Annual report 2011 | Fair Trade Original by Fair Trade Original

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Annual Report 2011

Contents Preface 3 About this Report 5

Copy: Fair Trade Original

The organization Strategy Sustainability targets Care for the environment Working at Fair Trade Original

9 11 13 15

Market developments Financial results for 2011 18 Food 20 Gifts & Living 24 Marketing 26

Cooperation with trading partners Trading themes Development programmes Fair trade principles

Colophon

31 33 36

Annual Accounts 2011 Annual Accounts for Fair Trade Original, 2011

GRI Index

Photos: Fair Trade Original Henne Vermeer, page 6 Sjoerd Eickmans, page 10 and others Design and layout: Studio Bassa, Culemborg

Fair Trade Original Beesdseweg 5 PO Box 115 4100 AC Culemborg The Netherlands Telephone +31 (0)345 54 51 51 Fax +31 (0)345 52 14 23 info@fairtrade.nl www.fairtrade.nl

Preface Although 2011 was a year in which Fair Trade Original was confronted by a phase of uncertainty, the organization was nevertheless able to record a profit. This uncertainty was in due to two factors. Firstly, the loss of an annual government subsidy of an average of more than € 1.5 million, which greatly reduced the feasibility of carrying out development programmes for and with the trading partners. Secondly, the economic crisis resulted in increasing purchase prices of fair trade raw materials which could be passed on to our Dutch food retail customers only with difficulty, with a time lag and, in some instances, incompletely. This last problem imposed pressure on the gross margins during the first six months of the year. During the year under review our organization made targeted and efficient use of the limited financial resources for development projects at our producers that would achieve the greatest effect on the market side. The selling margins improved gradually during the second six months of the year. As a result of the strong cost awareness throughout the organization and increasing consumer interest in fair trade products, Fair Trade Original – and in spite of the economic crisis – was ultimately able to record a net profit of € 39,000 after taxation.

Trading operations The marketing operations were focused on new products, alongside the enhancement of the position and profile of existing products by means including TV commercials. One of Fair Trade Original’s most important

activities is to develop and introduce new products that meet the fair trade criteria. A striking development in this field was the introduction of a range of Asian culinary products in the autumn of 2011. The continuing retail price competition between the supermarket chains has consequences for Fair Trade Original’s products in the food retail channel. While turnover remained at a reasonable level, sales – in particular, of coffee – came under substantial pressure. The issue of product licences for Van Oordt portion packs in the Food Service channel, an initiative taken at the end of 2010, has had highly favourable results. A comparable initiative for coffee in this channel, with United Coffee, achieved less rapid results but offers sufficient prospects for the future. The upgrading of the Gifts & Living product range, in which the design and functionality of the products plays a continually increasing role, resulted in increasing sales in the (international) mainstream market. The cooperation with Piet Hein Eek is increasingly bearing fruit. A second programme has been started with home cushions developed by the renowned designer Anne-Claire Petit. A licence agreement has also been concluded with the Claudio Ferrici bag brand: a range of ecologicallytanned leather goods marketed under the Fair Trade Original by Ferrici that has been developed was launched on the international markets in 2012.

Anita van Heusden and Richard Poulissen of Ferrici during their visit to EMA, the Indian workshop that produces the bags marketed under the Fair Trade Original by Ferrici label. The cooperation with Ferrici enabled Fair Trade Original to identify new potential applications for the ecologically-tanned leather from India.

Sustainability

The future

Fair Trade Original took the initial steps in a number of policy areas which give further shape to the organization’s sustainability commitment. Two examples are: A programme has been initiated to place the provision of a living wage to the employees of fair trade producers higher on the agenda. In most instances a living wage is higher than the minimum wage that is often adopted. A trial project has been initiated in the fair trade rice chain for an integral study of the chain, from the use of raw materials right through to the shelves in the shops, to review measures that will reduce and/or compensate for the chain’s environmental impact.

2012 will be a year of structural changes: we will make three material changes – we will find a definitive solution for the position of the Gifts & Living Business Unit, reposition the Fair Trade Original brand and find new, fitting accommodation for the organization by the end of the year – that will require a great deal of additional attention, time and effort. In addition to these largely operational issues, in the autumn of 2012 we will adopt a long-term strategy designed to give permanent future shape to trade that develops. Mike Jansen

Organizational developments The search for a suitable cooperation or takeover partner for the Gifts & Living Business Unit in the mainstream segment of the market for the Business Unit’s products did not yield adequate results and was rounded off at the end of 2011. Alternative options have been worked out in more detail during the first quarter of 2012, in preparation for the definitive decision-making. A definitive solution for the future of the Gifts & Living Business Unit shall need to have been achieved by no later than the end of 2012. The involvement of the employees and the stability of the organization made an unmistakeable contribution to the profit recorded for 2011. The favourable contribution made by the Supervisory Board, the members of which do not receive an emolument, in its supervisory and advisory roles also made a contribution to this achievement.

Managing Director Fair Trade Original

Fair Trade Original is taking part in a study of the Thai rice chain within the scope of the organization’s sustainability policy. Aim is to review the potential for the reduction of the chain’s environmental impact.

About this Report This Fair Trade Original Annual Report reviews all the relevant developments that took place in 2011: it is based on the G3 guidelines of the Global Reporting Initiative (GRI) and the guidelines issued by the Dutch Accounting Standards Board. The information is intended for interested customers, consumers and members of the public, subsidy providers, cooperation partners and other stakeholders. The selection of issues of importance is based on the relevant GRI issues and an internal and external evaluation of the Annual Report 2010. The information in this report can be accessed by referring to the relevant section or via the GRI table that refers to the relevant page numbers. The GRI has adopted levels of application in the G3 guidelines. Fair Trade Original hereby declares that the C level of the G3 guidelines is applicable to its Annual Report 2011.

Scope of this Annual Report Section 1 of the Report provides an insight into the organization and its environment. This Section also reviews the strategic decisions that have been made to enhance both the fair trade principles throughout the chain and strengthen the Fair Trade Original brand. A new element in this Report is the inclusion of six explicit sustainability targets formulated by our organization. Section 2 reviews Fair Trade Original’s Dutch operations. Section 3 reviews Fair Trade Original’s activities at the trading partners in developing countries. The scope of the review of the environmental impact of the operations is limited to the Netherlands, where the organization has direct control of and can influence the impact. The environmental impact of the activities of the suppliers and

trading partners is reviewed solely on the basis of examples and is of a qualitative nature.

Collection of information The information about the departments was obtained from input from departmental staff and from qualitative and quantitative questionnaires. These questionnaires were drawn up on the basis of the G3 indicators and the organization’s insights. Most of the information about the organization’s operations is based on invoices or on management information and records maintained by the organization or submitted by the suppliers on request. The necessary conversions of figures were carried out on the basis of factors from reliable sources and in accordance with specified protocols.

External evaluation Fair Trade Original’s Annual Report 2010 was the first Annual Report to comply with the guidelines of the Global Reporting Initiative (GRI). This bulky Report gave comprehensive attention to the various sustainability themes and reported the organization’s activities during the year under review. Fair Trade Original subsequently attached importance to determining whether this reporting method offered added value for the readers. Prior to the preparation of this Annual Report 2011, Fair Trade Original requested a number of stakeholders to give their opinion of the Annual Report 2010. We hope we have made good use of their valuable input, together with the lessons learnt from an internal evaluation, in achieving an improvement in the Annual Report 2011.

Online Annual Report This Annual Report is published solely online at www.fairtrade.nl. The annual reports for previous years are also available from this website. Clicking on hyperlinks included in the Annual Report bring you to other relevant pages in the Annual Report (the underlined text shown in orange) and to supplementary information elsewhere on the website (the underlined text shown in grey).

Your opinion on this Annual Report We hope that you will find this Annual Report interesting. We welcome your response via jaarverslag@ fairtrade.nl.

The readers* found that the Annual Report gave a good impression of the organization’s operations during the year and was clearly written. They appreciated that, as an element of being open about the organization’s operations, the Report included points for improvement rather than being restricted solely to success stories. This approach has also been adopted for the Annual Report 2011. All readers were of the opinion that the Report was (much) too comprehensive and that it contained too much general and duplicate information. Many readers suggested that the targets and results should be visualized to a greater extent. The Annual Report 2011 meets these wishes in part: readers requiring general information are referred to the website, as a result of which the Report is restricted solely to a review of the progress achieved in 2011 and is much more compact. A number of points of criticism about the substance of the report were: the result fair trade achieved at the trading partners was not made sufficiently clear; the Report failed to make use of the opportunity to provide more information about the trading partners’ environmental performance; consumers were insufficiently involved in the entire fair trade process. The first two of these points are due to Fair Trade Original’s confrontation with the organization’s limitations: quantifying all the developments at such a large number of trading partners – in so many regions and in so many product groups – is neither feasible not affordable for a

About this Report

relatively small organization. However, measures have been implemented to address the third point in 2012: a consumer panel will be formed that shall be involved in new deliberations and developments at an early stage. One of the stakeholders stated that the Report made clear just how much effort and stamina was needed to achieve material changes in the trade chain. The Annual Report 2011 reveals that this is applicable to all the players in the chain. * We would like to express our gratitude to Janne Mulders, Centraal Bureau Levensmiddelenhandel (‘Netherlands Food Retail Association’), Monique Sparla, consumer, Victor de Lange, CREM, and Monique Bout, Den Bosch Worldshop. In 2012, Fair Trade Original will form a consumer panel to involve consumers in the Foundation’s deliberations and developments at an early stage.

Fair Trade Original: the organization

Fair Trade Original: the organization Fair Trade Original’s vision and mission state that the organization intends to contribute to the reduction of poverty by means of development trade. In endeavouring to achieve this objective the organization plays a specific role in sustainable entrepreneurship. In its role as wholesaler the organization markets a broad range of fair trade coffee, food and gifts & living products under the Fair Trade Original brand to shop formulae and customers in the Gift Retail, Food Retail, International and Out of home sales channels. The products are purchased from selected trading partners, with due regard for the ten fair trade principles adopted at an international level. FLO Cert conducts audits for the Max Havelaar Seal of Approval to verify compliance with these principles and EFTA fair trade Assessments are carried out for those products that do not (yet) bear the Seal of Approval. Fair Trade Original operates within a broad (international) fair trade context in which numerous organizations make a contribution to conducting fairer trade. Fair Trade Original wishes to make a material contribution by cooperating with these organizations and further deepening its fair trade expertise. The organization, in its role as an importer and wholesaler and as a development trade organization, complies with the relevant external guidelines and is audited to verify compliance with the guidelines.

Management Board and Supervisory Board In 2011, the Fair Trade Original Foundation, formed in 1959 and based in Culemborg, worked on its mission with the some 50 staff of the Food Business Unit, Gifts

& Living Business Unit and staff departments who are managed by the Managing Director, Mike Jansen. Mike Jansen is also Chairman of the Management Team. Fair Trade Original, as a development trade organization, has decided to set the remuneration of the Management Board at a level within the guidelines formulated by the Ministry of Foreign Affairs for organizations that receive development cooperation subsidies, even though Fair Trade Original no longer receives a subsidy from the Ministry. Fair Trade Original’s Managing Director is appointed by and reports to the Supervisory Board, which is comprised of five members who do not receive an emolument. At the beginning of July 2011, Ms J. Schraverus, Mr H. de Grooth and Mr M.J.O. Delfortrie were reappointed for a further period of four years. The other members are Mr H.B.J. Mentink and Mr M.J. Roos. The Supervisory Board met on six occasions during the year under review. The Managing Director submitted the 2011 budget and business plan to the Supervisory Board in February. The Supervisory Board approved the Annual Accounts 2010 in April. The Supervisory Board concurred with the plans to search for a suitable cooperation or takeover partner for the Gifts & Living Business Unit. However, when these plans failed to achieve an adequate result it was decided, at the beginning of 2012, to draw up alternative options for the definitive decision-making on the future position of the Gifts & Living Business Unit. In 2011, the Supervisory Board concurred with Fair Trade Original’s development strategy 2012-2014 for the organization’s trading partners in Africa, Asia and Latin America.

Our vision Poverty and the unequal distribution of wealth constitute major obstacles to the well-being of individuals and the communities in which they live, impede development and create a continual source of tension and contrasts between individuals and groups in society.

Our mission Fair Trade Original intends to make a positive contribution to the struggle against poverty by means of trade development in cooperation with selected trading partners and producers in developing countries. When conducting trade we attach paramount importance to profitable operations, sustainable relations, autonomy, and self-respect for the trading partners and producers.

Works Council The membership of Fair Trade Original’s Works Council, which has four members, remained unchanged in 2011. The Works Council held eight meetings with the Managing Director to discuss current and future developments in the organization. In May, the Works Council issued a favourable opinion on the external agency that was to search for a suitable cooperation or takeover partner for the Gifts & Living Business Unit. For more information about the organization, click here. For more information about fair trade, click here.

Strategy Fair Trade Original’s strategic decisions shall need to result in the achievement of the organization’s objective, namely trade that develops. The organization perceives opportunities and growth potential in the following areas: Contribute to a responsible approach to consump-

tion, with due regard for People and Planet. In making this contribution the organization plays a role in an important social trend and endeavours to enhance its profile by clear positioning, USPs and the creation of added value within the fair trade sector. Trade is then determinative, since increased sales result in higher income for the trading partners. This requires belief in the strength of the Fair Trade Original brand and reaching carefully-considered decisions which, in taking account of People and

Planet, contribute to the successful expansion of the trading operations. Draw attention to fair prices, fair wages and appro-

priate working conditions. This enhances the demonstrability of the fair trade claim. The organization guarantees the reliability and autonomy of its trading operations by refraining from making concessions on fair trade principles and by giving preference to external fair trade certification. Promote trade in fair products and enhance sustai-

nable trading relationships. Fair Trade Original gives this objective shape by opting for sustainable solutions even when confronted with setbacks. The organization invests in longer-term relationships with its trading partners in which dilemmas are opened to discussion in an endeavour to cooperate with the trading partners in finding a solution. Develop new fair trade chains. One of the important

programmes within the scope of this objective is the provision of support to trading partners seeking fair trade certification that will enhance their appeal to a larger number of customers. Fair Trade Original’s development activities are an integral element of the organization’s operations. Introduce new fair trade products. This is subject to

two conditions, namely that the products to be developed must offer suitable prospects and must fulfil the expectations of consumers and the sales channels.

Fair Trade Original: the organization

No prospects for a solution Eswatini Swazi Kitchen, producer of products including jams and chutneys in Swaziland, offers work to women in the company’s factory and at farms in the surroundings. Fair Trade Original had cooperated closely with this small company since 1996, cooperation which achieved results including the successful introduction of a food safety system (HACCP). A management change that took place a number of years ago had a detrimental effect on supplies of products to Fair Trade Original, with major delays, a lack of consistent product quality, insufficient control of food safety and shortcomings in compliance with the fair trade principles. Intensive consultations failed to achieve the necessary improvements. In 2001, Fair Trade Original was ultimately – and with great regret – compelled to terminate the trading relationship. Organizations in the UK and Swaziland are now working hard with Eswatini Swazi Kitchen on a restart. Fair Trade Original will, in 2012, continue to be involved with this company as a consultant.

At the same time, the organization is confronted with a number of challenges: Pressure on raw material prices. On the supply side,

Fair Trade Original and the organization’s trading partners are confronted with the increasing scarcity of natural resources, pressure on the rural sector and on food production (the security of food supplies), as well as the continuing pressure on raw material prices due to uncertainty about their availability. The risks incurred by Fair Trade Original’s producers and trading partners increase when their production costs increase and the selling prices fluctuate. As Fair Trade Original pays the organization’s producers and trading partners a fair price which covers the production costs the price of the organization’s products increases in proportion with any increases in production costs. Fair Trade Original then needs to maintain the margins at the level required to provide the necessary guarantees for the organization’s profitability. Fair Trade Original has implemented the following measures to ensure that the organization is able to continue to conduct a healthy financial policy to the benefit of all its stakeholders:

monitor movements in raw material prices; cover the currency and price risks accompanying the most important cash and goods flows; make the necessary adjustments as determined by analyses of the margins; provide advance financing for purchase orders from trading partners.

Fair Trade Original: the organization

Producers’ income position. A substantial proportion

of the world’s population continues to be confronted with poverty: the income of many producers and employees is too low to support their families. Fair Trade Original intends to make a contribution to fighting this poverty by trading in fair products, trade which responds to the increasing attention the trade and consumers are giving to a fair wage for the makers of these products. Fair Trade Original’s guarantee of a fair price is intended to improve the producers’ income position. Nevertheless, many employees of fair-trade producer organiza tions continue to be confronted with difficulties in making ends meet. Fair Trade Original is endeavouring to help this group and achieve an improvement in their terms and conditions of employment: the organization perceives its duty to be to take the lead in achieving this objective and to request attention for the issue and the search for solutions. Cooperation in the chain is then essential.

Sustainable production. Climate change and the resultant more frequent and severe natural disasters can result in producers being confronted with substantial losses: their harvests are destroyed, workplaces severely damaged and production temporarily halted. Attention for sustainable production is increasing and the environmental requirements imposed pursuant to Fairtrade International certification are regularly made more stringent. Fair Trade Original helps producers who have incurred a loss to get their operations going again. The organization also regularly offers financial assistance. When developing new products the organization makes use of production and packaging methods which

The purchase price of coconuts also rose to unparalleled levels in 2011. This, in the opinion of Mario de Alwis, Director of MA’s Tropical Food supplier of Fair Trade Original’s coconut milk, was beneficial to the coconut farmers who supply produce under the fair trade terms and conditions. The fair trade approach provides for an improved distribution of the income from increased raw material process throughout the chain, as a result of which the coconut farmers now receive a larger proportion of the higher coconut prices.

have a lower environmental impact. The trading partners and producers regularly receive assistance with the implementation of more environmentally-friendly pro duction methods.

Insight into the added value provided by fair trade. The growing interest in sustainably-produced

products exhibited by consumers and retailers is accompanied by the emergence of a more critical attitude towards social initiatives such as fair trade. Consequently, providing an insight into the added value pro vided by fair trade is of importance to further growth in the sales of fair trade products. Clear communication of the results achieved by the development activities carried out at the trading partners and producers contributes to the provision of this insight. Fair Trade Original welcomes opportunities for improving fair trade by entering into dialogue with stakeholders and working together with them in searching for solutions to dilemmas that arise. Independent of subsidies. Fair Trade Original’s trading operations are also confronted with the current uncertain economic conditions and the resultant credit restrictions, lower consumer confidence and government cost-cutting measures. As a result, the organi zation has eliminated the dependency of its operations on subsidies and donations by reducing costs and financing its development activities almost entirely from its own funds.

Fair Trade Original: the organization

Sustainability targets In addition to the aforementioned strategic points for attention, Fair Trade Original has also formulated or increased the stringency of six sustainability targets. The emphasis is placed on targets which are related directly to Fair Trade Original’s work and sphere of influence and for which specific results are feasible. By 2015, food sales (in kilograms, including coffee)

shall have increased by 25% from the level in 2011 (from 3.6 million kg to 4.6 kg). In 2011, sales (in kilograms) fell by 4% from the level in 2010. Increased sales result in increased income for and a greater potential for the growth of the trading partners and producers that supply Fair Trade Original’s products. For this reason the organization continues to specify this target as its key target, which is now expressed in terms of a specific weight. A growth in sales is not always a representative measure of the achievement of this target, since increasing prices are not always to the benefit of the producers’ income (for example, in the event of increasing oil prices or increasing production costs in Europe). In addition, the development premium paid to food producers is based on the number of kilograms they supply to the organization. By 2015, the share of the food products purchased

directly from the producers shall increase to 35% of sales (2010: 25%; 2011: 28%). Many of Fair Trade Original’s finished products are completed in Europe for practical reasons relating to the product quality (the consumeby date, data and flavour), price and the production process (including composite products which contain ingre-

Fair Trade Original, in cooperation with the retail organizations, promotes sales of its products by means including shop displays of recipe cards. Since increased sales result in higher incomes and more potential for growth for the trading partners and producers in Africa, Asia and Latin America, achieving increased sales remains Fair Trade Original’s key objective.

dients from different countries and even different continents). However, at the same time Fair Trade Original is endeavouring to apportion more value to its trading partners in the chain. For this reason the organization has stipulated a target for the further increase in purchases of finished products directly from the trading partners. Gifts & Living products, other than a few minor exceptions, are now purchased directly from the trading partners and 100% of the coffee is purchased via third parties. It should be noted that Fair Trade Original also maintains contacts with the many trading partners that do not supply products directly to the organization and also carries out development programmes at these trading partners. By 2015 all producers and employees making Fair

Trade Original products shall receive a living wage. A living wage covers the minimum costs incurred in supporting a family (food, non-food and savings). In practice, this is often substantially higher than the statutory minimum wage prescribed in the various regions. Fair Trade Original has drawn up a programme designed to ensure that a living wage is feasible for everyone in the fair trade chain and is cooperating with international fair trade partners in the achievement of this objective. In 2012, the organization shall form a consumer

panel and a customer panel for the Worldshops, both of which will be consulted two or three times a year. Fair Trade Original intends to make increasingly frequent active requests for a contribution from these groups with the objective of involving the stakeholders in the organization’s operations. The organization has defined

Fair Trade Original: the organization

its stakeholders as trading partners/producers, consumers, customers, suppliers, staff, NGOs, authorities and donors. In 2012, the initial initiatives for a more intensive dialogue with these stakeholders were taken on the formation of a consumer panel and a customer panel. These panels have been formed to deepen the insights into these groups’ expectations of and wishes for the organization, working methods and products. During the coming years Fair Trade Original will

work on a structural improvement in the sustainability of its packaging by: carrying out advance analyses of the sustainability of the packaging options available for all products to be introduced in 2012; carrying out a sustainability analysis of one existing type of packaging or packaging line each quarter; conducting an annual evaluation with the organization’s Van Uden logistics partner to identify points for improvement in secondary and tertiary packaging; specifying quantitative targets for the reduction of the environmental impact of packaging to be achieved in 2013 and in each further year. Fair Trade Original’s work on the achievement of these targets is based on the results from a recent study of the feasibility of more sustainable Fair Trade Original packaging. Fair Trade Original will make the organization’s

environmental policy more stringent. The specific environmental targets are included in the section of this Annual Report that reviews the environmental results achieved by Fair Trade Original in 2011.

Fair Trade Original endeavours to apportion more value to the trading partners in the chain. Pursuant to this objective, the majority of the cane sugar produced in Mauritius for Fair Trade Original is now packaged in 500 g bags before leaving the country.

Care for the environment Attention to the environment is compatible with and an integral element of Fair Trade Original’s sustainability targets. Fair Trade Original focuses its environmental protection activities on the limitation of the environmental impact of various links in the chain, namely during the production in developing countries, during transport and within the Fair Trade Original organization.

Internal environmental reports Fair Trade Original reviews the organization’s use of paper (printed matter, company stationery) and consumption of gas, electricity, fuel and packaging materials. Consumption of paper Fair Trade Original’s paper bears the Forest Stewardship Council (FSC) Mixed Sources Seal of Approval. Doublesided copying and printing is adopted whenever possible. In 2011, the organization’s offices used some 1,180 kg of paper, 38% less than in 2010, primarily due to the greatly reduced use of company stationery. In 2012, Fair Trade Original will carry out studies including a review of the feasibility of the issue of invoices by e-mail. The organization is endeavouring to achieve a reduction of at least 10% in its use of paper. Gas consumption The premises Fair Trade Original currently lets for its offices are not insulated optimally and are equipped with obsolescent heating. Nevertheless, in 2011 Fair Trade Original consumed a considerably smaller volume of gas

than in 2010, primarily due to the relatively mild weather. The current lease expires after 2012. The energy consumption and insulation value of potential premises will serve as important criteria in the selection of new accommodation. Electricity consumption Fair Trade Original began to source Nuon’s Natuurstroom (‘green electricity’) in 1999. All this electricity is generated from solar, wind and water resources. This enables Fair Trade Original to avoid emissions equivalent to 99 tonnes of CO2. In 2011, Fair Trade Original’s electricity consumption was 2% lower than in the previous year, in part due to the cool summer in which the air-conditioning was virtually never required. In 2012, Fair Trade Original shall once again endeavour to achieve an at least 2% reduction in the organization’s consumption of electricity by means of a critical review of the equipment in use. The electricity consumption will also play a role in the selection of the new premises. Vehicle fleet Fair Trade Original had five leased cars in 2011, for general use, the sales managers and the Managing Director. The environmental performance of the cars was examined at the time of their purchase. The cars have been assigned an A or B environmental label or are fitted with an LPG tank. As more sales managers were on the road for Fair Trade Original in 2011 than in the previous year the vehicle fleet has been expanded. This in turn resulted in a 33% increase in the number of leased car kilometres to a total of approximately 165,000 km. When expressed in terms of the CO2

Fair Trade Original: the organization

Paper consumption 2010 1950 kg

Gas consumption in m3 * 2008 2000 48,400 39,900

2011 1180 kg

(2012) (1000 kg)

2010 47,200

2011 26,307

* Fair Trade Original’s offices and stores at Beesdseweg 5

Electricity consumption in kW 2008 2009 2010 158,000 146,600 147,500

2011 144,500

(2012) (141,500)

* Fair Trade Original’s offices and stores at Beesdseweg 5

emissions resulting from the use of fuel this is equivalent to 27 tonnes. In the year under review the fuel consumption per kilometre by all the users of leased cars was higher than the levels specified by the lease company. Endeavours shall be made to achieve a 5% reduction in the fuel consumption per kilometre in 2012. This will be furthered by providing the users information about the new driving style and replacing 2 cars with more fuel-economical types. Business trips Members of Fair Trade Original’s staff regularly visit trading partners and producers in Latin America, Africa and Asia, as do external consultants who are contracted for specific assignments. Business travel fell sharply in 2011, due to the reduced financial resources available to visit the organization’s partners. This in turn resulted in a substantial reduction in CO2 emissions from the levels in previous years. In 2012, the number of business flights is not expected to be greater than in 2011. In the longer term, Fair Trade Original intends to compensate for these CO2 emissions by carrying out activities at the organization’s trading partners. The organization has reached a carefully-considered decision not to compensate these emissions solely with third-party certificates. Intercontinental kilometres* flown on the instructions of Fair Trade Original: 2009 2010 2011 (2012) 1,435,700 940,000 506,705 km (500,000) 213 tonnes 87 tonnes (85 tonnes 322 tonnes of CO2 of CO2 of CO2) of CO2

Fair Trade Original: the organization

Packaging Fair Trade Original pays packaging tax on all packaging materials brought on the Dutch market. Records are kept of the use and type of packaging for each article. Material use, (rounded off in kg) Paper and cardboard Plastic Glass Metal (other than aluminium) Aluminium Wood Movement in Fair Trade Original’s turnover Index 2008 = 100

2008 127,000 24,000 234,500 9,000 400 1,500

2009 130,000 27,000 247,000 16,000 250 1,500

2010 137,500 27,500 245,500 23,000 350 1,300

2011 145,000 (114) 25,000 (104) 250,000 (107) 28,000 (311) 420 (105) 1,300 (87)

100

116

122

128

The quantity of metal packaging increased sharply from 2009 following the organization’s successful launch of products such as canned coconut and canned pineapple on the market. The quantity of glass brought on the market increased in 2011 due to the successful launch of a new range of Asian products with

* Flights within Europe are not taken into account in the figures as these are not booked from a central location and, consequently, are not registered. The staff are requested to travel on journeys of less than 500 kilometres by train and otherwise by car.

sauces in glass jars. During the year under review a study was carried out to examine the environmental issues associated with Fair Trade Original’s packaging. A system has now been developed for systematic improvements in these issues.

Working at Fair Trade Original Fair Trade Original intends to be a fair employer for its staff, an employer that offers them appropriate terms and conditions of employment. The organizationâ&#x20AC;&#x2122;s staff in turn make a contribution to the developments at the producers. For this reason the organization needs to recruit good staff, ensure that they stay with the organization and provide them appealing and stimulating work. Fair Trade Original intends to be a company employees are pleased to work for, and a company of which they can be proud. The staff are encouraged in their work by offering them an opportunity to follow specific courses and by holding regular interviews with them.

HR policy instruments The legal status regulations are in part based on the hospital collective labour agreement and are in part tailored to Fair Trade Original. Fair Trade Originalâ&#x20AC;&#x2122;s amended legal status regulations, salary system and job classification system were implemented in 2011. The Works Council consulted with the staff on the various regulations at the beginning of 2011, after which the regulations were signed by the Management Board and the Works Council. The annual progress interviews were held, in accordance with the schedule, before 1 July and the appraisal interviews were held in December 2011 and January 2012. Central consultations between the supervisors and the HR consultant took place on one occasion in 2011. These bilateral consultations shall be held once every six months in 2012. Fair Trade Original has a number of staff who frequently travel in the performance of their duties. The travel policy was updated in 2011.

Fair Trade Original: the organization

Jobs Fair Trade Original had a staff of 47 at the end of 2012. One colleague is based in Guatemala. Jobs at 31 December 2010 31/17

2011 30/17

Indefinite period / Definite period Fulltime/part-time

46/2

45/2

22/26

19/28

Total number of staff

Total number of FTEs

Women/men

Age structure At 31 December 2011, the average age of the men was 47 and of the women 44, an increase of 1 year for both groups as compared to the previous year. Staff turnover rate Two members of staff left the organization on their own initiative. One temporary contract of employment was not renewed. Three new members of staff were recruited in the same year, one of whom was to the new position of Online Marketing Officer. Staff turnover rate by age category and gender Departing staff 20+ 30+

1 m/1 f

40+ 50+

New staff 1f 1m 1f

The EFTA fairtrade Assessment carried out in April 2011 revealed that the employees of the Amdo Food Company (a noodle factory in India) were not paid on a regular basis. Although there were demonstrable reasons for these irregular payments they were, nevertheless, unacceptable. At the end of a figuratively and literally long process, as of the end of 2011 all employees at the Amdo Food Company will have a bank and/or savings account and an official identity.

At 31 December 2011, almost half of the staff had been in employment with Fair Trade Original for more than 10 years. One 12½th, one 25th and one 35th service anniversary was celebrated during the year. In addition, a second member of staff has since worked for the organization for 35 years or more. In 2011, an inventory was made of the staff who possess important information, a step taken in view of the future departure of staff on reaching retirement age.

Pension fund Fair Trade Original is affiliated with the Zorg en Welzijn Pension Fund. In April 2011, an information meeting for the staff was held in cooperation with the pension fund to discuss issues such as stopping work before retirement age, continuing to work after retirement age, occupational disability and dependant’s pensions. The participants attending the meeting were of the opinion that it had been worth their while and, moreover, would make it easier to contact the pension fund in the future to raise any questions they may have.

Fair Trade Original: the organization

health, safety and welfare service’s medical officer held a surgery at the office as required. Periodic consultations also took place between the HR consultant and the medical officer. The services of the permanent confidant were not called on in 2011.

Training courses € 17,000 was allocated to training courses in 2011. This budget served to finance a wide range of activities including training courses in the successful acquisition of customers and conversational English, as well as a meeting on packaging materials. In addition, the HR consultant coached a number of staff on time management. Fair Trade Original offered three traineeship places in 2011: a preparatory secondary vocational education student carried out a practical traineeship in the Cash & Carry, a Twente University student carried out a study of the sustainability of packaging and an InHolland University of Applied Sciences student carried out a study of coffee production in Ethiopia.

Health and safety

The future

The organization’s policy is focused on tackling sick leave before it occurs. In 2011, the absenteeism rate was 3.5 % (2010: 2.5 %). This remains relatively low in comparison with the national average (4.5 % in 2011). However, the number of working days lost did increase sharply (from 413 in 2010 to 1905 in 2011), due to the long-term sick leave of a number of members of staff. As much contact as possible was maintained with staff on long-term sick leave with the objective of simplifying their return to work. The Rienks Arbodienst occupational

Since changes to the organization are foreseen during the course of 2012 a number of scheduled activities, such as a staff motivation study and the preparation of a plan of approach for strategic HR management, have been postponed until a later date. However, during the course of 2012 a study will be carried out to review the extent that the new work concept can be introduced in the organization, a decision in part based on the coming relocation to new premises and the opportunity this offers for the implementation of flexible workplaces.

The employees of one of Conserve’s production companies in India (which makes products including interior decorations and fashion accessories from recycled materials) receive lessons in reading, writing and arithmetic. After two lessons everyone was able to write their own name. They no longer need to put their thumbprint on the register when they receive their wages.

Market developments

Market developments Fair Trade Original conducts trade that develops in an endeavour to achieve a more responsible approach to consumption, with due regard for People and Planet. Within this context trade is then determinative, since increased sales result in higher income for the trading partners. At the same time, the organization is also working on the solid financing of its activities and the clear positioning of the brand to ensure that Fair Trade Original can continue to play a convincing fair trade role in the future.

Financial results for 2011 Net turnover: € 19.6 million 2010: € 18.6 million Net result: € 39,000 2010: € 268,000 Gross margin: € 5.6 million 2010: € 5.3 million Other income (including subsidies): € 0.1 million 2010: € 1.9 million Fair Trade Original concluded the 2011 financial year with a net profit of € 39,000 (2010: € 268,000). This was an excellent result in view of the loss of the majority of the income from subsidies. In 2011, net turnover increased by € 1 million (6%) to € 19.6 million. Turnover generated by the Food Business Unit, € 16.4 million, accounted for 83% of total turnover. Net turnover genera-

ted by the Gifts & Living Business Unit amounted to € 3.2 million, equivalent to 17% of total turnover.

Movements in turnover Growth in turnover stagnated in 2011, due to the downturn of the Dutch economy and the resultant fall in consumer confidence. Fair Trade Original recorded a slight increase in turnover generated by the three main food, coffee and gifts & living groups of products. Absolute sales of both food and coffee fell in comparison with 2010, and the increase in turnover was due to the higher selling prices. Supermarket sales of food under the Fair Trade Original brand increased by 9%. The purchase price of a number of raw materials increased sharply during the year under review, as a result of which the organization found itself compelled to adjust the selling prices. This was particularly applicable to the movements in the price of roasted coffee, which resulted in a more than 30% increase in the purchase prices of a range of blends in just one year. As a result, coffee’s contribution to turnover increased from 25% to 27% of the total.

Movement in the margin In 2011, gross margin income increased by 7% to € 5.6 million. The gross margin percentage of the gifts & living products exhibited a particularly large improvement, as a result of which gifts & living’s contribution to the gross margin increased from 23% to 25% of the total. The improvement in the gross margin percentage of the gifts & living products was due to the lower write-off of unmarketable stock and the favourable results from revaluation on the increase in the exchange rate of the US dollar. In 2011, the gross margin was 44% as compared to 41% in the previous year.

Net turnover by product group

17%

27%

56%

Food Koffie Gifts & Living

Net turnover by sales channel

46%

41%

Gift Retail Out of home

9% 4%

Internationaal Food Retail

20 18 16 14 12 10 8

Fair Trade Original uses the SAP All-in-one business information system. The majority of the functional and technical management of this system has been outsourced to an approved SAP supplier: contracts in the form of Service Level Agreements have been concluded with the supplier. Fair Trade Original has implemented measures to guarantee the availability, continuity and security of its ICT systems. These measures are laid down in procedures and amended to modified circumstances at regular intervals.

Costs

In 2011, the authorizations granted to SAP users were revised and the stringency of the authorization management procedure was increased. The review and increased stringency of the authorizations granted to each SAP user is included in the ICT schedule for 2012. Fair Trade Original will also introduce a B2B webshop for the organization’s business customers in 2012. This webshop will be linked to the existing systems to achieve an

Result before interest and taxation, 2007-2011 in thousand euros 2,000 1,500 1,000 500

(500) (1,000)

2011

0 2010

The expiry of the primary subsidy programmes resulted in Fair Trade Original’s implementation of cost-control measures designed to maintain the operating results at the required level. In 2011, costs were reduced by € 1.1 million (16%) to € 5.7 million. The measures implemented to reduce costs were effective and, in addition, the cost budgets that were made available were not drawn in full.

2011

The provision of information and automation

2010

In 2011, other income amounted to € 0.1 million (2010: € 1.9 million). Fair Trade Original completed the then current subsidy programmes at the end of 2010 and decided that new trading partner development programmes would be largely financed from the organization’s funds. This resulted in a € 1.7 million fall in income from subsidies. In 2011, the organization received solely a subsidy from PSO within the context of a training and work programme. A donation from ASN Bank made a large contribution to the development of the Asian culinary products line.

2009

Subsidy

Net turnover, 2007-2011 in million euros

2008

Fair Trade Original concluded a renewed cooperation agreement with the organization’s Van Uden logistics provider in 2011. The keener and improved conditions, as well as the more efficient joint approach, contributed to a reduction of the costs for food and gifts & living products. A new system for deliveries of products to gift retail customers by postcode was introduced in 2012, a measure which was implemented in view of the organization’s endeavour to keep the logistic costs incurred by the customers at an affordable level and to improve efficiency.

2008

Logistics

2007

The gross margin income from food increased by € 0.2 million to € 3.2 million. Fair Trade Original recorded a 4% decline in the gross margin income from coffee, to € 1 million, due to the pressure imposed by the increasing raw material prices. The gross margin percentage on food increased from 28% in 2010 to 29% in 2011, while the gross margin percentage on coffee fell to 19% (2010: 22%). The rate and extent to which the purchase prices increased caused the organization problems in gaining customer acceptance of increases in the selling price implemented in time to avoid loss of margin.

Market developments

2007

improvement in the service level and the efficiency of the order process. The third spearhead that will receive the organization’s attention is the provision of assurances for the availability and continuity of the company systems. The further automation of the purchase and sales processes has increased SAP’s importance to Fair Trade Original and imposes new requirements on the organization and management of the ICT systems.

Prospects The forecast indicates that turnover will also grow in 2012. The prospects for both the food and gifts & living products are moderately favourable. Although Fair Trade Original, in analogy with many other companies, will suffer hindrance from the economic conditions it is nevertheless highly probable that turnover will exceed the € 20 million mark. In view of the plans to hive-off the Gifts & Living Business Unit the organization is not in a position to issue a forecast for the result in 2012. At the time of the publication of this Annual Report a decision has yet to be reached on the manner in which, the timing of and the conditions governing the hive-off of the Business Unit. The hive-off of the Gifts & Living Business Unit will not only have consequences for the organization but will also have consequences for the employees. Preference will be given to the separation of the company’s operations into two autonomous entities in a manner that retains as many jobs as possible. However, the achievement of this objective will depend on the manner in which the hive-off is given shape.

Market developments

Food Fair Trade Original’s long-term objective stipulates that the organization shall endeavour to enhance its position as the leading premium fair trade food brand in the Netherlands. This resulted in the definition of target stipulating the achievement of a 5% increase in turnover generated by food products (including coffee), a target which has been achieved. The approach in which Fair Trade Original’s pioneering role was repeatedly explained to the decision-makers in the most important sales channels has borne fruit. In addition, approaching the supermarket chains at various levels has proven worthwhile. As an example, in 2011 the central purchasing organization of the C1000 supermarket chain decided to include new products in its range, such as coffee. At the same time, individual branches were approached with the proposal for the inclusion of a wider variety of Fair Trade Original products in their range, as a result of which Fair Trade Original welcomed its 27th C1000 supermarket customer at the end of 2011. Food is of great importance to Fair Trade Original, since food generates 83% of total turnover. Moreover, the packaging and large-scale display of these products on the supermarket shelves are of great importance to brand recognition. 2011 was an active year in both the product range and the various sales channels: numerous products were launched on the market and the endeavours to expand the range of products stocked by the supermarkets, Worldshops and other sales channels met with success.

The Asian culinary product line was the largest product introduction in 2011: six new products appeared on the shelves at the same time. The KRS production company, in Bangkok, is an important link in the newly developed fair trade chain from farmer to consumer.

The improved harmonization of the marketing and sales activities had beneficial results which included a favourable effect on product launches.

Movement in turnover Turnover generated by food (including coffee) increased from € 15.6 million in 2010 to € 16.4 million in 2011, an increase of 5%. In 2011, the gross margin increased by 4% to € 4.2 million. A 2011 target stipulating that the margin percentage was to decline less sharply than in the previous year was achieved.

Sales channels Food Retail In 2011, in analogy with previous years, the majority of growth in turnover was recorded by sales to the supermarket channel: the 14% growth in turnover exceeded the 5% target by an ample margin. This was largely due to the sharp increase in coffee prices. In addition, a number of successful new products were launched and subsequently included in the range stocked by a number of supermarket chains. The expansion of the distribution of the existing products and the improved sales of existing products to the supermarket chains were also beneficial. Gift Retail The formulae and organizations in the Gift Retail channel (primarily the Worldshops and WAAR shops) had a difficult year, a situation which also had consequences for Fair Trade Original: turnover generated from sales to these shops fell by 3%, whilst the growth target was 1%.

This was largely due to the channel’s disappointing sales of Christmas hampers. Nevertheless, Fair Trade Original intends to achieve moderate growth in this channel in the coming years by endeavouring to improve brand loyalty and providing for appealing product introductions. Out of Home Fair Trade Original wishes to adopt a more prominent position in the Out of Home market. This will in part be achieved by cooperation with Van Oordt the portion company and United Coffee in the portion pack and coffee product categories respectively. The activities carried out in other product categories in 2011 have yet to result in the required breakthrough. The Out of Home channel requires a relatively great deal of effort. The deployment of an interim Out of Home account manager failed to achieve adequate results in the short term and, as a result, could not be continued. Nevertheless, Fair Trade Original is continuing to endeavour to utilize the turnover potential offered by this strategically-important channel. In 2011, 80% of the turnover from food in the Out of Home channel originated from sales destined for Christmas hampers. Turnover generated by Christmas sales of food fell 17%. This was due to missing out on a number of large orders from an important distributor. International Fair Trade Original sold slightly less food to the international market than in 2010 (99% of the 2010 level). Since the sale of food to customers outside the Netherlands is not one of the organization’s spearheads this is reflected in the lower level of sales. In 2011, Fair Trade Original

Market developments

Food turnover in million euros (excluding coffee) 2010

2011

Food Retail

5.4

5.9

109

Gift Retail

4.2

Out of Home

0.8

International Totaal

95 100

0.5

0.4

10.9

11.1

102

Coffee turnover in million euros 2010

2011

Food Retail

2.4

3.1

129

Gift Retail

1.5

100

Out of Home

0.1

–

International

0.7

100

Totaal

4.6

5.3

115

Belgium, which accounts for approximately 43% of the total turnover generated by food (excluding coffee), recorded food sales 17% below the level in 2010. This sister organization, an important player in coffee sales, accounts for 99% of coffee turnover in the international channel and recorded an 11% increase in this product group as compared to 2010.

of the wine bottles. The steady customers of a number of Worldshops and WAAR shops were invited to an Asian Evening that offered them an opportunity to taste the new Asian culinary products. Almost all Worldshops selling Christmas hampers made use of the Christmas hamper folder compiled in cooperation with Fair Trade Original’s De Evenaar colleague importer.

Promotion

Customer satisfaction

In 2011 Fair Trade Original, in cooperation with its customers, focused on discount offers and tasting sessions in an endeavour to promote sales of its products to a broader group of consumers.

A survey was conducted among the Worldshops to review the activities which Fair Trade Original carried out for this specific group of customers in 2011. A total of 26 respondents completed the questionnaire. This revealed that the Worldshops were satisfied with the shop and information materials. The Worldshops were moderately satisfied with the monthly special offers: consequently, this is an element which could be improved. A survey was also conducted amongst the Worldshops that sold Christmas hampers. 181 respondents completed the questionnaire. The Worldshops were satisfied with the Christmas brochure and Fair Trade Original’s service. Fair Trade Original was awarded an average score of 7.7 out of 10, the same score as the two preceding years.

At the supermarkets in the Albert Heijn chain, Food Retail’s largest customer, this was carried out success fully by means of shelf campaigns, a recipe in the chain’s Allerhande magazine and the associated recipe card. The campaign at the supermarkets in the Jumbo chain was based on a Jumbo Deal with coffee and sandwich fillings. In addition, a Buy & Win campaign was conducted in which consumers had a chance of winning a Fair Trade Original package. Two tasting trials at Marqt also resulted in additional sales and new consumers.

Product liability In 2011, food sales were also actively promoted with special offers at the Worldshops and WAAR shops. Recipe cards were also made available, and a second booklet of recipes was published as a sequel to the successful Tien keer Heerlijk (Ten delicious recipes) booklet: Lekker Tafelen met Fair Trade Original (Delicious dining with Fair Trade Original). In October, the Worldshops received a Wijnwijzer (Wine guide) to attach to the necks

Food safety is of essential importance in the food sector in which Fair Trade Original is active. For this reason the organization keeps a close eye on its actions and those of its suppliers in this sector. In 2011, Fair Trade Original’s HACCP system for food safety was subjected to two audits, one of which was conducted by the independent Det Norske Veritas agency and the second, in May, by the Dutch Food and Consumer Product Supervisory Aut-

Market developments

In 2011, the HACCP systems of Nantekara, Khoisan Salt and Fynbos Fine Foods in South Africa were assessed by an independent agency on Fair Trade Original’s request. Although these producers of culinary products have implemented HACCP systems which perform well, they do not have the financial resources to seek certification. The results from these assessments provide them guidelines for the implementation of further improvements in their food safety systems that will ensure that they continue to comply with the international food safety standards. The sign shown above is displayed in Khoisan Salt’s factory.

hority. The results from both audits were favourable. The recommendations have been implemented. It has been decided, in response to the changing requirements of the European market, that in 2012 Fair Trade Original’s current HACCP certification shall be converted into ISO 22000 certification. This will be carried out in cooperation with Det Norske Veritas.

Quality and food safety Three of the five quality and food safety targets for 2011 were achieved:

An analysis of the complaints that were received resulted in the initiation of three improvement programmes: In the autumn of 2011, and in cooperation with the producer, a new dispensing spout was introduced for the chocolate vermicelli packs as an earlier modification had failed to yield a satisfactory result. An adjustment of the recipe is expected to reduce the problems with chocolate bloom on plain chocolate vermicelli. In spite of an earlier intervention, in 2010, complaints were still received about the excessive amount of salt in peanut butter. An adjustment of the supplier’s process and increased control will need to result in a structural improvement. Complaints received in 2011, total Packaging, physical

31%

Product appearance

29%

Flavour

23%

Other

17%

Recalls Fair Trade Original did not need to initiate any product recalls in 2011.

Two targets were achieved in part: The traceability of the products Fair Trade

99,9% of the order lines were delivered

Complaints

Market developments

without complaints about the products; 85% of the suppliers (producers) either possess a food safety system that has been awarded certification or have a food safety system of an adequate level as demonstrated in an audit by an independent agency approved by Fair Trade Original; 85% of all suppliers (producers) had been awarded a green status (approved) in Fair Trade Original’s supplier assessment, 13% a yellow status (approved with minor non-compliances) and 2% an orange status (provisionally approved, more major non-compliances). Explicit agreements on further improvements were reached with the suppliers classified in the yellow and orange categories.

Original buys in bulk and has packaged in the Netherlands has been implemented to a level of 80% (target: 100%) in Fair Trade Original’s business information system. 3, instead of 4, producers have been audited by an external independent agency on the basis of the Fair Trade Original HACCP checklist. Supplier assessment 2010

2011

Green

77%

85%

Yellow

19%

13%

Orange

Prospects for the Food Business Unit The Food Retail channel will continue to offer the most promising prospects for growth in the coming years. Fair Trade Original shall continue its innovations to make maximum use of this potential for growth. In addition, Fair Trade Original shall increase its focus on the Out of Home channel to secure its unique position as the leading premium fair trade food brand in the Netherlands, which will be achieved by launching one or more specific food service propositions. The Gift Retail channel will also continue to be of great importance to Fair Trade Original’s food sales. For this reason the organization will continue to provide tailor-made promotions for segments including the Worldshops. Within the near future the organization will develop a policy for food sales via the Internet.

Gifts & Living In 2011, the Gifts & Living Business Unit set itself a target stipulating further growth in both the national and international mainstream markets. To achieve this objective the Business Unit has since carried out a search for partners in the wholesale and online sales channels. The trading partner portfolio on the purchasing side has been expanded to include four suppliers that possess a substantial production capacity and make products suitable for the mainstream markets. In 2011, the successful collection of wooden baskets and ceramics marketed under the Fair Trade Original by Piet Hein Eek label was expanded to include the FAT range of crockery from Thailand. The promotion of all

Market developments

these products to national and international customers was successful. To supplement this design collection, in 2011 Fair Trade Original entered into cooperation with designer Anne-Claire Petit for the development of an interior textiles collection and with the Dutch Ferrici leather goods company for a collection of ecologically tanned leather goods. Sales of both these product ranges began in 2012. In cooperating with third parties, Fair Trade Original’s collection has acquired a specific image and has moved into a somewhat higher segment of the market. This approach will also enable Fair Trade Original to enter new markets. The endeavours to increase turnover in 2011 were accompanied by work on an improvement of the net returns. However, this was complicated by the loss of subsidies that used to cover part of the product development costs. This item has been cut back by a considerable amount, as has the item for sales promotions.

Movement in turnover At the end of 2011, the gifts & living product range was comprised of 1,600 article codes. Turnover of € 3.2 million was recorded in 2011, a 7% increase in comparison with the previous year. With this result the ambitious € 3.6 million turnover target was not achieved, largely due to the loss of or below-budget turnover generated by sales to a number of large mainstream customers. In 2011, the Business Unit recorded a gross margin result of 44% (2010: 41%), in part due to the favourable movement in the exchange rate of the US dollar. Costsavings in the logistics yielded a gain of 7%. In addition, the pursuit of a keen clear-up policy in 2011 resulted in

Fair Trade Original and CreArte, in Guatemala, had been brooding for some time on product development that would result in work, in particular for the weavers. Fair Trade Original, encouraged by the successful cooperation with Piet Hein Eek in Vietnam and Thailand, approached textile designer Anne-Claire Petit. She sought inspiration from the weaving techniques and the colours used by the Maya population.

the decline of the provision for unmarketable stock from € 312,000 (year-end 2010) to € 128,000 at year-end 2011. An endeavour will be made to achieve a further decline to € 100,000 in 2012.

Market developments

number of producer groups. The Cash & Carry is also visited by a growing group of independent retailers and online retailers. Turnover generated by the Cash & Carry declined by 5% due to the increasing number of Worldshops that place pre-orders and repeat orders by e-mail.

Gifts & living turnover, million euros Gift Retail

2010 2.4

2011 2.5

International

0.5

0.6

Out of Home

0.1

Total

3.0

3.2

Sales channels Gift Retail Turnover generated by sales to the Worldshops and WAAR shops came under pressure caused by increasing competition and fell by 4% from the level in 2010. Measures including more intensive cooperation with FaiRSupport were implemented to deal with this issue. Turnover generated by sales to FaiRSupport increased by 17%. Fair Trade Original, on the initiative of the Rainbow Collection, took part in a major national campaign designed to provide for the achievement of the Millennium Development Goals: Shake the World. During this campaign 20,000 bracelets were sold to the Worldshops alone. In 2011, sales of gifts & living products for Christmas hampers remained virtually unchanged from the previous year. The Cash & Carry, with product innovations and campaigns, has remained an appealing purchasing point for the Worldshops. As an additional impetus, a one-off collection of African fair trade articles was purchased from a

The mainstream customers included De Bijenkorf and Wehkamp.nl, which purchased articles in the Piet Hein Eek collection and baskets, vases and decorative articles from Fair Trade Original. Another important customer was Piet Hein Eek’s shop, together with a number of his dealers and steady customers. Other customers included museum shops and the new 50/50 Stores shop formula. In some instances a specific collection was developed or selected and purchased for individual customers. Return to Sender, together with the HEMA department store chain, bought a limited number of articles in relatively high volumes. The Stichting Jong Ondernemen (‘Young Entrepreneurship Foundation’) was an important customer by virtue of its KidsinBizz project. Sales of the Fair Trade Original by Edelman collection, developed in cooperation with Edelman B.V. at the end of 2010, fell short of expectations and the joint development of the collection was terminated in the spring of 2011. International Fair Trade Original in Belgium, distributor of fair trade products to the Flemish Worldshops, was the largest international customer for gifts & living products. Fair Trade Original’s participation in the Ambiente Trade Fair, in Frankfurt, resulted in the acquisition of new international customers such as the Globus department store in Switzerland, the Pottery Barn in the USA and the Conran Shop in the UK. A number of large fair trade distribu-

Bambu, a supplier of marvellous bamboo and cork products, is Fair Trade Original’s first trading partner in China. This new cooperation gave rise to questions from a number of customers in view of the country’s poor reputation for the quality of the working conditions. Within this context Bambu is actually a pioneer in sustainable entrepreneurship: the Bambu entrepreneurs have assigned priority to the environment and working conditions. At the end of 2011, two members of Fair Trade Original’s staff visited the company and a number of workshops. They discovered that they were the first customers who had ever shown interest in the well-being of the employees. Bambu, in cooperation with Fair Trade Original, intends to dot the last fair trade i’s.

tors in countries including Denmark, Germany and Sweden also purchased products. Out of Home In the Out of Home market, Fair Trade Original’s marketing of its gifts & living product range is primarily based on cooperation with the Fair Goods & Food Company. Turnover fell sharply due to the capricious Christmas hamper (wholesale) market that forms the core of the Fair Goods & Food Company’s operations. Work was also carried out in cooperation with United Coffee on the development of coffee sets suitable for use by Fair Trade Original’s coffee customers in the catering sector. This successful range has since been expanded to include products for domestic use.

Promotion

Market developments

Prospects for the Gifts & Living Business Unit The developments in 2011 revealed that growth in the gifts & living operations is feasible. However, the pace of this growth is slow. In 2011, it was decided to endeavour to increase the potential for growth by seeking a takeover partner for the Business Unit. However, by the end of 2011 it became clear that it would not be possible to find a suitable takeover partner at the moment. This resulted in the decision to draw up a number of scenarios for the future of the gifts & living operations. Hiving off the operations would appear to offer the best prospects. A decision will be reached in the first six months of 2012.

Marketing

Fair Trade Original presented its leading product range at the international Ambiente Trade Fair in Frankfurt, the second time the organization has participated in this trade fair. In qualitative terms, Fair Trade Original’s product presentation makes a clear statement that fair trade and design are highly compatible and results in a powerful and appealing concept.

Once again, more fair trade products found their way into consumers’ shopping bags in 2011, as is revealed by the annual survey carried out by NCDO in cooperation with the Max Havelaar Foundation and Fair Trade Original. More than 55% of all Dutch households bought one or more fair trade food products in 2011, and the purchasing frequency and expenditure per household increased.

Two collection handbooks targeting Dutch retailers were published to present the new gifts & living product collections, with 200 new articles in the spring and 325 in the autumn. The collection handbooks were distributed to the lifestyle press, which regularly included products on the shopping pages. This effect was further enhanced by the visibility of the collections on the website.

Fair Trade Original intends to develop effective marketing activities that fulfil the needs of consumers and of today’s society, characterized by its changes at an accelerating pace, both to continue to promote growth in the fair trade category and to distinguish Fair Trade Original from the increasing number of fair trade products and brands.

And sometimes it doesn’t work …. A tapas line based on trendy terracotta pottery was developed with a new producer group in Bangladesh. Although the people in the simple workshop – who extract the clay from the river by hand and turn the clay on a wheel – received intensive assistance, it transpired that they were not up to the job. This was followed by a long search for the combination of the right clay, glazing and oven temperature required to comply with the European food safety standards. However, compliance with the quality requirements was still infeasible: just 1 out of every 12 products could be placed on the shelves. Fair Trade Original learnt that it is sometimes wise to break off an onerous development process at an early stage.

In 2011, the most important marketing targets were: Growth in turnover as a result of the development of the range: – impart a new impetus to existing products; – introduce new products. Growth in brand awareness and brand preference: – integral promotional campaign from TV to supermarket shelf; – expand online activities.

Market developments

unfortunately it transpired that the implementation of both these improvements was confronted with difficulties. Further studies will be carried out in 2012. The organic nougat in the sweet range was modernized to resolve quality problems. One pack now contains two flavours, vanilla and chocolate. The soft nougat is made from fair trade cane sugar, honey and cocoa.

New in the product range In a new package In 2011, Fair Trade Original modified its range of teas, in part on the basis of customer and consumer surveys. The quality and flavour have been improved. The tea used in the revised range has both Fairtrade and organic certification and is a 100% natural product. The packaging is now more user-friendly and environmentally-friendly, with tea bags and tea envelopes without staples, and cardboard boxes made from sustainable fibres. Fair Trade Original’s cocoa powder was also awarded both Fairtrade and organic certification in 2011. Fairly shortly afterwards the Kassa TV consumer programme gave this cocoa powder the highest score in a comparative test. The jury stated that the cocoa powder tasted of ‘Real chocolate, was in equilibrium and was not too sweet’. The cocoa powder was tested alongside 9 other cocoa powders and ready-to-use mixtures from supermarkets. In 2011, Fair Trade Original examined how the current range of nuts could be improved by the introduction of new types and a different type of packaging. However,

Fair Trade Original is characterized by the organization’s continual search for opportunities for the introduction of new fair trade products on the market, both to attract new consumers and to demonstrate that fair trade can be introduced on virtually every supermarket shelf. Fair Trade Original introduced two entirely new fair trade concepts in 2011: baking mixes and Asian culinary products. In addition, the organization developed a special chocolate letter for Saint Nicholas’ Day. The baking mixes for muffins and brownies enable consumers to make muffins with chocolate chunks or brownies in a trice, to accompany tea of coffee, as the basis of a dessert or as a treat. These Fair Trade Original products respond to the convenience and enjoyment consumer trend. Fair Trade Original introduced the first fair trade chocolate on the Dutch market in the nineteen-nineties. Since then, chocolate has developed into one of the most successful fair trade product categories. In recent years Oxfam Novib’s ‘Green Saint Nicholas’ campaign has also greatly promoted the availability of responsible choco-

Dozens of loving couples got married in Amsterdam on the popular 11-11-11 wedding day and can now, for eternity, put the & character between their names. For this reason newlymarried couples were, as the ultimate symbol of their new union, presented Fair Trade Original’s first chocolate letter in the form of an &.

TERTIARY PACKAGING RY PACKAGING SECONDA PRIMARY PACKAGING

ARD ADE DISC DEGR

PRODUC

OTE - US ROM E| &P P

els

ON TI

mono material composite mate rial

renewa ble materi al % virgin mater % re ial cycle d mat erial stre ngth em bo die densi e ty pre mbo d en d e se nc ied w rgy eo a f to ter x or ins ig in

GE NE RA L

FOOD LOSSES

INST RUC TIO NS

PR OM O

info

product code

UTION TRIB DIS

rm pro ati d o bra uct n n ab nd am ou tp e han ro dlin du g in ce sym stru rs bols ctio inform ns ation abou barco t selle de r EAN cod e production batch

Y CIENC EFFI

lab

EFF ICI EN CY

ht ig we ility e & eab le m lu trac ckab vo sta ble sta ne ing kag f pac ern no patt atio pallet t nten g co ortin y use supp energ rney return jou of air transportation % damaged products self-

PROD UCT ION

water raw ma pollu terials ting subs tances proc ess er o recycl was in te fp go fw pro rodu aste c du cti tion st on m loc eps ati tra ode % on fail ns of po tra ure n rt s dis spo rt ta nc e

OUT PUT

Y BILIT USA

volume

ratios (renewable) energy INPUT

USE

PEC T S IFI

diz dar

refillable t conten visible ld to ho easy se to do easy pen to o sy f ea roo w kp la lea ing ell lab ns tio s ac ce im ran a cla pe ap

GING FUNCTIO KA NS AC

shelf life

MA T

ts en n m at tio tre fica nts e ce erti on c ls rfa ria mp su co mate s f ink ro of be ber m es nu num esiv adh es ditiv r ad e othe spac head t weigh surface

AMOUNT

hygiene

CH AR AC TE RIS TIC S

S ENT ON MP CO

by co sy ns m bo um co er ls lle cti dis po on s sin ys dis te g po sin instru m g pro cti duct on s pre stor p arat ing ion open ing right qu antity resealable easy to empty comple tely

MAT ERIA L

LS IA ER

U RE

stan

RE TA

INFORM ATIO N

In 2011, Fair Trade Original was one of the companies nominated for the Aangepakt 2011 Packaging Award, whereby Nedvang devoted attention to nine product innovations addressing the reduction of waste. Fair Trade Original was nominated on its reduction of the weight of imported South African wine bottles: the weight of each bottle has been reduced from 550 grams to 350 grams, which saves both glass (from production to waste) and energy during transport.

E -LIF OF RECYCLE

R NE GE

DEN SE

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In 2010, Fair Trade Original developed a new campaign strategy in cooperation with the marketing and media agency, which was rolled out in 2011. This was based on a year-round presence in the media, with weekly TV commercials during eight months of the year which were broadcast on Thursdays and Fridays on the Nederland 1, 2 and 3 TV channels, the channels offering the best access to the primary target audience. A variety of commercials were produced on the basis of the same format, a cost-efficient means of demonstrating the range of the Fair Trade Original food products. This also offered an opportunity to support the various product

S ARE CURREN GE T KA

In 2011, a student from Twente University carried out a comprehensive study of the feasibility of increasing the sustainability of Fair Trade Original’s packaging. However, this is complicated by the fact that Fair Trade Original’s

TO DEVELOP SUSTAINABLE PACKAGING

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Sustainable packaging

INSPIRATIONS & ASPIRATIONS

S CANNOT WA GE IT KA

Fair Trade Original introduced a new line comprised of six Asian culinary products in the autumn of 2011, consisting of two wok sauces, two curry pastes, sweet chilli sauce and ketjap manis soy sauce. The Eastern fair trade culinary products are as pure as possible and contain no flavour enhancers or – with the exception of ketjap manis – preservatives. However, they do all have one extra ingredient: the farmers who supply the peppers, sugar and soya beans receive a fair price and a development premium to enable them to invest in their future. In launching these products Fair Trade Original introduced the first fair trade line of Eastern products on the market. The introduction was an immediate success, with supplies to shops including the Albert Heijn and C1000 supermarket chains and Worldshops.

products are packaged by external suppliers and, consequently, the organization is dependent on the capabilities of these suppliers. For this reason the student developed a method that will enable Fair Trade Original, in cooperation with the suppliers, to begin structural work on the improvement of the sustainability of the organization’s packaging (primary, secondary and tertiary). This method has also been used to assess part of the current product range. The method will be implemented in 2012.

release of toxic substances ration ery by incine energy recov ns ducts l by-pro nditio harmfu ntal co onme ess l envir eria right illingn mat w umer recycled ing cl cons for ncy and ow dem g/d se clin reu ly upcy mb fter e ass life a cess dis r fro d-o g p cture en in an nufa cle a m by

late letters, a development which encouraged Fair Trade Original to launch a special fair trade chocolate letter. This resulted in the introduction of the first chocolate l&tter for everyone in September. The letter is striking as a result of its special shape, the & character, once the 27th letter of the Roman alphabet. Consumers were also able to write a personal message on the packaging. The letter was available from shops including the Plus and Deen supermarket chains, Makro wholesalers and the Worldshops. In addition, the letter was marketed via a special online webshop.

Market developments

NSPORT - INFO RA R -T

The method a Twente University student developed for Fair Trade Original for a structural approach to the sustainability of the organization’s packaging will be implemented in 2012.

groups featured in the TV commercials with promotions in the shops and (online) consumer offers. Fair Trade Original ultimately decided to broadcast four flights of TV commercials in January, April, August and December. This was necessary because television is becoming a more expensive medium and because the use of the media had to be limited after the reduction of the marketing budget due to the pressure imposed on food margins. The January coffee commercial was combined with a coffee pod sampling offer on four major broadcasting stations. It transpired that the ambition to achieve synergy between the TV commercials and shop offers was difficult to fulfil. Fair Trade Original carried out a survey of the brand awareness and the effectiveness of the TV campaign at the end of 2011. The study also extended to elements such as brand attitude, product awareness, point of sale and the frequency of purchase and use. In 2011, the total brand awareness was 72% (2010: 70%). The number of respondents stating that they had experience with the use of the Fair Trade Original brand increased relative to the number stating solely that they were aware of the brand. 88% of the respondents with experience with the use of Fair Trade Original products are satisfied users. The intention to purchase percentage was much higher amongst respondents who had seen the Fair Trade Original TV commercials. The expansion of the marketing department with an Online Marketing Officer on 1 July 2011 has resulted in the further optimization of the website and implementa-

Market developments

tion of a new e-mail marketing tool. An extensive online campaign was also conducted to support the chocolate l&tter, which included a Facebook campaign and a temporary webshop. Nationale Postcode Loterij Fair Trade Original, the National Association of Worldshops and the Max Havelaar Foundation have been joint beneficiaries of the Nationale Postcode Loterij since 2010. A continually increasing number of shops, companies are discovering fair trade products. Even so, half of all Dutch households have never purchased a fair trade product: for this reason the three largest Dutch fair trade representatives – Fair Trade Original, the National Association of Worldshops and the Max Havelaar Foundation – initiated a joint campaign, fairbezig.nl (‘take part in fair trade’). Pursuant to the target, the fair trade purchases per head of the Dutch population are to triple within three years.

Marketing in the future In 2012, Fair Trade Original will lay the foundations for a new positioning of the brand for the coming years. This new positioning will in turn serve as the basis for a review of all marketing activities, from product range strategy to sales channels and from communication concept to packaging line. Consumers impose an increasing number of demands on food products and, moreover, the relationship between diet and health is receiving more and more attention. For this reason, in 2012 Fair Trade Original will define a more stringent policy relating to allergens, nutritional value and additives.

The launch of the fairbezig.nl ‘taking part in fair trade’ website was combined with the search for a fair trade 18 carat Golden Banana. Fair trade gold is extracted from the ground without the use of toxic chemicals and the gold seekers also have a better financial future. In October 2011, everyone in the Netherlands could visit fairbezig.nl for a live search for the fairest gold in the country. The person who found the Golden Banana could keep it. The winner ultimately found the Golden Banana at – and where else! – the Apenheul Primate Park in Apeldoorn. The introduction of fairbezig.nl was supported by commercials on TV and radio and advertisements online and in newspapers.

Cooperation with trading partners

Market developments

Cooperation with trading partners

Cooperation with trading partners The combination of trade and development programmes as practised by Fair Trade Original results in the sustainable development of trading partners and their employees and affiliated producers in Africa, Asia and Latin America: People: Fair Trade Original feels committed to the makers of its products and encourages people and organizations in their endeavours to improve working and living conditions. Profit: growing and more profitable sales improve the income position of producers and employees. Planet: Fair Trade Original helps its producers and trading partners to comply with the environmental requirements imposed by the market and responds proactively to developments in cooperation with specialized external parties.

Trading themes Fair Trade Original purchases its products under fair trade terms and conditions from selected trading partners in Africa, Asia and Latin America. A number of specific points for attention in the purchasing activities arose in 2011:

on a one-to-one basis. The Mass Balance principle is then applicable to these products: for example, cocoa without Fairtrade certification may be used in a bar of chocolate bearing the Max Havelaar Seal of Approval provided that the same weight of cocoa with Fairtrade certification is purchased and processed in another nonfair-trade product. This measure had already been implemented in practice in view of the fact that it is often extremely difficult or expensive to provide for the physical separation of the various flows of these ingredients. The measure has now been formalized and is governed by regulations. Although Fair Trade Original endorses this approach, the organization nevertheless endeavours to arrive at the physical traceability of fair trade ingredients in the finished product. This is often a question of volume: for example, following a substantial growth in turnover it is now possible to achieve this physical link for rice. The organization shall endeavour to adopt the same approach for other products: for example the organization delivers the sugar required for fair trade products directly to a number of food processors. Self-evidently, Fair Trade Original is then entirely dependent on the procedures and capabilities of other parties in the chain. Increasing coffee prices. Coffee prices had already

New raw material traceability guidelines. In 2011,

the Fairtrade International organization that specifies the standards for products with the Max Havelaar Seal of Approval for fair trade determined that products containing cocoa, sugar, tea and fruit concentrates do not need to contain the purchased certified fair trade ingredients

increased sharply in 2010, and in 2011 actually increased even more rapidly. The minimum price guaranteed under the Max Havelaar Seal of Approval was occasionally an issue in those areas in which Robusta coffee beans are cultivated. The farmers benefited from the increased prices, although the effect was often nullified

The sugar with Fairtrade certification for the baking mixes introduced in 2011 is delivered directly from the factory in Mauritius to the factory in the Netherlands that prepares the mixes.

by poor harvests. Buyers responded to the high prices and scarcity by making every effort to detach farmers from their cooperative. They succeeded in a number of instances, when the farmers sold their coffee to the highest bidder. As a result, the farmers’ cooperatives were not always in a position to fulfil their delivery commitments.

get back to normal life at home. These donations, supplemented with donations from ASN Bank and a number of Worldshops, ultimately totalled € 5,200. This amount was transferred at the beginning of 2012. It subsequently transpired that Fair Trade Original was the sole customer to make this gesture – a gesture which was greatly appreciated.

Fairtrade International decided to counter this development and enhance the farmers’ loyalty to their organization by increasing the development premium farmers receive for coffee with Fairtrade certification. At the same time the organization stipulated that a fixed part of the premium should henceforth be invested in measures to increase production output. Fair Trade Original also initiated a programme with the objective of increasing the farmer’s productivity. On a future decline of coffee prices a larger coffee harvest will then need to provide compensation.

Non-fair trade ingredients. A variety of Fair Trade

Floods in Bangkok. Bangkok was hit by severe floo-

ding immediately after the introduction of the Asian culinary products and at the time the sauces and herbal pastes were to be produced for the first delivery to the Albert Heijn supermarket chain. The city was under water for weeks, with disastrous consequences. KRS Spicy Foods, the producer of five of the six new culinary products, was also under water and was compelled to halt production for a longer period of time. Fair Trade Original, in cooperation with the factory – and by pulling out all the stops – succeeded in nevertheless arranging for the majority of the delivery in time. Fair Trade Original donated € 25 to every KRS Spicy Food employee to help them

Original products which bear the Max Havelaar Seal of Approval contain ingredients for which Fairtrade certification is infeasible, such as milk in chocolate, strawberries in jam and flour in baking mixes, etc. In instances of this nature the organization then requests the producers for information about the origins of the raw materials. In addition, producers using products accompanied by higher risks – such as palm oil – must be able to demonstrate that the origins comply with the responsibility requirements. However, in some instances the origins cannot be determined, for example when a number of links are involved in the supply chain. In other instances the very small amounts involved make it impossible to exert an influence on the origins. A problem occurred with hazelnuts: a TV documentary revealed that large-scale use of child labour is made during the harvesting of the Turkish crop (the source of the majority of hazelnuts). The hazelnuts contained in a number of Fair Trade Original products also come from Turkey. Although the supplier issued a ‘certificate of good conduct’, Fair Trade Original was unable to preclude the possibility that child labour was involved in the harvesting. Once it became clear that Turkey was not

Cooperation with trading partners

Voor hem:

de kans zijn Fairtrade certiﬁcaat te halen.

Open nu een spaar- of bankrekening bij de ASN Bank, dan gaat er € 10 naar een fairtrade project voor Thaise boeren.

Voor u: gratis kennismaken mett 9 nieuwe Aziatische kookproducten van Fair Trade Original. U ontvangt het hele pakket na het openen van uw ASN-rekening.

GRATIS

Kijk voor meer info en de actievoorwaarden op

www.asnbank.nl/fairtradeoriginal

Anyone buying Fair Trade Original Chocolate Vermicelli in the autumn could turn to the back of the box to read all about it during breakfast or lunch: the cooperation between de ASN Bank and Fair Trade Original for the Asian culinary product range, with the objective of offering the Thai farmers to obtain Fairtrade certification for their sugar, peppers and soya beans.

taking specific steps to improve the situation Fair Trade Original decided to intensify its search for alternatives. However, this is complicated by the very small quantity of product involved, as a result of which the potential orders are not of sufficient interest to induce hazelnut suppliers to change their working methods, let alone to be prepared to have their methods audited. At the beginning of 2012, Fair Trade Original decided to switch to hazelnuts from Spain and Italy for its hazelnut butter. A search is also being carried out with the relevant suppliers for alternative sources for the other products that contain hazelnuts. Purchasing organization. Fair Trade Original has

adjusted its purchasing conduct for the gifts & living product range to improve the stock control of these products. In the past, the sales forecasts were used to determine the quantity required and large purchasing orders were placed twice a year which were distributed between all trading partners. However, in recent times the purchases of the basic product range have been supplemented with orders based on orders placed by customers. The focus is then placed on the products that sell in larger volumes. As a result, trading partners who are less active in product development and market a product range with a more ethnical image have observed a fall in the volume of orders placed by Fair Trade Original. Conversely, other trading partners now receive more frequent orders that are on occasion substantially larger than in the past. In both instances Fair Trade Original meets with the trading partners to discuss the reason for the changes and how the trading partners can anticipate in the new situation.

Cooperation with trading partners

Production of large volumes. Not all trading partners

in the gifts & living segment are in a position to increase production immediately to supply larger volumes of a successful product. The product range designed by Piet Hein Eek is an excellent example. During the development phase it became apparent that there was great interest in the wooden baskets. However, as the small workshop in Vietnam had yet to set up the production equipment some time passed before the deliveries (and, as a result, the sales) really got into their stride. The workshop subsequently invested in a storage shed so that the finished baskets cluttering the workshop could be removed: this provided more space for production and the output could be increased. The installation of a new extraction unit also improved the working conditions. The employees are assured of constant work throughout the year. They allocate their extra income to the schooling of their children, to the purchase of electronics goods such as mobile phones and TVs and, in one or two instances, even to the purchase of a moped. This is just one example of the great impetus a successful product can impart to a workshop or factory. Moreover, since this often has effects on other products and customers the process can suddenly begin to accelerate.

Development programmes In 2011, Fair Trade Original decided to refine its development strategy following the Ministry of Foreign Affairs’ termination of its development programme subsidy.

At the end of 2011, half of the 200 employees of the Sang Arun ceramics factory, in Thailand, worked on the FAT crockery. Although total different from the traditional floral crockery that the factory also produces, everyone from the top to the bottom of the organization is proud of the new product – so proud, in fact, that the jugs are stored in the showrooms rather than in the factory.

Fair Trade Original, in addition to conducting trade, also carries out development programmes at a select number of trading partners in an endeavour to enhance the position of employees and producers in Africa, Asia and Latin America. These programmes are feasible solely with Fair Trade Original’s specific knowledge and experience. They are financed largely from the organization’s funds. The results meet a consumer need, which contributes to the consumers’ willingness to buy the product. Fair Trade Original’s expertise lies in the field of the development of fair trade production and trading chains (see box). This extends beyond solely certification: Fair Trade Original helps trading partners to integrate fair trade in their operations and seeks solutions for fair trade dilemmas. Fair Trade Original puts its new knowledge and experience to use at other trading partners. The programmes create added value by: developing new fair trade products; supplying added value to the country where the products are made whenever possible; improving the product quality; giving shape to the fair trade policy.

Internal organization Fair Trade Original’s development programmes are the result of concerted action between various groups within the organization: Fair Trade Original’s Marketing department specifies the activities that support trade and give form to the development trade concept for consumers;

Cooperation with trading partners

Development of fair trade chains In 2011, Fair Trade Original worked on the following fair trade chains: Orange juice from Ghana: work is being cargrowing the ingredients (peppers, sugar and ried out in cooperation with Fair & Organic Prosoya beans) and the processors of the products ducts, the importer of the Fair Trade Original are assisted in the preparations for Fairtrade orange juice concentrate, and the juice factory certification. in Ghana, on the development of the organization and provision of fair trade training courses Coconut milk and herbs from Sri Lanka: Fair for the citrus farmers. Trade Original’s MA’s Tropical Food trading partner is organizing the coconut and herb farmers Ecologically responsible leather from India: into the SAFE Network. The ultimate objective is in 2011, work was carried out in cooperation to obtain the Fairtrade certification required to with the leather tannery and the bag-making come into consideration for the Max Havelaar factory in Kolkata on the improvement of the quaSeal of Approval. lity of the leather, product development and training for the tanners. Ferrici, a Dutch bag manu Sugar from Mauritius: 32 fair trade cooperafacturer, will use this leather in a new collection tives of cane sugar farmers in Mauritius were of bags to be launched on the market in 2012. organized into an umbrella organization in 2011. The Fairtrade inspection for the Max Havelaar Palm-oil candles from Indonesia: The Wax Seal of Approval immediately revealed the comIndustri candle maker uses exclusively RSPO plexity of a process of this nature, after which (Roundtable Sustainable Palm Oil) certified palm the major efforts to rectify the non-compliances oil to make the candles. Candles made of palm achieved success. oil burn longer and better than candles made of other products. Fair Trade Original introduced Olive oil from Argentina: in 2011, discussithe fair trade principles to Wax Industri, a philoons were held with Coöperativa La Riojana and sophy that was new to the management board Fairtrade International to review the feasibility of but highly compatible with their principles and certification for olive oil from Argentina. No olive viewpoint. Wax Industri will implement the fair oil from Argentina with Fairtrade certification trade working practices during the first six has been available to date. A minimum price months of 2012 and a EFTA fair trade assessshall be set for olives and farmers with small ment will be carried out later that year. holdings will receive fair trade training. Asian culinary product range: the farmers

product specialists, buyers and logistics staff maintain contacts with the trading partners about product development, quality, prices, orders and deliveries. They also indicate any bottlenecks in the process; the business consultants and the trading partners review the improvements that need to be made in the chain to comply with the requirements and expectations of Fair Trade Original and its customers and to guarantee that producers and employees at the beginning of the chain benefit from the trade. As necessary, Fair Trade Original and local consultants assist the trading partners in the implementation of their plans and the search for the financing required for those plans.

PSO training and work programme PSO provided financing for the training and work programme in 2011, a programme Fair Trade Original carries out with three objectives: The development of a sustainable model for the capacity-building of the trading partners and producers: – the new development strategy was developed in consultation with the management. This strategy involved the necessary changes to the organization; – the Economic Business Analysis – a tool to review the operations of the trading partners – developed in 2010 was tested by the business consultants at four trading partners at the beginning of 2011 and was evaluated during a training session held in February 2011; – in July 2011, this was followed up by a Financial Management workshop which addressed the analysis of annual accounts and cost price calculations;

Cooperation with trading partners

– a third training programme, focused on Value Chain Analysis, was held with business consultants and purchasing staff. This resulted in a tool for the EFTA fairtrade assessments and development of fair trade chains. Enhancement and broadening of the network of

local consultants: – a total of twenty local consultants were deployed in 2011; – new consultants were trained in India, Thailand and Sri Lanka before and during the eight EFTA fair trade assessments carried out in 2011 to prepare them for the independent performance of these assessments in the future; – new consultants were deployed for the best practices and productivity study in the coffee sector in Latin America and Africa; – local consultants in Thailand and Ghana received training in the development of new fair trade chains. Focus on capacity development with visible results

in the short term. Three programmes addressing capacity-building at producer organizations were prepared and/or carried out in 2011: – capacity-building of a new fair trade orange chain in Ghana – greater coffee harvest, greater income: the sustainable improvement of productivity and quality in the coffee sector in Latin America and Africa. – capacity-building of trading partners addressing the development of strategies for the sustainable achievement of a living wage.

Coffee prices have increased tremendously in recent years. Nevertheless, the income of most small coffee farmers – even in the fair trade segment – is still low. This gives cause to the question as to how the farmers can produce more and better coffee and, as a result, increase their income.

Fair trade principles Compliance with the 10 internationally-adopted fair trade principles is guaranteed for 63% of Fair Trade Original’s net turnover by means of the Max Havelaar Seal of Approval. The compliance of the remainder of the products (primarily gifts & living products) is monitored via the EFTA fairtrade assessments. In all instances plans of action are drawn up with the assessed trading partners and the producers that supply products to them. These provide for the implementation of the necessary improvements within a stipulated period of time.

FLO inspections Fair Trade Original’s range of products for which fair trade standards are available bear the Max Havelaar fair trade Seal of Approval. Organizations which supply ingredients for the products bearing the Seal of Approval are subjected to an annual audit by a FLO Cert inspector. In 2011, Fair Trade Original carried out the following support activities: training courses at organizations that had yet to comply with the Seal of Approval’s standard so that the staff could master the required working methods (see box on page 34); provision of support to trading partners whose attention had been drawn to non-conformances by an FLO inspector during an audit that would need to be rectified to retain their certification. This occurred in seven instances in 2011.

Cooperation with trading partners

EFTA fair trade assessments The EFTA (European Fair Trade Association) fair trade assessments were introduced to audit compliance with the fair trade principles by trading partners dealing in products falling outside the scope of the Max Havelaar Seal of Approval. In 2011, the plans of action drawn up with the trading partners assessed in 2010 were

actively followed up by the relevant trading partners. In addition, fair trade assessments were carried at a further eight trading partners on Fair Trade Original’s request. Six of these trading partners were assessed for a second time and two for the first time.

EFTA fair trade assessments by Fair Trade Original Trading partner Country Aarong Bangladesh Allpa Peru AMDO India Conserve India Craft Aid Mauritius CRC India CreArte Guatemala Crisil Bolivia Dhaka Handicrafts Bangladesh Eco Tasar Silk India Eswatini Swazi Kitchen Swaziland FTCI India Mai Vietnamese Handicrafts Vietnam MA’s Tropical Foods Sri Lanka Mitra Bali Indonesia

Product Candles, interior decorations Gift articles Noodles Fashion accessories Cane sugar Scarves, leather goods, etc. Gift articles Glassware Baskets Scarves Jam, sauces Bags Gift articles Herbs, coconut milk Gift articles

Sang Arun Sasha Exports TARA Turqle Trading Yak & Yeti Y-Development

Pottery Accessories, gift articles Accessories, gift articles Culinary Silver, gift articles Gift articles

Thailand India India South Africa Nepal Thailand

2007

x x

2008

2009

2010 x x

2011

x x x

x x

x x x x x x x

x x

x x x

The assessment of compliance with the fair trade principles is based on a classification into four categories: 1. Complies with the fair trade principles 2. Minor non-compliances 3. Serious non-compliances 4. Trading will be discontinued due to gross negligence A total of 102 scores were awarded in the 2011 assessments. Gross negligence was not an issue at any trading partner. The 25 instances in which trading partners complied in full with the fair trade principles related primarily to compliance with the fair trade terms and conditions. A serious non-compliance was discovered at one organization, which had yet to improve the order forms for the producers: the prices were not quoted and the forms were not signed by the producers. A total of 67 minor non-compliances were discovered, the majority of which related to chain management (the origin of the primary raw materials was not always known), transparency & accounting and safety at the workplace. Nevertheless, the assessments revealed that evident improvements had been achieved in these fields: following the first assessment in 2008 many producers had begun to keep administrative records and accounts, as a result of which it was now simpler to audit performances in areas such as remuneration and working conditions. The working conditions at most trading partners had improved greatly since the first assessment. Many workshops now had an attendance and wages book, in some instances signed by the employees. Nevertheless, working hours, secondary terms and conditions (pension,

A living wage Fair Trade Original is endeavouring to ensure that by 2015 a living wage is paid at all levels in the chains that make all products marketed by Fair Trade Original. A living wage covers the minimum costs incurred in supporting a family (food, nonfood and savings). In 2011, a living wage was calculated for a variety of regions in India, Nepal, Sri Lanka and Thailand on the basis of the Basic Needs formula developed by SAI (Social Accountability International). These calculations had already been carried out in India, Bangladesh, Indonesia, Vietnam, Guatemala, Peru and Bolivia in 2010. The objective was to derive an up-to-date benchmark for the assessment of payments by trading partners in these regions. With the exception of Thailand, the living wage is substantially above the minimum wage in all the regions that were examined. A new method was introduced for the calculation of the living wage and the gap analysis of the difference between the lowest wage paid by the producer organizations, the minimum wage and the living wage. This method was used during two two-day workshops organized for trading partners and consultants in Southern and South-East Asia which reviewed living wages. During these lively workshops the participants familiarized themselves with the calculation of the living wage and

Cooperation with trading partners

analysed the variances between the lowest wage paid in their organization and the minimum and living wage in their region. In conclusion, they drew up strategies and plans of approach for the payment of a living wage in the shorter or longer term. Experience has revealed that it is not always easy to develop strategies and plans for a transition to the payment of a living wage which do not involve excessive price increases and the resultant weakening of market position. More足over, this is totally impossible in some countries where lowgrade products are made that require little investment or expertise. Nevertheless, Fair Trade Original is working with trading partners on the development of business plans to provide for the payment of living wages at all levels in the chain. The measures to be implemented will have an influence on their operations and marketing. In most instances they will need to find more and larger customers to increase their volume. Fair Trade Original is working with international fair trade umbrella organizations, such as Fairtrade International and WFTO, to reinforce the programme by getting the living wage on the agenda within a broader fair trade context. These organizations and their members are now working actively on the detailing of a policy for the calculation and implementation of a living wage.

insurance) and overtime continue to be themes that require attention. Safety levels had also improved tremendously at many workshops, although safety was not yet at an adequate level at all workshops dealing with the trading partners. Although few risks were observed in most offices, the conditions at many workshops still exhibit substantial room for improvement with respect to ventilation with fresh air, the size of the workshop, noise and hazards arising from machinery and naked flames. Two workshops were clearly substandard. Serious non-compliances were observed in ten instances, primarily relating to remuneration: employees and producers in some links of the production chain were paid less than the minimum wage. None of the trading partners paid all employees in the workshops or factories a living wage, which gave Fair Trade Original cause to initiate a separate development programme to address this issue.

Deepening of the fair trade principles In addition to the assessments and the follow-up given to the assessments, additional attention was devoted to the following issues relating to the fair trade principles: Price policy: work on the inventory of the cost price calculations for products without fair trade certification was restarted in 2011. Fair Trade Original now has a database which is updated twice a year during the purchasing rounds. The trading partners and producers use these cost price calculations during their negotiations on prices and reviews of production processes to analyse issues for improvement.

Cooperation with trading partners

Familiarity with the fair trade principles: the

standard workshops organized for the EFTA fair trade assessments have proved an effective means of providing for a thorough re-review of the fair trade principles. Most of the trading partners who were assessed in 2011 organize at least one meeting a year to explain the substance of fair trade to the producers. In 2011, Fair Trade Original prepared a poster with the ten fair trade principles. This poster is used during the workshops and is also displayed in the trading partners’ offices and the workshops and factories where the Fair Trade Original products are made. A translation in the local language is often displayed alongside. Care for the environment: farmers state that they suffer continually more hindrance from climate change, Fairtrade International is increasing the stringency of its environmental and sustainability standards and the 2011 assessments once again revealed that trading partners are becoming increasingly concerned about the environment and are implementing the necessary standards. The management of waste, such as chemicals that can harm the environment, has been improved. Weavers who use dyes now have simple processing systems that prevent hazardous chemicals from entering the groundwater. Fair Trade Original is working on impact studies and plans to prevent damage to the environment in cooperation with partners whose operations result in major environmental risks, such as the use of toxic compounds, large volumes of water or a great deal of energy (ovens).

Los 10 principios de comercio justo 1 Creando oportunidades para productores/trabajadores en desventaja económica 2 Transparencia yThe rendición cuentas 10defair trade Yak & Yeti – Nepal Fair Trade Original colabora con socios comerciales que gestionan una política social explicita enfocada en productores y trabajadores en desventaja.

principles

3 Prácticas comerciales justas 4 Pago de un precio justo 5 Garantizando que no haya trabajo 1 Creating opportunities for infantil ni trabajo forzado economically disadvantaged 6 Compromiso con la no discriminación, producers/workers equidad de géneros y libertad de 2 Transparency and accountability asociación 3 Fair trading practices 7 Garantizando buenas condiciones 4 Payment of a fair price de trabajo 5 Ensuring no child labour and forced 8 Proporcionando la construcción labour de capacidades 6 Commitment to non discrimination, 9 Promoción del comercio justo gender equity and freedom of 10 Respeto al medio ambiente association

Yak & Yeti – Nepal Fair Trade Original collaborates with trading partners that conduct an explicit social policy focused on disadvantaged producers and workers.

Allpa – Perú El trabajo llevada a cabo para Fair Trade Original debe ser, dentro de márgenes razonables, seguro y saludable.

Allpa – Peru The work carried out for Fair Trade Original has, within reasonable margins, to be both safe and healthy.

Dining In – África del Sur Todos los productores o trabajadores tienen el derecho a recibir una igual remuneración, igual trato e iguales oportunidades de trabajo.

7 Ensuring good working conditions 8 Providing capacity building 9 Promoting fair trade 10 Respect for the environment

Dining In – South-Africa All producers or employees are entitled to equal payment for equivalent work, equal treatment and equal job opportunities.

The fair trade principles also need to be known and propagated at the workplace. For this reason Fair Trade Original makes this poster available to the factories and workshops that make the organization’s products. A translation in the local language is often displayed alongside.

In 2011 Fair Trade Original, in cooperation with CREM, a sustainable development agency, Van Sillevoldt, the importer and packer of Fair Trade Original rice, and PFA, the supplier of pandan rice from Thailand, began a pilot project relating to the ecological footprint of rice. The objective of this project is to prepare a bio-compensation plan based on No Net Loss. Attention is also devoted to biodiversity, i.e. not just emissions of greenhouse gases (CO2), but also the consumption of water and use of land. The intention is to reduce the impact of these factors in the chain when this is feasible and to compensate for them when reduction is not feasible.

Trading partners A list of Fair Trade Original’s trading partners is available at www.fairtrade.nl In 2011, Fair Trade Original began cooperation with: Bambu, supplier of bamboo and cork kitchen articles,

in China; Ashoka, supplier of canvas bags, in India; Wax Industri, a candle factory in Indonesia; EMA, processor of ecologically-responsible leather,

in India; KRS Spicy Food, Northern Food Complex, Maetaeng

Fairtrade Soy Bean Group, Pranburi Fairtrade Sugar Cane Group, Royal Project Foundation and Fairtrade Chillie Group in Thailand, for the Asian culinary product range;

Cooperation with trading partners

Fruittiland, juice factory and eight associations of

orange farmers, in Ghana; COINACAPA, cooperative of Brazil nut collectors,

in Bolivia. In 2011, Fair Trade Original stopped trading with: Stellar Winery, in South Africa, which decided to

withdraw from Fairtrade International’s fair trade system. This step, in combination with a difference in opinion on the quality system, resulted in the decision to terminate the cooperation; Eswatini Swazi Kitchen, supplier of chutneys in Swaziland, which was no longer able to comply with Fair Trade Original’s requirements; Oudrif Farm, in South Africa (apples for apple juice concentrate), which voluntarily withdrew from the Fairtrade register as the parent company was dissatisfied with the return on investment; The Federation of Tibetan Cooperatives, in India, a supplier of bags and jewellery, which after many years’ cooperation was found to be unable to comply with Fair Trade Original’s delivery, quality and fair trade requirements.

Fair Trade Original is working with Fair and Organic Products Trading b.v., a Dutch trading house trading in fair and/or organic fruit juice concentrates, on a new chain in Ghana to enhance the supplies of high-quality orange juice concentrate with Fairtrade certification. This programme includes activities such as courses for the orange farmers to train them to become fair trade farmers and to the Fruittiland processing factory to train the management in achieving compliance with the European food safety directives.

Annual Accounts 2011

Contents Annual accounts

Balance sheet at 31 December 2011 Single profit and loss account for 2011 Cash flow statement Notes to the Annual Accounts 2011

Other information

Five-year financial summary

42 43 44 45

Annual accounts Single balance sheet at 31 December 2011 (after allocation of result) Note Fixed assets 1 Tangible fixed assets 2 Financial fixed assets Current assets Stock Trade accounts receivable Advance financing of trading partners Other receivables and prepayments Liquid assets

3 4 5 6 7

Total

2011

2010

153,623 20,081 173,704

293,817 29,864 323,681

4,088,205 2,700,741 50,930 121,655 321,154 7,282,685

3,518,343 2,502,678 118,522 899,414 271,638 7,310,595

7,456,389

7,634,276

Equity Other reserves

3,522,123

3,483,103

Provisions

193,655

396,169

982,434

1,418,060 154,171 343,557 842,389 2,758,177

1,632,239 â&#x20AC;&#x201C; 312,339 827,992 2,772,570

7,456,389

7,634,276

Long-term debts Interest-free loans Short-term debts Trade accounts payable Fair Trade Assistance current account Taxation and social security charges Other debts and accruals

Total

11 12

Annual Accounts Fair Trade Original 2011

Profit and loss account for 2010 Note Gross Margin Net turnover Cost of sales

Other income Income from subsidies Other Costs Personnel costs Depreciation Selling costs Accommodation costs General costs Other value adjustments to tangible fixed assets

13 14

2011

2010

19,621,730 13,989,829

18,594,256 13,314,189

5,631,901

5,280,067

67,835 45,916 113,751

1,702,315 152,552 1,854,867

2,592,550 173,522 2,212,870 267,869 474,261 â&#x20AC;&#x201C; 5,721,072

2,757,159 167,612 2,610,887 314,083 974,848 (10,100) 6,814,489

24,580

320,445

16 17 18 19 20

Operating result before interest and taxation Financial income and expenditure Operating result before taxation

1,361 25,941

11,157 331,602

Corporation tax Result after taxation

13,079 39,020

(63,575) 268,027

Annual Accounts Fair Trade Original 2011

Single cash flow statement The cash flow statement recognizes the funds that became available during the year under review and their use. The cash flow from operational activities is determined using the indirect method.

Operational activities Result after taxation Depreciation and value adjustments to tangible fixed assets Movement in provisions Movement operating capital

Investment activities Investments in tangible fixed assets Income from the sale of tangible fixed assets Movement in financial fixed assets

Financing activities Movement in overdraft facility, Fair Trade Assistance

Movement in liquid assets Liquid assets Balance of liquid assets at 1 January Balance of liquid assets at 31 December Movement in liquid assets

2011

2010

39,020 174,054 (202,514) (91,138) (80,578)

268,027 168,067 (114,780) (733,906) (412,592)

(33,860) 9,783 (24,077)

(82,025) 4,725 (20,278) (97,578)

154,171 154,171

â&#x20AC;&#x201C; â&#x20AC;&#x201C;

49,516

(510,170)

271,638 321,154 49,516

781,808 271,638 (510,170)

Annual Accounts Fair Trade Original 2011

Notes to the single Annual Accounts 2011 General The financial data on pages 42 to 52 inclusive are derived from the consolidated Annual Accounts of the Fair Trade Original Foundation. KPMG Accountants has audited the consolidated Annual Accounts and issued an unqualified audit opinion.

In the event of any variances or inconsistencies between the text and figures presented in these accounts and the original Annual Accounts 2011 as filed with the Trade Register then the latter shall prevail.

Balance sheet 1

Tangible fixed assets

2 Alterations

Computer equipment

Inventory

Total

Balance at 1 January Investments and assets Divestments Balance of purchase price at 31 December 2011

803,995 803,995

956,670 26,630 (7,586) 975,714

360,518 7,230 (913) 366,835

2,121,183 33,860 (8,499) 2,146,544

Balance at 1 January Depreciation Divestments Balance of depreciation at 31 December 2011

717,911 55,567 773,478

783,934 105,902 (7,586) 882,250

325,521 12,585 (913) 337,193

1,827,366 174,054 (8,499) 1,992,921

30,517

93,464

29,642

153,623

Book value at 31 December 2011

Financial fixed assets

Loan to Cooperativa Campesina Apicola Valdivia 65 depository receipts for Triodosbank N.V. shares 26.36 depository receipts for Oikocredit Nederland shares

2011

2010

10,000

20,000

4,810

4,672

5,271

5,192

20,081

29,864

In 2011, stock dividends resulted in the acquisition of one depository receipt for a Triodosbank N.V. share and 0.4 depository receipt for an Oikocredit Nederland share.

3 Stock

Annual Accounts Fair Trade Original 2011

Current assets

Other receivables and prepayments

2011

2010

746,915 301,590 287,298 257,545 98,014 13,581 1,299,338 3,004,281 (107,115) 2,897,166

642,019 261,877 201,404 287,234 104,329 9,244 1,114,898 2,621,005 (50,637) 2,570,368

Provision for unmarketability Total, Gifts & Living

432,410 214,767 195,968 43,302 886,447 (128,125) 758,322

362,354 222,208 262,231 70,988 917,781 (311,919) 605,862

Goods underway Packaging material Total stock at 31 December

375,388 57,329 4,088,205

298,763 43,350 3,518,343

Coffee and Food Coffee Breakfast Alcoholic beverages Confectionery Tea Complementary Other food Provision for unmarketable items Total, Coffee and Food Gifts & Living Interior decorations Table accessories Fashion Stationery

Trade accounts receivable 2011

2010

Dutch accounts receivable International accounts receivable

2,619,956 82,005

2,409,742 96,550

Subtotal, accounts receivable

2,701,961

2,506,292

Provision for doubtful debts

1,220 2,700,741

3,614 2,502,678

Advance financing of trading partners

This amount receivable of € 50,930 relates to advance payments to trading partners in developing countries for future deliveries of Food and Gifts & Living products. A provision of € 6,000 (2010: € 13,000) has been deducted from the amount receivable.

Security deposits Prepaid ICT costs Corporation tax Prepaid selling costs Consultancy fees Insurance premiums Personnel costs Prepaid pension premiums Procurement costs Interest Contribution from Max Havelaar in the Nationale Postcode Loterij programme costs Subsidies to be received Other

2011

2010

29,428 18,107 13,206 10,622 9,900 9,216 6,561 3,109 2,888 2,839 -

28,789 26,634 14,635 56,520 8,950 3,066 1,154 8,034 15,000

15,779 121,655

700,650 35,982 899,414

Liquid assets

The cash at bank and in hand relates to the balance in bank accounts and cash resources. The cash at bank and hand is freely disposable unless otherwise stated.

8 Equity

Balance of other reserves at 1 January Result for the financial year Balance of other reserves at 31 December

2011

2010

3,483,103

3,215,076

39,020 3,522,123

268,027 3,483,103

9 Provisions 2011

2010

126,382 39,541 27,732 193,655

245,073 67,096 84,000 396,169

A Social Plan was agreed with the trade unions prior to the reorganization implemented in July 2007. A provision has been formed for future commitments towards the staff who have left the organization or have been transferred. Fair Trade Original’s conditions of employment include a provision for a non-recurrent bonus to employees who have been in service with the organization for 12.5, 25 or 40 years. On the basis of the current workforce the current obligations extend to a nominal amount of € 27,732, whereby account is taken of mortality risks.

Annual Accounts Fair Trade Original 2011

Short-term debts 11 Taxes, pension premiums and social security charges

Turnover tax Payroll tax and national insurance premiums

2011

2010

214,714 128,843

176,052 136,287

343,557

312,339

2011

2010

290,017

296,498

247,396 48,901 39,887 37,451 32,981 16,839

201,031 32,812 38,296 40,670 48,149 32,255

608 128,309 842,389

26,712 111,569 827,992

12 Other debts and accruals Unoccupied real estate Social Plan Anniversary bonuses Balance of provisions at 31 December

As a result of the reorganization and the 2007 fire, part of the warehouses and offices in the leased premises at Beesdseweg 5 in Culemborg are no longer in use. It is firmly expected that the vacant areas will not be re-allocated to operational activities in the period before the expiry of the lease (on 31 December 2012). The cash value of the future rental obligations is recognized in the annual accounts as a provision inclusive of an increment for unavoidable accommodation costs. The lease paid relating to the vacant areas is deducted annually from the provision.

Long-term debts 10 Interest-free loans The interest-free loan of € 982,434 granted by the Fair Trade Assistance Foundation has been provided until 31 December 2020. This loan is based on the agreements reached with the tax authorities.

Procurement costs, additional costs, licences and bonuses Personnel costs Selling costs Prepaid subsidies Issued gift vouchers Logistics costs Accountants and consultancy fees Goods invoices to be received Other

Financial instruments

Commitments not included in the balance sheet

The company makes use of various financial instruments for its normal operations which expose the company to market and/or credit risks. This relates to financial instruments which are recognized in the balance sheet and foreign exchange forward transactions and currency options that cover future transactions and cash flows. The company does not trade in these derivatives and has implemented procedures and a code of conduct to limit the scope of the credit risk associated with each counterparty or market. Any losses arising from a counterparty’s failure to pay amounts due to the company are limited to the market value of the respective instruments. The contract value or notional principal amounts of the financial instruments are solely an indication of the extent to which financial instruments of this nature are used: these are not an indication of the amount of the credit or market risks.

An amount of € 157,035 is deposited in a blocked account with the Rabobank to serve as warranty for rents and as surety for risks related to foreign exchange forward transactions.

The estimated market value and total contract value / notional principal amounts of the foreign exchange forward transactions and currency options at 31 December 2011 are listed in the following table:

Foreign exchange forward transactions for purchase of US dollars Total

Estimated market value

Contract value / notional principal amounts

467,796

440,785

467,796

440,785

The current lease commitments for the areas and rooms used at Fair Trade Original’s premises in Culemborg amount to a total of € 165,000. The lease commitments for company cars, maintenance contracts, out-tasking, landline telephony and photocopying equipment amount to approximately € 193,000.

Annual Accounts Fair Trade Original 2011

Notes to the single profit and loss account 13 Net turnover

Food Coffee Gifts & Living Total

2011

2010

Realization in % of 2010

11,062,218 5,333,339 3,226,173 19,621,730

10,936,594 4,638,388 3,019,274 18,594,256

101% 115% 107% 106%

14 Gross margin The continuing commitments arising from the logistics service agreement with Van Uden Logistics amount to € 190,000. This obligation relates to the lease of storage space. At year-end 2011 the commitments arising from current orders of merchandise amounted to € 1,093,000.

Transactions with related parties Transactions with related parties are an issue in the event of a relationship between the company, its participating interests and members of their management boards or managers. No transactions with related parties have taken place.

Food Coffee Gifts & Living Total

2011

% of turnover

2010

% of turnover

3,213,061 991,307 1,427,533 5,631,901

29% 19% 44% 29%

3,022,134 1,031,548 1,226,385 5,280,067

28% 22% 41% 28%

15 Other income

Annual Accounts Fair Trade Original 2011

16 Personnel costs

Income from subsidies Contribution from Max Havelaar in the Nationale Postcode Loterij programme costs Contribution from ASN Bank Other contributions to subsidized programmes Movement in the provision for the advance financing of trading partners Donations Total

2011

2010

67,835 17,406

1,702,315 154,444

16,610 285

2,500

7,000

(7,000)

4,615 113,751

2,608 1,854,867

2011

2010

Salaries and contracting of personnel Pension contributions, social security charges and other levies Study and recruitment costs Release from the anniversary bonus provision Other

2,150,849 456,218

2,210,518 459,448

4,591 (53,540) 52,792 2,610,910

27,339 (3,749) 80,453 2,774,009

On-charged costs to others Total

18,360 2,592,550

16,850 2,757,159

17 Depreciation PSO subsidized a training and work programme and contributed an amount of â&#x201A;Ź 67,835 to this programme in 2011. Fair Trade Original receives an annual advance payment from PSO for the performance of this programme. The expenditure on the programmes is deducted from the amounts received.

Receivables (debt) at 1 January Advance payments received Expenditure Receivables (debt) at 31 December

PSO (28,379) 69,426 67,835 (29,970)

The receivables and debts relating to subsidies are recognized under other receivables and other debts respectively.

During the year under review the average number of employees (excl. temporary employees) amounted to 41 FTEs (2010: 42).

18 Selling costs

Depreciation charges Result from the disposal of tangible fixed assets by sale Total

2011

2010

174,054 (532)

168,067 (455)

173,522

167,612

2011 Logistics costs Promotion costs and materials Branding & Communication Packaging & product development Payment discounts Travelling and accommodation expenses Contributions, colleague fair trade organizations Annual Report Provision for doubtful debts Other Total

2010

1,054,890 1,116,257 479,021 633,478 414,220 532,709 124,153 205,672 50,903 47,693 31,927 27,626 21,022

23,039

17,818 9,043 (2,622) 2,469 21,538 12,901 2,212,870 2,610,887

19 Accommodation costs

21 Financial income and expenditure

Rent Maintenance and cleaning of buildings and inventory Gas, water and electricity Insurance premiums Release from provision for vacancy of real estate Property tax and other levies Total

2011

2010

124,920 65,082

126,800 70,708

54,691 27,802 (8,558)

56,773 29,636 26,300

3,932 267,869

3,866 314,083

2011

2010

139,653 99,433 69,371

576,697 119,444 116,437

63,387 33,483

48,587 36,676

24,736

24,507

44,198 474,261

52,500 974,848

20 General costs

Partner development ICT Accountants and consultancy fees Company cars Charges for post and telecommunications Purchase/maintenance of inventory and office supplies Other Total

Interest expenses Interest income Dividend receipts and investment results Balance of expenses less income

Annual Accounts Fair Trade Original 2011

Signed by the Supervisory Board and the Management Board

2011

2010

(26,147) 27,236 272

(23,390) 34,217 330

1,361

11,157

Fair Trade Original has a current account credit facility with Fair Trade Assistance for the financing of the working capital. The agreed rate of interest is equal to the deposit rate of interest of the European Central Bank, increased by 2.75%. The rate of interest is set per quarter, whereby the rate of interest in the previous quarter is adopted for the next quarter. The interest is due per quarter. No security has been furnished. At 31 December 2011 € 154,171 was loaned from Fair Trade Assistance. In 2011, the average balance of the current account credit facility with Fair Trade Assistance was € 795,366. The interest paid by Fair Trade Original amounted to € 26,116.

22 Corporation tax Fair Trade Original is levied 20% corporation tax on taxable profit to € 200,000. The rate above this amount is 25.5%. The final settlements of corporation tax returns have been issued for the years to 2010 inclusive.

Fair Trade Original has exercised the exemption as referred to in Article 2:383, Section 1, of the Netherlands Civil Code for the remuneration of members of the Management Board as any such statement could be traced back to one single natural person. None of the members of the Supervisory Board receive an emolument.

Culemborg, 27 April 2012 The Management Board The Supervisory Board M.F.J. Jansen

J. Schraverus

Other information Five-year financial summary In thousands of euros 2007

2008

2009

2010

2011

Movement in turnover by product group Food Coffee Gifts & Living Complementary Net turnover (inclusive of turnover bonuses)

7,653 5,906 3,639 66 17,264

9,156 3,043 3,053 39 15,291

10,337 4,463 2,939 68 17,807

10,937 4,579 3,019 59 18,594

11,062 5,288 3,226 45 19,622

Result Net turnover (inclusive of turnover bonuses) Operating result before interest and taxation Result after taxation Cash flow (net result + depreciation)

17,264 1,025 837 1,093

15,291 1,725 1,520 1,802

17,807 312 251 426

18,594 320 268 436

19,622 25 39 213

8,178 1,444

7,549 2,964

7,086 3,215

7,634 3,483

7,456 3,522

712 68 256

504 75 282

394 70 175

324 82 158

174 34 174

69 3,657

44 2,335

43 2,507

42 2,646

41 2,570

Capital Total assets Equity Fixed assets Balance sheet value Investments Depreciation Employees Number, year-average on the basis of fulltime employment Payroll, inclusive of social security charges and exclusive of temporary employees

Annual Accounts Fair Trade Original 2011

2007

2008

2009

2010

2011

Ratios Gross margin as % of net turnover Operating costs (excl. depreciation) as % of net turnover Operating result before interest as % of net turnover Result after taxation as % of net turnover Return as % of average equity

33.0 50.2 5.9 4.8 81.6

32.4 41.2 11.3 9.9 69.0

29.4 38.5 1.8 1.4 8.1

28.4 35.7 1.7 1.5 4.2

28.7 28.3 0.1 0.2 0.1

Stock as % of net turnover Trade debtors as % of net turnover Solvency (equity as % of total assets)

17.9 16.7 17.7

24.6 15.0 39.3

17.2 14.4 45.4

18.9 13.5 45.8

20.8 13.8 47.2

Annual Accounts Fair Trade Original 2011

GRI Index GRI G3 Guidelines C-Level

1. Strategy and Analysis 1.1 Statement from the Managing Director about the relevance of sustainability to the organization and its strategy 1.2 Description of key impacts, risks, and opportunities 2. Organizational Profile 2.1 Name of the organization 2.2 Primary brands, products, and/or services. 2.3 Operational structure of the organization, including main divisions, subsidiaries and joint ventures 2.4 Location of organizationâ&#x20AC;&#x2122;s headquarters 2.5 Number of countries where the organization operates (specifically relevant to the sustainability issues covered in the report) 2.6 Nature of ownership and legal form 2.7 Markets served (geographic breakdown, sectors served, and types of customers/beneficiaries) 2.8 Scale of the reporting organization 2.9 Significant changes during the reporting period regarding size, structure, or ownership 2.10 Awards received in the reporting period Report Parameters 3. 3.1 Reporting period for information provided 3.2 Date of most recent previous report 3.3 Reporting cycle (annual, biennial, etc.) 3.4 Contact point for questions regarding the report or its contents 3.5 Process for defining report content, including relevance, determining materiality and stakeholders 3.6/3.7 Boundary of the report (e.g., countries, subsidiaries, leased facilities, joint ventures, suppliers) 3.8 B asis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations or other entities 3.9 Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations 3.10 E xplanation of the effect of any re-statements of information provided in earlier reports

Page numbers

Reporting level (Full, Partial/ Not)

3, 4, 8

9 - 11

8 8, 9 9

F F F

9: link to site 9: link to site

8 39

F F

9: link to site

8 F 8, 21, 22, 25, 26 F 8 F N 28 F 5 5 5 5 5, 6 5 5

F F F F F F F

F N

Reason for non-reporting or Explanation of non-reporpartial reporting ting or partial reporting

Non applicable

Annual Accounts Fair Trade Original 2011

GRI G3 Guidelines C-Level Page numbers

Significant changes from previous reporting periods in the scope, boundary, or measurement methods 3.11 applied in the report 3.12 G RI index 3.13 Policy and current with regard to seeking external assurance for the report 4. Governance, Commitments, and Engagement 4.1 Governance structure of the organization, including committees under the highest governance body 4.2 Indicate whether the Chair of the highest governance body is also an executive officer 4.3 F or organizations that have a unitary board structure, state the number of members of the highest governance body that are independentand/or non-executive members 4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body 4.8 Internally developed statements of mission or codes of conduct relevant to economic, environmental and social performance and the status of their implementation 4.9 Procedures of the highest governance body for overseeing the organizationâ&#x20AC;&#x2122;s identification and management of economic, environmental, and social performance, including relevant risks and opportunities 4.12 E xternally developed economic, environmental and social charters, principles or other initiatives to which the organization subscribes 4.13 Memberships in associations (such as industry associations) and/or national/international advocacy organizations 4.14 List of stakeholder groups engaged by the organization 4.15 B asis for identification and selection of stakeholders

Reporting level (Full, Partial/ Not) N

Reason for non-reporting or Explanation of non-reporpartial reporting ting or partial reporting

Social part of the Account is not verified

52 - 58

8 8, 9 8

F F F

8,9

9, 10, 11, 12

22, 23 & 36 - 39 9

F N

4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder

group 4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the

organization has responded to those key topics and concerns

Non applicable

9: link to site

Information is not included in the Account Only concerning the Account itself Only concerning the Account itself

Annual Accounts Fair Trade Original 2011

GRI G3 Guidelines C-Level Page numbers

Reporting level (Full, Partial/ Not)

Reason for non-reporting or Explanation of non-reporpartial reporting ting or partial reporting

DMA Economic aspects EC1 Direct economic value generated EC2 F inancial implications and other risks and opportunities due to climate change

18 - 20 18 & 41 - 52 10, 38

F F P

EC3 Coverage of the organizationâ&#x20AC;&#x2122;s defined benefit plan obligations

EC4 Significant financial assistance received from government. EC6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of

3, 11, 18 12, 31 - 39

F F

operation EC7 Procedures for local hiring and proportion of senior management hired from the local community EC8 D evelopment and impact of infrastructure investments and services provided primarily for public benefit

N F

Not material

31 - 39

Environmental performance indicators DMA Environmental aspects

10 - 14

Emphasis on business in the Netherlands

EN1 Materials used (by weight or volume)

13, 14

EN2 Percentage of materials used that are recycled input materials EN3 Direct energy consumption by primary energy source EN4 Indirect energy consumption by primary source EN5 Energy saved due to improvements

13 13 13, 14

N F F P

Only concerning packaging materials Information not available

5. Management approach and performance indicators Economic performance indicators

Information partly available No mention of coverage made

(through commercial, inkind or pro bono engagement)

EN8 Total water withdrawal by source EN11 Location and size of land owned, or adjacent to areas of high biodiversity EN12 D escription of significant impacts of activities, products, and services on biodiversity

N N N

Not material

Not material Not material Not material

Information environmental aspects in the chain partly available Information concerning products not available

Rental property expires in 2012, later on more focus on energy saving building

Annual Accounts Fair Trade Original 2011

GRI G3 Guidelines C-Level Page numbers

EN16/EN17 Total direct and indirect greenhouse gas emissions by weight EN19/EN20 Air emissions (ozone-depleting substances, NO, SO) EN21 Water discharge EN22 Total weight of waste by type and disposal method EN23 Total number and volume of significant spills EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation EN27 Percentage of products sold and their packaging materials that are reclaimed EN28 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations EN29 Significant environmental impacts of transporting products and materials used for the organizationâ&#x20AC;&#x2122;s operations, and transporting members of the workforce Social performance indicators: labor practices DMA Labor practices and decent work LA1 Total workforce by employment type, employment contract and region LA2 Total number and rate of employee turnover by age group, gender and region LA4 Percentage of employees covered by collective bargaining agreements LA5 Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements LA7 Rates of injury, occupational diseases, lost days, and absenteeism and number of workrelated fatalities by region LA8 Education, training, counseling, prevention and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases LA10 Average hours of training per year per employee by employee category LA11 Programs for employees to improve their skills and knowledge LA12 Percentage of employees receiving regular performance and career development reviews

Reporting level (Full, Partial/ Not) N N N N N P P N

Reason for non-reporting or Explanation of non-reporpartial reporting ting or partial reporting

13, 14

Information partly available

15 15 15, 16 15

F F P F N

Not material

14 12

F N

16 15

F F

Information not available Not material Not material Information not available Not material Information partly available Non applicable

Not material

Information not specifically available

Legal deadlines

Annual Accounts Fair Trade Original 2011

GRI G3 Guidelines C-Level Page numbers

LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity LA14 Ratio of basic salary of men to women by employee category

8, 9, 15

Reporting level (Full, Partial/ Not) F

Reason for non-reporting or Explanation of non-reporpartial reporting ting or partial reporting

Information not specifically available

Social performance indicators: human rights DMA Human rights HR1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening

9, 32, 36 - 38 39

F P

HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights and

36 - 39

actions taken HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained HR4 Total number of incidents of discrimination and actions taken

N 36 - 39

HR5/HR6/HR7 Operations identified as having significant risk for (1) deprivation of the right to exercise freedom 36 - 39 of association and collective bargaining, (2) child labor, (3) forced or compulsory labor, and actions taken to eliminate this HR10 Percentage and total number of operations that have been subject to human rights reviews and/or impact 36 assessments HR11 Number of grievances related to human rights filed, addressed, and resolved through formal grievance 36 & 37 mechanisms Social performance indicators: society DMA Acting in society and community SO1 Nature, scope and effectiveness of any programs and practices with impact on communities SO2 Percentage and total number of business units analyzed for risks related to corruption

31 - 39 31 - 39

Not reported as such

Human rights are anchored in fair trade principles and working method

Information not specifically available

F F

F P

F F N

Reporting partial defaults in relation to EFTA/FLO

Information not specifically Monitoring on social available aspects takes place, anti-corruption policy is in development

Annual Accounts Fair Trade Original 2011

GRI G3 Guidelines C-Level Page numbers

SO3 Percentage of employees trained in organizationâ&#x20AC;&#x2122;s anti-corruption policies and procedures

Reporting level (Full, Partial/ Not) N

SO4 Actions taken in response to incidents of corruption

SO5 Public policy positions and participation in public policy development and lobbying

SO8 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations SO9 Operations with significant potential or actual negative impacts on local communities S1O Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local communities

Reason for non-reporting or Explanation of non-reporpartial reporting ting or partial reporting

Information not specifically See SO2 available Information not specifically See SO2 available 8: link to site As a member of EFTA part of Fair Trade Advocacy Office Non applicable

N N

Non applicable Non applicable

Social performance indicators: product responsibility

DMA Product responsibility PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures PR3 Type of product and service information required by procedures PR4 Total number of incidents of non-compliance with regulations and voluntary codes PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction

9, 22 9, 22

F P

9, 22 9, 22, 23

F N P

PR6 Adherence to laws, standards and voluntary codes related to marketing communications (advertising, promotion and sponsorship) PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services

Non applicable Information with regard to customer satisfaction is not specifically available Not discribed as such

Non applicable

Information not available as such

Complaints registration is ongoing