Fair trade slowly catching on here

Japanese companies big and small learning the social benefits of playing fair at grassroots level

by Minoru Matsutani

Staff Writer

Hirokazu Kanetaka, who works in the cafe section of restaurant operator Zensho Holdings Co., was thrilled when an elementary school teacher in Rwanda thanked the company for helping students get to school on time.

The teacher told him that a newly built water supply system funded through Zensho’s fair trade program has freed the students from the time-consuming job of climbing up a mountain to get a bucket of water every morning.

“Their big applause and appreciation really surprised me. I was proud of being a Zensho employee,” said Kanetaka, who was one of four Zensho employees who went to Rwanda in June. “My daily job is to increase sales by providing tasty coffee to customers in Japan. But I realized my job is the source of smiles in Rwanda.”

Fair trade, a concept that includes providing humanitarian benefits in developing countries that are the sources of the goods traded, is taking root in Japan as companies try to attract customers who also want to support people in disadvantaged nations.

Its proponents say it lifts people in the developing world out of poverty by offering them a premium for their goods, eliminating exploitation and dependence on foreign aid while providing a positive impact on communities.

Japan’s fair trade market was valued at around ¥810 million in 2008, up from ¥731 million in 2007, by the Institute of International Trade and Investment, a think tank in Tokyo. Because the market size is difficult to calculate, the institute decided to be conservative in its estimates, according to researcher Kotaro Masuda.

The institute does not have recent figures, but they are undoubtedly rising, Masuda said.

How fair trade programs work varies among companies.

In Zensho’s case, the operator of the Sukiya “gyudon” (beef on rice) chain and other restaurants helps countries it imports food items from by paying a 5 percent “social premium” on top of the original price. The company imports coffee beans and other produce from farmers in Rwanda and 11 other countries.

Rwanda’s water supply system was paid for with this social premium. Zensho sends its employees to consult on how to spend the money, which is aimed at building social infrastructure and other welfare purposes.

The Tokyo-based company People Tree, which specializes in fair trade products, is considered one of the largest fair traders in Japan. It imports from 10 countries, including Kenya and Asian and Latin American countries, spokeswoman Michiko Ono said.

In Kenya, People Tree imports accessories from a group that employs disabled people.

Founded in 1995, People Tree focuses on fashion items to change the perception that fair trade goods are low in quality. Ono said the production of fashion goods involves numerous steps, creating many jobs.

Although fair trade is gaining momentum in Japan, the nation accounts for only 1.7 percent of global fair trade, which was valued at €2.65 billion (¥427 billion) in 2007, according to Masuda’s institute and a report by DAWS/FINE, a group of global trade and retail associations.

One of the problems in Japan is the lack of a unified system. Because the definition of fair trade is vague, it is difficult to calculate the entire market. Large corporations may not necessarily break down sales figures for fair trade and it is difficult to keep track of numerous tiny companies, Masuda said, adding that a number of firms, including Starbucks Japan, have declined to answer the institute’s surveys.

In addition, companies conducting fair trade don’t necessarily utilize two well-known accreditation bodies — Fairtrade Label Japan, a Japanese unit of German-based Fairtrade International, and the Dutch-based World Fair Trade Organization. Many companies, including Zensho, opt not to pay them for accreditation, instead setting their own standards and promoting the products on their own, Masuda said.

Zensho was not included in the institute’s survey because the volume of its fair trade was small at the time of the survey, Masuda said. Zensho began fair trade in April 2007, since expanding it to 12 countries in Africa, Latin America and Asia. Coffee has been the main import.

Aiming to boost fair trade, the Japan External Trade Organization began a program in 2007 to support Japanese companies conducting fair trade in Africa. It gives up to ¥5 million to firms to aid their fair trade projects.

More than 30 companies have received the subsidy, a JETRO official said.

Yamada Seiyu, the edible oil maker based in Kyoto, is using JETRO money for a sesame seed project in Uganda.

The company has not begun imports yet, but it has helped farmers with planting seeds this fall and is expecting the harvest to be ready in January or February, President Koichi Yamada said.

He expressed hope that the farmers will be successful enough to be able to export to Europe and other developed countries.