much money.
Too little money
The Fairtrade system exists to ensure a guaranteed minimum revenue to the producers of (mainly) developing countries. To do so, it establishes a “Fairtrade minimum price” and a “Fairtrade premium”. The first one is the minimum price that producers should receive when selling their products. The second one is a “top-up” to the purchase price, also paid to the producer, to help their business, or the local community, invest in their own development.
The idea is that if the market price is higher than the Fairtrade minimum price, then the producers should (but are not guaranteed to) receive the market price. If the market price is lower, then they are guaranteed to receive the Fairtrade minimum price.
For conventional (non-organic) Indian tea, the Fairtrade minimum price is set between 2 and 2.2 USD/kg. That is between £1.54 and £1.70 for each kilo of tea (at the time of writing). The Fairtrade premium is set at 0.5 USD/kg, which is £0.39. All together, that means that a kilo of tea should cost between £1.93 and £2.09.
This is supposed to cover the total production costs of a producer, whether it is a small producer, a business, etc. In other words, this includes running their operations, plucking the tea, processing it, paying the salaries, etc. Even taking into account the lower cost of life in a country such as India, this is very little money.
This brings us to our own prices. At Darvaza Teas, we pay a minimum of £30/kg. A high quality tea isn’t made by magic in an instant. Beautiful, long leaves can remain full because they were processed with care, not by machines but with the help of machines. This takes time. This takes people. And both cost money.
We pay that price happily because it is the just cost of a work carried with care, expertise and professionalism.
Isn’t it what fair trade is about, after all, to pay the fair price for a good work?
Too much money
There is still another side of the Fairtrade system. A certification costs money. Every year. To the seller (like Darvaza Teas) as well as to the producer (like the Dharmsala Tea Company). And unfortunately, it doesn’t necessarily takes into account the difference in living costs in different countries, which makes it an expensive system to get into for any producer.
How much money are we talking about? For example, an Indian tea plantation employing between 50 and 100 people (for example) must pay around £2,700 the first year, and £2,500 the subsequent years. In a similar manner as the organic certification, this is an investment on their future that not all small producers can afford, and we don’t want to discriminate against them.
Some purchasing businesses choose to help with these costs, and that is a great thing to do. But in general they are big companies, while we are still a small one. If we were to do the same thing, our prices would increase by 20 to 30%.
Above all, we want a tea that is priced fairly to our producers and to our customers, and we believe that we achieve this balance by
- paying our partner in the tea plantation a just price, that reflects the real cost of production as well as the high quality of the tea, and
- limiting the retail price that you will pay.
Doing the right thing is a small common effort: it takes all of us to achieve the results that each of us dream about, like a fairer pricing for a fairer society.
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