A. Introduction

Previous chapters have discussed the link between heightened U. S. consumer awareness of child labor in import industries and the growth of private labeling systems within the hand-knotted carpet, leather footwear, and soccer ball industries. Tea has not been among the industries to draw attention from U. S. anti-child labor activists or consumer campaigns. Nonetheless, there has been increased international scrutiny of tea production methods, particularly since 1994, when consumer groups in Germany began raising concerns about child labor on the tea estates of India. Indian tea producers, concerned that the child labor issue could spread in Europe and disrupt the market for tea, decided to raise their standards concerning child labor above those mandated by Indian law. ¹

The same year that activists in Germany focused their attention on child labor in tea, the first fair trade labeling program for this industry was launched by TRANSFAIR International, a German organization which was already operating fair trade labeling programs for other commodity products. Fair trade labeling, which originated in the Netherlands in 1988, promotes improvements in trading conditions, including higher prices paid to the actual producers of agricultural goods in developing countries.

TRANSFAIR and other fair trade labeling organizations do not trade themselves. Rather they create a structure through which goods produced under certain standards can be imported and marketed to consumers in industrialized countries.These production standards are conveyed to consumers through the use of a fair trade logo. The logos are registered trademarks within each consuming country.

Fair trade labeling in tea is different from the other labeling programs discussed in previous chapters inasmuch as child labor was not the motivating force behind the program. Prior to their movement into the tea industry, fair trade labels had been designed principally to support small holder producers of crops such as coffee. International standards and domestic laws on child labor generally treat small holder producers different from plantations, since children in the former settings often work for their own families. However, tea is principally a plantation crop, where international law sets a clear minimum age standard. Thus, to address increasing concerns about tea production, TRANSFAIR International incorporated into its tea criteria a provision prohibiting the employment of children under the age of 14.

This chapter will examine the structure and operation of fair trade labeling in tea, with a particular focus on the child labor aspects of the label. Section B briefly describes the structure of the international tea industry and the U. S. tea market, and Section C discusses the incidence and extent of child labor in the tea industry. Section D contains an analysis of the structure and implementation of the fair trade labeling programs for tea. It also provides supplementary information gathered insite visits to three countries — India, Tanzania, and Nepal — that currently produce labeled tea. Finally, Section E reports responses of five U. S.- based tea importers, packers, and retailers to the child labor issue, based on a recent voluntary survey.

B. Industry Profile

The tea products at issue in this report are those derived from the CamelliaSinensis plant . ²  Although the term tea is often used in reference to other beverages derived from various plants and flowers, production methods for these "herbal teas"are outside the scope of this study.

With the obvious exception of water, tea is the most widely consumed beverage in the world. Although tea is grown commercially in over 35 countries, world production is largely concentrated in a few countries. In 1995, India, China, SriLanka, Kenya, Indonesia, and Argentina accounted for over 75 percent of world production. More than half of 1995 world production came from India and China alone. ³ Many countries, including India and China, export less than half of their production due to high domestic consumption; others, such as Kenya and Sri Lanka,export most of their tea. ⁴ In 1995, the top tea-exporting countries (by volume) were Sri Lanka, Kenya, China, India, Indonesia, and Argentina. ⁵

The structure of tea production varies from country to country. Production may be concentrated in private plantations, state-owned enterprises, small holdings,or some combination thereof. Most frequently it is cultivated on large tea plantations (also called estates or gardens), which may be 200 to 400 hectares in size (1 hectare equals 2.47 acres) in major producing countries. ⁶ For instance, in India, Bangladesh,and Malawi, the bulk of tea production takes place on large estates, many of which are owned wholly or in part by multinational beverage companies. Some of these multinationals have their own estates and trading, processing, and blending
facilities. Other multinationals only operate estates and trading operations, or simply operate their own estates. ⁷ In Kenya, where tea cultivation has been promoted to encourage small farmers to participate in the cash economy, there is now an important small-holder sector (with holdings of less than 50 acres) alongside the estate sector. ⁸ World tea production has expanded considerably in recent decades. The record 1995 world crop of 2.6 million tons was 156 percent greater than that registered in 1963. ⁹ During this period, many countries have increased their tea acreage at the same time productivity has been climbing due to new varieties, innovative planting, production and pest/disease control techniques, and modern processing methods. During the same period, prices for tea on the world market have steadily declined. Prices remain low due to increasing supply and weak or at best stable world demand, in part due to a large reduction in Russia's imports of Indian tea. ¹⁰

While consumption of tea has traditionally taken a back seat to coffee and soft drinks in the United States, tea sales have grown in the 1990s. ¹¹ Total U. S. annual tea sales at the wholesale level increased by 133 percent between 1990 and 1995. ¹² Growth was strongest in ready-to-drink bottled teas, large sized tea bags for food service vendors, flavored and unflavored specialty blends, and premium varietal estate teas. ¹³ It is estimated that tea products can now be found in almost 80 percent of all U. S. households. ¹⁴ The U. S. tea market is unique in that 80 percent of tea consumption consists of iced tea. ¹⁵ The bulk of iced tea is brewed from tea bags, which account for the largest share of tea sales at the retail level. In 1994, tea bags accounted for over 65 percent of total sales, ready- to-drink tea 19 percent, and instant tea 11 percent. Iced tea mix and loose tea accounted for the remaining 5 percent of the market. ¹⁶

Only a very small amount of tea is grown commercially in the United States, on a plantation in South Carolina. ¹⁷ Therefore, the U. S. tea industry consists primarily of the importation, processing, marketing, and distribution of teas grown elsewhere. ¹⁸

The United States is among the world's major importers of tea. ¹⁹ The U. S. industry is highly concentrated. A few large companies account for as much as 80 percent of the market, while a multitude of smaller players compete for the remaining market share. ²⁰

U. S. tea imports in 1996 were valued at $132.1 million. ²¹ Figure V- 1 showsthe top 20 suppliers of tea to the U. S. market in 1996. The top five (by value) areChina, Germany, Argentina, Indonesia, and Sri Lanka. ²² This supply pattern has notchanged substantially since 1989. While the United States imports tea from over 60 countries, the top few countries provide the bulk of imports. China, Germany, and Argentina alone accounted for 53 percent of total imports (by value) in 1996. ²³ Since Germany grows none of the tea that it processes and blends for the U. S. market, tea imported from Germany originates elsewhere. However, since Germany is one of the world's leading transit and processing centers for tea, the origins of certain products reexported from Germany may be difficult to track. Table V- 1 shows imports from the top 20 suppliers of U.S. tea imports in 1996 for the years 1989 through 1996.

An international network of businesses and business partnerships moves teafrom growers and processors in countries of production through international commerce to final processing, packing, and retail distribution in consuming countries.

TABLE V-I
U.S. Tea Imports, 1989-1996, Top 20 Suppliers in 1996
(in millions of U.S. dollars)

 

	1989	1990	1991	1992	1993	1994	1995	1996
China	20.3	21.7	23.0	25.2	24.7	26.8	20.9	25.9
Germany	21.4	21.2	21.2	20.8	18.4	20.4	24.4	21.9
Argentina	12.6	14.8	16.7	21.8	22.3	25.2	21.3	20.9
Indonesia	16.0	14.5	14.8	17.3	15.5	16.0	10.4	12.9
Sri Lanka	11.1	8.1	7.3	7.3	7.6	8.5	10.0	10.8
India	7.5	8.1	7.3	6.1	6.3	7.3	7.0	8.4
Kenya	10.4	7.5	7.1	7.2	6.7	5.9	4.2	6.3
Malawi	2.5	2.1	2.5	3.3	4.3	4.1	2.7	4.2
United Kingdom	2.1	2.7	4.1	4.6	2.6	2.8	3.2	3.9
Brazil	5.7	5.2	4.2	4.3	3.5	4.2	3.0	2.5
Taiwan	3.4	6.0	2.2	2.2	1.8	2.2	2.3	2.4
Japan	1.3	1.0	1.5	1.4	1.6	2.2	2.3	2.4
Hong Kong	1.4	1.6	1.6	1.3	.8	1.0	.8	1.2
Netherlands	3.7	4.2	3.1	1.7	2.4	1.8	2.5	1.2
Papua New Guinea	.6	1.1	1.3	1.0	1.3	1.1	.7	1.1
Canada	1.5	.8	1.0	1.6	1.3	1.2	1.1	1.1
Tanzania	.1	.2	.5	.2	.3	.5	1.3	.9
Ecuador	.5	.3	.5	.6	.7	.9	.5	.6
South Africa	.2	.1	.1	.2	.3	.5	1.3	.9

South Africa	.2	.1	.1	.2	.2	.8	.3	.5
Vietnam	0	0	0	0	0	.9	.6	.4
Total Imports	5790.5	6708.3	6415.8	6618.2	7089.2	7495.7	7707.9	8168.1

Source: Official Statistics of the U.S. Department of Commerce

Some tea is purchased directly from estates by large importers and packers, but most is sold through auction houses in producing countries and major transit hubs such as London and Hamburg. ²⁴ Most tea sold on a retail basis is a blend of teas from around the world. ²⁵

Figure V- 2 illustrates the many routes through which these transactions occur. The principal actors/entities in tea production are listed below:

• Tea cultivators and pluckers, employees of tea growers, cultivate tea bushes and pluck tea leaves.
   
• Tea growers own the enterprises that cultivate and harvest tea. They include large publicly or privately owned estates, individual smallholder producers, or small holder cooperatives. Most large growers have on-site facilities to ferment, dry, and roll or crush tea, the first level of processing. However, smallholders typically sell their harvested leaves to nearby estates, middlemen, or specialized processors.
   
• Agents or brokers are intermediaries who purchase tea from estates or at auction for resale to tea wholesalers, packers, or importers in consuming countries. They may also arrange for shipping and financing tea before the buyer takes possession. Tea importers purchase tea to customers' specifications and arrange for shipping and delivery by specific dates. Their purchases may be directly from growers, from agents or brokers, or at tea auctions. Today, there is little distinction between brokers, agents and importers in the tea industry.
   
• Auction houses are the forum in which various actors meet to transact international tea sales.
   
• Tea packers may import tea leaves directly or purchase imported leaves which they blend, convert into tea products, and/or package for sale. Some process and pack only their own branded teas; others also prepare private label teas for supermarkets and retail outlets. It is estimated that as much as 70 percent by weight of tea entering the United States may be imported directly by large processors. ²⁶ Some of the larger packers/processors own the estates from which they import directly. ²⁷ Others do not own estates, but maintain representatives in producing countries to purchase tea.
   
• Distributors/wholesalers sell the final product to retail outlets. Some processors and packers also handle this function. Distributors may also sell tea directly to the general public via mail-order.

FIGURE V-2
Tea Chain of Production and Distribution

• Retailers sell the final tea product to the consumer. The principal retail outlets for tea in the United States are supermarkets, the food service industry, specialty shops, and general retail stores. ²⁸

C. Child Labor in the Tea Industry

There are both agricultural and industrial activities associated with tea production. Planting, cultivating, and plucking tea are labor-intensive operations. Withering, rolling, fermenting, drying and bagging, which often take place in modern facilities, require considerably more automation and proportionately less labor. Hence the bulk of employment in the tea industry, and the site of potential child labor problems, is in the fields.

Fieldwork is generally done by hand. ²⁹ During the off season, tea bushes are pruned to induce growth and keep them at a workable height, usually about 3 feet. ³⁰ Other maintenance jobs include weeding, spraying, hoeing, drainage, nursery work,and fertilizing. ³¹ Some of these tasks require working around the base of bushes on hands and knees.

The tea leaves harvested during peak season are new shoots that emerge after pruning. These tea leaves are plucked and dropped in a basket or bag that is usually carried on the plucker's back. When the container is filled, the leaves are taken to a collection point, weighed, and transported to the processing facility. The tea must be processed quickly to take full advantage of flavors contained in the tea leaf. ³² Depending on the type of processing, tea becomes one of three major types— black, green, or oolong. The dry leaves are then graded and sorted according to leaf type and size. ³³ Finally, the leaves are prepared for shipping or auction.

The seasonality of tea production affects the job security and benefits of those working in the field. The typical plucking season is six to nine months, although in some regions it lasts the entire year. At the end of the harvest, temporary field workers are dismissed until the harvest begins again. A small component of the peak season workforce is sufficient to handle pruning and other winter chores. These year- round workers are usually classified as permanent employees. During the lengthy peak season, temporary workers are either recruited from within the households of permanent employees or hired from outside the estate.

The most labor-intensive function, plucking, is a delicate operation that is often viewed as women's work. ³⁴ Given few child care alternatives, women who pluck tea often bring their young children with them into the fields. Young children may begin by helping their mothers for recreation, but in countries where schooling is not compulsory, it is a short step to carrying their own baskets for pay. Most allegations of child labor in the tea industry involve the functions of plucking, weeding, hoeing, and nursery work. Some argue that children make good pluckers because of their "nimble fingers;" others argue that plucking is too arduous a task for children to perform. Child labor may also be preferred for functions that require moving about between bushes on hands and knees.

There is typically a daily wage for tea plucking, based on a minimum quota of leaves. If a worker exceeds this quota, additional wages are paid proportionate to the excess plucked. In some countries, pay differs by gender and/or by age of the plucker.

It is impossible to accurately quantify the number of children employed inthe tea industry worldwide. Because child labor is illegal, it goes uncounted in most official statistics. The existing surveys of child labor in the tea industry usually cover larger-scale operations without looking at child labor on smallholder estates. In many countries, however, smallholder estates are the subject of recent allegations of child labor. Some smallholdings may be purely family based, and thereby exempted from international standards on child labor. However, these international standards prohibit smallholders employing wage laborers from using child labor. It is very difficult to determine how much of the smallholder production takes place on family farms not employing wage laborers, and how much occurs in the context of hired labor. Minimum age requirements are sometimes difficult to enforce in countries that lack vital statistics registration and/ or compulsory education systems.

Tea plucking can be hazardous work. Workers, including children, who cultivate and pluck tea are exposed to toxic pesticides and insecticides, insects, andsnakes. Often, they are not given protective clothing and shoes. The work is physically demanding and often requires long hours. ³⁵

In June 1997, U. S. Department of Labor officials visited tea estates in Brazil, India, Kenya, Nepal, and Tanzania. ³⁶ The following country-specific information was collected during those visits and from the most recent available reports.

India

In the Indian tea industry, permanent workers and their families typically reside on the plantations, and relatives of permanent employees often hold temporary jobs. ³⁷ In the past, children have been a widely recognized part of the work force in India's tea industry. A 1995 report on child labor on tea plantations in northeast India described the employment of children:

Most of the child workers are employed as casuals. Children are found to do such strenuous work as plucking under very severe climatic conditions; they are assigned to nursery work, fertilization, carrying of heavy loads and household work. They are also made to work in the factories, against established law. ³⁸

The Plantation Labour Act of 1951 prohibited the employment of children under the age of 12 on any plantation, but permitted and regulated the employment of children of age 12 through 14 as well as adolescents, defined as those between the ages of 15 and 17. ³⁹ The 1951 Act requires both children and adolescents wishing to work to obtain a "certificate of fitness" from a certified surgeon. In addition, they may not work more than 27 hours a week, or at night. The Child Labour Prohibition and Regulation Act of 1986 amended certain portions of the Plantation Labour Act of 1951 by raising minimum age for employment from 12 to 14 years of age. ⁴⁰

Tea is grown principally in three areas in India: West Bengal and Assam in the northeast, and Nilgiris in the south. In 1990, the Government of Assam estimatedthat there were 96,535 children employed on tea gardens in Assam, making up over 14 percent of the total workforce. Of these child workers, nearly 70 percent were employed on a temporary or casual basis; the rest were estimated to be permanent workers. ⁴¹ In West Bengal, child workers numbered between 13,000 and 15,500 (5 to 6 percent of the workforce) in 1988, according to statistics published by the Tea Board of India and the Government of West Bengal respectively. The total number of children working may not have been represented in these figures, however, sincethey do not include temporary workers. ⁴²

International concern about child labor and local concern about potential repercussions prompted the Indian tea industry to issue its own recommendations regarding child labor. In July 1994, the Consultative Committee of Plantation Associations wrote a letter to all member associations urging them to not employ anychild under the age of 15. ⁴³ The following month, the Indian Tea Association advised its members, representing 63 percent of plantation production, to ensure that no oneunder 15 is employed in the fields or processing factories of tea estates. It furtherstated that "it is expected that those already in employment will be automatically phased out within two to three years." ⁴⁴

While there are no recent data on the incidence of child labor on Indian tea estates, interviews with representatives from industry, government, and labor unions indicate that the employment of children has been reduced on commercial estates producing tea for the export market. There are, however, some situations where children may still be employed. Some young dependents of estate residents may be employed as temporary workers during harvest season. ⁴⁵ In Darjeeling, there are a few instances where child dependents are allowed to work when a parent can no longer support the family due to death or illness. This type of situation is the result of an unwritten contract of permanent employment between employers and workers' families. Several sources indicate that children may still be working on small estates in the informal sector, particularly in the poorest regions where schools are either nonexistent or seriously inadequate, such as in parts of Assam and the Teraiand Dooers regions of West Bengal. Whether these children are working on family farms, or as part of a family unit or wage laborers on someone else's land, is unclear.

Nepal

The Nepalese tea industry, which produces largely for domestic consumption but does export some tea, consists of both government- owned and privately managed estates. Most of these estates are located in Illam and Jhapa in eastern Nepal. ⁴⁶ The traditional labor categories on tea estates include children ( lokadas ) and adolescents ( chhokadas ). ⁴⁷ A 1991 study on child labor in tea estates estimated that out of 3,995 permanent laborers, 451 (or 11 percent) were between the ages of 7 and 18. ⁴⁸

An ILO-sponsored 1996 survey of 35 tea estates, conducted by the General Federation of Nepalese Trade Unions (GEFONT), has led officials of the International Labor Organization to believe that the incidence of child labor in tea estates hasdeclined since the enactment of the Labour Act of 1992. ⁴⁹ Out of a sample population of 2,828 children, GEFONT found only 23 children between the ages of 5 and 14 employed as permanent workers. However, only 56 percent of the 2,828 children surveyed were found to be enrolled in school; the rest were either involved in household and other income earning activities or were "idlers." A considerable number of children were still reported to work during peak plucking season on a piece- rate basis. GEFONT also found that working parents occasionally used idle children as substitutes in the fields. Finally, GEFONT reported that Indian children have been found working in estates in Jhapa, along the Indian border. ⁵⁰

U. S. Department of Labor interviews in June 1997 with representatives of unions, government, NGOs and industry confirm that estate management is now sensitive to outside concerns about child labor. While various groups dispute the extent to which child labor persists on the estates, most agree that the practice continues and that it is both seasonal and difficult to detect.

Brazil

Registro, located in the Vale do Ribeira in Sao Paulo state, is the source of most tea exported to the United States from Brazil. While most tea is processed, packaged, and exported by a small number of large firms, the majority of tea in Brazil is grown on small plantations. The export-oriented Brazilian tea industry has been in crisis since the early 1990s due to low- cost competition from Asian produc-ers. Tea production has decreased and become more highly mechanized, even onsmall estates, reducing labor demand and increasing adult unemployment.

Here, as elsewhere, the line between family and commercial production isoften blurred. In 1994, in rural areas of Registro, children were reportedly working alongside their parents on pieces of land parceled out to their families by tea estate management. ⁵¹ Department of Labor interviews with government officials, industryand union representatives, and NGOs, as well as visits to tea estates, indicate that although child labor was a serious problem on some large tea plantations in the past, particularly during harvest season, its incidence has been virtually eliminated. ⁵² Union activism, media attention, depressed tea production, and higher adult unemployment have helped stop the use of child labor by large-scale employers in the industry.

Various sources indicated children still work on smallholder and family- farmed plots that supply green tea leaves to nearby estates under outsourcing arrangements. Several union representatives and tea workers said children work on smallholderand family farms during harvest season in tasks such as spreading fertilizer andpruning. ⁵³ A local Secretariat of Agriculture official said that due to deteriorating economic conditions, small farmers can no longer afford to hire employees and have their children help out with production. ⁵⁴ Some children combine this work with school, but in many cases they do not. ⁵⁵

Kenya

The Kenyan tea industry is made up of two distinct sectors: plantations and smallholders. Smallholders, who do not have the capacity to process their own tea, account for about half of the total tea produced in Kenya. ⁵⁶ The Kenyan Employment Act of 1976 prohibits the employment of children under the age of 16 in industrial undertakings but does not apply to the agricultural sector.

Officials from the Kenyan Ministry of Labour and Manpower Development and ILO/ IPEC Nairobi reported that while child labor is pervasive in the smallholder sector, it is not prevalent on large plantations. ⁵⁷ As elsewhere in the industry, small-holder estates hire large numbers of casual workers, particularly during harvest season. These casual workers often bring their children into the fields to pluck tea leaves with them. The smallholders either sell the plucked tea leaves to the large estates for processing or take them to one of the many factories maintained for smallholders by the Kenyan Tea Development Authority (KTDA). The KTDA maintains 45 factories exclusively for smallholders throughout Kenya. ⁵⁸

Tanzania

The majority of tea production in Tanzania is plantation-based. The largeestates are mostly union organized, and are not thought to hire many children. In Tanzania's smallholder sector, however, child labor is reported to be pervasive —primarily in the plucking of tea leaves. ⁵⁹

There are indications, however, that some children between the ages of 9and 14 may work on larger estates. In a 1995 study, some children who were not attending school were found to be working on tea estates. These children registered on a daily basis with the estate office but did not appear on the employer's payroll. ⁶⁰ In addition, during weekends or school holidays, children sometimes accompany their parents or relatives to the fields where they help pluck tea. ⁶¹ There have alsobeen reports of schools requiring students to pluck tea as part of the school day, with local authorities keeping the money earned or using it to purchase books and other supplies. ⁶² One study reports that primary school age children were being recruited for work on tea plantations in Iringa and Mbeya. ⁶³

The Tanzanian Employment Ordinance No. 47 of 1955 sets the basic minimum age for employment at 12 years of age and requires that 12 to 14 year old child workers receive a daily wage, work on a day-to-day basis, are provided transportation home each evening, and obtain permission to work from their parents.

Other

The use of child labor in tea production has been reported in Sri Lanka, Indonesia, Malawi, Uganda, and Zimbabwe. More research is required to determine the accuracy of these reports as well as the nature and extent of any child labor that exists. In Sri Lanka, a 1995 survey of 3,000 households on 100 tea estates found that youths 10 to 19 years of age made up about four percent of the workforce. Children not attending school, some under the age of 10, were found weeding, a function estate management contracts out to families in one-acre units. ⁶⁴ Labor organizations and NGOs allege children work along side adults on tea plantations in Indonesia, particularly in West Java and North Sumatra. ⁶⁵

There may be significant child labor on tea estates in Malawi ⁶⁶ and Uganda. ⁶⁷ Ugandan Ministry of Labor officials indicate that children perform about 10 percent of the labor in tea production and are used for picking tea, removing weeds, and spraying herbicides. Officials of the Ugandan Tea Association, however, report that child labor is negligible in the industry, occurring only in isolated cases on estates or in smallholder production. ⁶⁸ In Zimbabwe, children are reported to work alongside their parents on tea plantations after school during planting and harvesting seasons, and full- time during school holidays. ⁶⁹

D. Consumer Labeling Programs in the Tea Industry

1. Introduction

In the tea industry, child labor labeling appears to be limited to fair trade labeling programs. These programs originated in Europe and today are found in a number of tea consuming countries, including the United States. Fair trade labels inform consumers that products carrying one of the several existing labels were produced and traded under certain conditions. At present, fair trade labeling only involves agricultural goods, including tea, produced in developing countries. A prohibition on the use of child labor was not originally part of fair trade labeling initiatives. However, when tea was added to the list of labeled products, a provision on child labor was included in the tea producer criteria. This was because a large portion of tea production in many countries occurs on plantations, where international standards prohibit the employment of children under 14.

This section describes the structure and implementation of fair trade labeling in tea. It is based on materials from several of the fair trade labeling organizations, interviews with representatives of these organizations, and information obtained during Department of Labor site visits to three countries where fair trade labeled tea is produced — India, Nepal, and Tanzania.

2. Fair Trade Labeling

a. Program Overview

The idea of "fair trade" originated in the 1960s, spurred by the 1964 United Nations Conference on Trade and Development call for "trade not aid" as a development path for third-world countries. In the late 1960s, hundreds of "third- world" shops opened across northern Europe advertising goods made by small-scale producer groups in developing countries. ⁷⁰ These early fair trade initiatives, also called alternative trade, concentrated on handicraft products.

Today, the fair trade movement is made up of three principal branches: ⁷¹

• Fair trade import organizations (also known as alternative trading organizations) import and sell products generally made by small producers and producer cooperatives in developing countries, and pay a price that enables producers and their families to make an adequate living.
   
• Third- world shops sell products purchased under the same model.
   
• Finally, fair trade labeling initiatives, the subject of this section, aim to enlarge the market for fairly traded products and give consumers an independent certification of fair trade standards.

The first fair trade labeling initiative was introduced in the Netherlands in 1988 by an organization called Max Havelaar. ⁷² This initiative was a response to the breakdown of the International Coffee Agreement and the subsequent drop in worldmarket prices for coffee. ⁷³ Two other fair trade labels, TRANSFAIR and FairTradeMark, were introduced shortly thereafter. Unlike the earlier fair trade initiatives, these labeling programs focused on agricultural commodity items.

Today, there are Max Havelaar labeling initiatives in the Netherlands, Belgium, Denmark, Switzerland, and France; TRANSFAIR initiatives in Germany, Austria, Luxemburg, Canada, Italy, Japan, and the United States; and Fair Trade Markinitiatives in the United Kingdom and Ireland. In addition to tea, the products currently being sold under these labels include coffee, honey, chocolate products, cocoa, sugar, and bananas. Most fair trade labeling organizations are composed of coalitions of NGOs, including
consumer, environmental, and religious groups, aswell as trade union associations. ⁷⁴

The principle behind these labeling initiatives is to reach a broader market byimproving the quality of fairly traded goods and marketing them through mainstream retail channels. ⁷⁵ The stated goal of fair trade labeling initiatives is broad: to help improve the living and working conditions of disadvantaged producers in develop-ing countries. ⁷⁶

The basic criteria used by fair trade labeling organizations are the following: ⁷⁷

• the payment of a fair price, which covers production costs plus a fair trade premium that flows to the actual producers;
   
• participation by the actual producers in decisions regarding use of the fair trade premium;
   
• provisions for advance payment or credit so that producers do not go into debt before sales can be realized; and
   
• the promotion of longer term trading relationships so producers can plan for the future with some security.

The fair trade labeling organizations are independent, non-profit NGOs that do not trade themselves. ⁷⁸ Rather, they aim to create the structure under which established importers, retailers, and marketers can sell goods meeting fair trade criteria through mainstream channels such as supermarkets. While the labels used indifferent countries differ, the various national labeling programs have cooperated over the years to develop joint product criteria, maintain lists of eligible producers (called producer registers), and establish methods for monitoring the goods' production, import, and marketing.

Importers and retailers pay a licensing fee for the use of a fair trade label andthe services associated with it, such as promotion, marketing, and monitoring. ⁷⁹ The labels are registered trademarks in the countries where they operate. Only one label exists in each country in order to make it easier for consumers to recognize fair tradeproducts. In April 1997, the various national initiatives established FairTrade Labeling Organizations International (FLO), to serve as an umbrella organization for all existing
national initiatives.

Tea was added to the list of labeled products in 1994 by TRANSFAIR International. ⁸⁰ Because of public concern about child labor, TRANSFAIR incorporated a provision in the tea criteria prohibiting participating tea plantations from employing children under 14 years of age in the tea plantations of any producer. ⁸¹ The tea criteria also include provisions on working conditions, minimum wage, and provision of housing, clean water, health facilities, access to primary education, and protective clothing for pesticide use.

In 1996, tea carrying a fair trade label could be purchased at retail outlets (including supermarkets, specialty, and third- world shops) in Austria, Denmark, Germany, Japan, Luxembourg, Switzerland, and the United Kingdom. ⁸² TRANSFAIRUSA was established in 1997 and plans to launch labeled products in the UnitedStates, including tea, by the end of the same year. ⁸³ Labeled tea can currently be sourced from producers (mainly plantations and a few smallholder associations) in India, Nepal, Sri Lanka, Vietnam, Tanzania, and Zimbabwe.

Licensees place fair trade labels directly on tea boxes and, in some cases, individual tea bags and/ or tags. ⁸⁴ The labels consist of a logo but contain no specific written claims regarding child labor. However, licensees are required to include certain basic information on the labeling program and its producers. TRANSFAIR initiatives, for example, require all licensees to include the following minimum text on tea packages carrying the label:

This high-quality tea has been awarded the TRANSFAIR seal for "Fair Trade" by TRANSFAIR. The aim of "Fair Trade" is to promote producers in the "Third World" who are at a disadvantage under present trading conditions and to help them achieve independence and equality. The additional price paid for the tea is used directly for the improvement of… the living conditions of tea pickers and plantation workers [for tea plantations]… the improvement of the smallholder' living conditions [for smallholder' cooperatives]. ⁸⁵

b. Program Structure

As a result of growing cooperation among existing national labeling programs, a centralized umbrella organization, Fair Trade Labeling Organizations International (FLO), was established in 1997. Through FLO, the various national organi-zations have begun discussions towards the eventual adoption of a single label. Fornow, however, the national initiatives continue using their own established labels in their respective markets and maintain independent authority over which labeled products they will offer in those markets. ⁸⁶ They also promote and market the use of their label domestically, license the label to interested tea packers and importers, and monitor the flow of the labeled goods from importers to the licensees. ⁸⁷ It is envisioned that once fully functional, FLO will enable further coordination among the national initiatives, providing a forum for decisions on new labeled products and producer criteria.

The national initiatives and FLO are non-profit organizations financed by licensing fees paid by users of the label and grants from governments or NGOs.Their aim is to eventually become completely self-sufficient, with all financing coming from licensing fees. These fees cover administrative, marketing, and monitoring costs associated with the label and vary according to volume of sales.

Licensees can purchase labeled tea from any producer on the international tea producer register. The tea register is a list of approved sources administered jointly by the national labeling initiatives through a tea register committee. The committee maintains the list of eligible producers, processes applications for new members, ensures that proper in-country monitoring occurs, and confirms that the quantity of tea imports recorded by participating importers corresponds to exports reported by producers.

Producers who wish to join the tea register must sign a producer agreement and complete a detailed questionnaire on estate conditions, including child labor.These questionnaires must be updated annually. Producers must agree to give free access to their estates to monitors and make available any records that might berequired in order to verify information provided.

The tea criteria specify that licensees and producers must agree to a fairmarket price that at least covers the producers' cost of production. There is no formula for calculating the market price. Licensees must pay producers an additionalfixed fair trade premium — currently one or two German mark(s) per kilogram of tea ($ 0.50 or $1.00 at current exchange rates) — depending on the quality and processing of the tea. Producers bear no costs associated with participation in the program. ⁸⁸

The fair trade premium is intended to benefit workers directly. In order to ensure workers can participate in decisions relating to the use of the premium, producers are required to set up a joint body consisting of management and worker representatives. ⁸⁹ Producers must also set up a special fund into which the premiumcan be paid, to be administered by the joint body. ⁹⁰

c. Program Implementation

The tea register currently consists of 36 tea producers located in India (21), Nepal (1), Sri Lanka (8), Vietnam (1), Tanzania (3), and Zimbabwe (2). These producers are either long-time suppliers of fair trade licensees or have approached the labeling organizations on their own initiative. ⁹¹

Tea producers on the register are monitored by consultants, who are independent, locally based individuals familiar with the region, proficient in the relevant local language( s), and able to accurately assess the social situation on the estates they must monitor. ⁹² These consultants conduct monitoring visits of prospective producers prior to their acceptance onto the register. During these initial visits, the consultants check a producer's questionnaire response against actual conditions on the estate. If any criteria are not met at the time of the visit, conditional acceptance onto the register may be granted based on compliance within an agreed deadline. ⁹³ Monitoring visits are repeated six months after acceptance onto the register, and annually thereafter, unless situations of conflict or compliance questions require more frequent visits. While the annual and six-month visits are generally announced, producers are also required to allow unannounced visits. Monitoring visits include verification of producer compliance with all elements of the tea criteria. ⁹⁴

Producers can be removed from the register without notice if they violate any element of the tea criteria, including employment of children under 14. The tea register committee can also choose to present a producer with a work plan to remedy the violation rather than terminating their relationship. ⁹⁵ The tea monitoring consultant for Tanzania and Zimbabwe told the U. S. Department of Labor that if she finds a producer is violating any of the tea criteria, she either corrects the situation on the ground or, in cases of serious infraction, informs the tea register committee in Germany. In some cases, fair trade premiums to a particular producer are stopped until the situation is corrected. ⁹⁶

Since the implementation of tea labeling in 1994, only two instances of child labor (persons under age 14) have been found on participating producers' estates. ⁹⁷ Both were resolved without terminating the producer agreement. One such instance was in India, where a 13-year-old was found working on a tea plantation. ⁹⁸ This child had been employed as a result of an unwritten contract whereby if a permanent employee dies or can no longer work, a remaining family member, even if he orshe is a child, can take the job. The tea register committee and plantation managers agreed that management would send the child to school while continuing to pay his/her wages. ⁹⁹ The other instance occurred in Tanzania, where on one plantation,teachers would occasionally send whole classes to pluck tea leaves, sometimes to augment a teacher's salary, other times to earn cash for purchasing books and other educational materials. The tea register committee made it clear to the plantation managers that it would not tolerate such a practice, and urged them to consider using fair trade premium funds to improve educational facilities. ¹⁰⁰

In February 1996, the members of the tea register committee met for three days in India with tea monitoring consultants to discuss and evaluate their experiences during the first year of tea labeling. The Committee plans to conduct such evaluations on a regular basis. ¹⁰¹

Reporting and verification systems are used to track the production, importation, and sale of the labeled tea and to ensure producers receive both the marketprice and the fair trade premium. Each month, importers must notify the tea registercommittee of their purchases from registered producers, including quantities purchased and payments made. Producers are asked to verify this information against their own records. Finally, licensees submit quarterly reports of sales by source andimporter to national labeling initiatives, which in turn forward this information for further verification to the tea register committee.

The joint bodies may use fair trade premiums they receive for any purposeother than benefits or services estate owners are statutorily required to provide. ¹⁰² Premiums have been used to help build a high school and rest stations for school children who must walk long distances to reach their classrooms. Premiums havealso funded alternate training opportunities for estate residents, employment opportunities for unemployed youth, specialized medical treatment, pension funds for retired workers, and infrastructure projects such as bridges or roads. Although employees must have input into the use of premiums, TRANSFAIR International found that "most of the projects approved by joint bodies in the first year were suggested by managers." ¹⁰³

This observation was echoed by monitoring consultants during U. S. Department of Labor site visits to India and Tanzania. The TRANSFAIR consultant in Tanzania found that tea estate workers are not always fully aware of their rights under the program and sometimes allow managers to make decisions concerning the use of the premium. The consultant had not, however, seen any intimidation of workers in this respect, and noted that most workers want to use the funds to build permanent dwellings. ¹⁰⁴ Mr. Raja Menon, tea monitoring consultant in northern India and Nepal,said members of the joint committees are frequently hand-picked by management, evidence of the almost feudal nature of management-employee relations on many estates. ¹⁰⁵

Most estates appear to sell only a small portion of their tea through the labeling programs, and premiums are dependent on sales. The manager of Pussimbing Tea Estates in Darjeeling, India expressed concern that should the premiums decrease due to reduced sales of labeled tea, management could be left with a half-finished road project being financed by premiums. Should that occur, managementwould have to complete the road at its own expense. ¹⁰⁶

During the first two years of tea labeling (December 1994 through 1996), participating producers received fair trade premiums amounting to 2.5 million German marks, or $1.4 million. ¹⁰⁷ Sales of labeled tea in Austria, Denmark, Japan,Germany, Luxembourg, and Switzerland were 304 metric tons in 1996, and 432 metric tons in 1995. ¹⁰⁸ In Germany, where tea labeling is the most developed, 29 tea importers and retailers have become licensees of the TRANSFAIR label. ¹⁰⁹ These licensees include two of the
largest tea traders in Germany — Teekanne and Ostfriesische Tee Gesellschaft (OTG), which are each labeling one line of their tea. ¹¹⁰

According to a TRANSFAIR International official, the attractiveness of a fairtrade label license depends to a large extent on the public awareness and trust that the label can generate. Promotion of the label among retailers and consumers is seen as central. Media publicity and the endorsements of the German president and television personalities have helped increase consumer awareness of fair trade labeling. A survey in Germany showed that four years after the establishment of TRANSFAIR, one- third of all consumers recognized the TRANSFAIR seal and had an idea of what it represents. ¹¹¹ In February 1997, TRANSFAIR International reported to command a market share of approximately 2.5 percent in Germany.

Various studies show that a significant minority of consumers are willing to pay as much as 20 to 25 percent more than average retail prices for fair trade products, as long as quality remains high, the products are readily available, and an independent agency guarantees that higher prices translate into benefits that reachthe primary producer. ¹¹² A Dutch survey indicated that 70 percent of respondents were familiar with the Max Havelaar trademark, and 14 percent of the population —particularly women between 21 and 45 years of age — were willing to pay higher prices for fair trade products. ¹¹³

The European Fair Trade Association sees the participation of mainstreamwholesalers and retailers as essential to increasing market
share:

Mainstream traders and sellers, who have hitherto been less than enthusiastic about "fair" products that implicitly insinuate that their other products are "unfair", are more readily selling "fair trade" since the fair trade labels differentiate these products from the rest… Most wholesalers and retailers initially buy the fair trade products from one of the fair trade organizations. ¹¹⁴ Once their turnovers start reaching commercially significant levels, it becomes interesting for the mainstream companies to start importing the products themselves and/or to start selling them under their own brand names. This process has advanced furthest with coffee which in half a dozen European countries is being bought from producers, imported, roasted, packaged, and sold mostly by mainstream commercial companies. Because these companies generally have a better organizational infrastructure and distribution network than do the fair trade organizations, they can achieve a relatively higher market penetration and higher turnovers. ¹¹⁵

E. The Response of U. S. Tea Importers, Packers, and Retailers to Child Labor

In an effort to assess the extent to which companies in the U. S. tea industry have responded to concerns about child labor through implementation of codes of conduct or other formal policies, the U. S. Department of Labor conducted a volun-tary survey of 10 U.S.-based importers, packers, and retailers of tea. ¹¹⁶ ( See Box V- I for a list of the companies surveyed and Appendix B for the Company Questionnaire.) Of the ten companies surveyed, five provided reportable responses: Lipton,R. C. Bigelow, Inc., Reily Foods Company, Safeway Inc.; and Tetley USA Inc. The five remaining companies either did not respond or designated their response business confidential.

Several of the companies surveyed, including Bigelow and Reily Foods, purchase all teas through third-party importers. Lipton indicated it purchases its teas through a combination of U. S.-based importers, overseas brokers representing specific estates, its own buyers at public auctions overseas, and direct purchases fromestates, some of which are affiliate- owned. Tetley stated that all its tea is purchased and supplied by the Tetley Group's Worldwide Tea Buying and Blending organization, based in the United Kingdom.

Companies returning reportable survey responses indicated that they areunaware of the use of child labor in overseas tea estates. Some companies reported that in the many years they have been doing business with and visiting tea producersaround the world, neither they nor their buyers had ever observed children working on tea plantations. Others responded that child labor has never been perceived as an issue in the industry.

None of the five companies returning reportable responses participate in a labeling system or have a code of conduct or formal policy prohibiting the use of child labor. Lipton noted that its own purchasing and personnel policies require allemployees to behave in an ethical manner and in compliance with all laws. Since it has never seen children working on tea plantations in violation of ILO Convention 138, however, the company sees no need to implement a code of conduct concern-ing child labor or inform consumers about child labor policies.

Hindustan Lever, a partially owned Indian subsidiary of Unilever (the parentcompany of Lipton), provided the Department of Labor with Unilever's Code of Business Principles, which states: "Unilever companies are required to comply with the laws and regulations of the countries in which they operate." ¹¹⁷ The Hindustan Leverrepresentative said that Unilever tea gardens only employ workers who are 18 orolder; the company uses a computerized record system, including an employee'sage, to monitor for
compliance. ¹¹⁸

On the issue of labeling, Tetley noted that the common practice of blending teas from different sources could make labeling problematic. Tetley noted that variations in tea leaf quality associated with climatic and other field conditions require frequent changes in blend recipes. Because of frequent sourcing changes, Tetleydoes not consider tea labeling "a practical device of calling attention to a given estate's benefits or drawbacks."

The Tea Association of the U. S. A., whose members account for approximately 80 percent of United States tea trade, states that in both major and small tea producing countries, prohibitions against child labor are spelled out in national laws or voluntary industry standards on the minimum age of employment. The Tea Association notes that in several countries, including India and Malawi, local tea associations insist on standards that are higher than those mandated by national legislation.In addition, the Tea Association states that member companies will "encourage all the tea producing countries to require strict adherence to all ILO standards and/or allapplicable local labor legislation." ¹¹⁹

The only evidence of voluntary codes of conduct with specific provisions on child labor in the tea industry was found during a U. S. Department of Labor site visit to Tanzania. At the Kibena Tea Company, a 17,000-acre estate in Nyombe, Tanzania, estate officials provided the U. S. Department of Labor with a 16-page "Supplier As-sessment Checklist/ Report" that UK- based Premier Beverages requires Kibena tocomplete. The document states:

No children should be employed who are under 14 (or the legal minimum if higher). Children under 18 should not work at night or in hazardous conditions. Depending on local circumstances, children of school age over 12 may be employed part time if still in education.

Table V-2
Type of policy Prohibiting Child Labor
(Based on Responses to Department Labor Questionnaire)

^a Company has a formal code of conduct, statement of principals or compliance certificate

^b Company has a purchase order, letter of credit, or buying agent agreement, which contains a specific prohibition on child labor in overseas production.

¹ Lipton's personnel practices and purchasing policies require all employees to behave in an ethical manner, in compliance with all laws. Lipton parent Unilever's Code of Business Principles requires all Unilever companies to comply with the laws and regulations of the countries in which they operate.

Premier Beverages' checklist requests information on the number and ages of workers under 16 years; their terms of employment and rates of pay; and availability of schools and child care facilities. It also includes detailed questions on the use of pesticides/ fertilizers; the existence of outsourcing arrangements from small suppliers (including a question on how many workers employed by these suppliers are under 16 years of age); wages and hours; and forced labor.

F. Conclusion

Unlike the industries discussed in earlier chapters, the tea industry has notbeen the subject of U. S. consumer campaigns against child labor. In the mid- 1990s,however, consumer and social groups in Germany began raising concerns about the employment of children on tea estates in India. These concerns, as well as the possibility they could translate into declining sales, led to preemptive action by the Indian tea industry, which adopted a voluntary industry minimum age standard abovethat mandated by Indian law. Apprehensions that child labor could be illegally employed on tea estates also led the administrators of the first tea labeling program— a fair trade initiative — to incorporate a provision into their criteria prohibiting the employment of children under 14.

It is impossible to accurately estimate the number of children employed in the tea industry worldwide. Recent reports and information gathered during site visits by Department of Labor officials to Brazil, India, Kenya, Nepal, and Tanzaniaindicate that child labor is no longer common on large commercial estates in these countries. Child labor appears to be more pervasive in the smallholder sector in these and other countries. More research is needed to determine whether these children work on their families' farms or as hired laborers and whether they attend school. Since outsourcing arrangements whereby larger estates purchase the harvested leaves from smallholders are not uncommon, it is possible that tea plucked by children on smallholder estates enters international commerce.

Unlike the other labeling programs discussed in this report child labor is notthe central element of fair trade labeling. The fair trade movement aims to improve overall living and working conditions for small- scale producers and their families indeveloping countries. Fairly traded tea, unlike most fair trade products, comes primarily from large-scale commercial estates. The child labor prohibition was incorporated into the tea producer criteria in response to concerns that child labor could be an issue on the tea estates supplying labeled tea. Only a small amount of fairly-traded tea comes from small producer cooperatives, however, where child labor is most likely to occur.

Formal policies or codes of conduct with provisions prohibiting the illegal employment of children do not appear to be common in the tea industry. This is not surprising, given the fact that child labor does not now appear to be common in commercial tea estates. The five large U. S. tea importers, packers, and retailers who provided reportable responses to a voluntary U.S. Department of Labor survey indicated they do not have a policy or code of conduct specifically prohibiting the employment of children on overseas tea estates from which they source. Some companies stated they had never received information on child labor in overseas estates or perceived child labor as an issue in the industry. According to the Tea Association of the U. S. A., however, its members will in the future encourage all tea producing countries to require strict compliance with international or local labor legislation.

This report was produced by the staff of the International Child Labor Program and is published by the U.S. Department of Labor, Bureau of International Labor Affairs.

Acknowledgements