29 november 2008
Financial crisis forces reorganization at Dutch Fair Trade company
AgroFair is a fresh fruit company co-owned by farmers in Africa and Latin America. Founded by Dutch development organisation Solidaridad, in 1996 it introduced the first fair trade fresh fruit (nowadays comprising bananas, mangoes, pineapples and citrus) into Europe. The fair trade system ensures that the producers receive a guaranteed minimum price for their products. AgroFair’s fruit growers own a 50 percent stake in the company. AgroFair buys all its products directly from the producers or their organisations, without the intervention of intermediary buyers.
This year AgroFair’s turnover will stabilize at 67 million euro. Nienhuis: “But our gross margin (5.3 million euro in 2007) is under great pressure.” Nienhuis won’t give precise figures for this year. The main reasons are increases in the price of raw materials and oil and the volatile exchange rates. Nienhuis: “Since the financial crisis, the dollar has been getting stronger, and we buy our fruit in dollars. Consequently we have to make new and more flexible arrangements with growers and retailers.”
Fair trade is doing pretty well on the world scale, but AgroFair has lost its position as the only player in the game. Nienhuis: “We were one of the pioneers, nowadays we are only one of the importers and distributors. So we have to fight harder. Our ‘disadvantage’ is that we are specialised in fair trade, it is our core business. Other companies do fair trade as a side business. So for them it is easier to switch from fair trade to common fruit and vice versa.”
AgroFair’s problems have deepened since Sainsbury’s, the UK’s second biggest retailer, switched to 100 percent fair trade bananas in 2007. This doubled the world’s volume of fairtrade-labelled banana sales overnight. Nienhuis: “For fair trade this was a major boost. Sainsbury’s volume is bigger than our total volume in Europe. But for us, it meant a race between suppliers to source enough fair trade-certified bananas to meet the new demand and it put pressure on growers. Most of them stayed loyal to us, some switched to Sainsbury’s.” Bananas make up almost 80 percent of AgroFair’s turnover.
P+ webtip: Agro Fair