Government kitchens set for a mini revolution

Public buyers and suppliers alike should make sure they are ready for new procurement standards for food that hit this autumn. 

In a break with the trend to devolve and abolish top-down target, this July the government issued a comprehensive set of minimum standards that catering suppliers must meet if they want to win government business. The new ‘Government Buying Standards for Food and Catering Services’ represent a major overhaul of the minimum requirements for food sellers, and in setting them, the government has come a step closer to realising the full potential of its huge buying power.

THE STANDARDS
From animal welfare and the environment, to nutrition and waste management, the standards cover a wide variety of social and ethical issues that relate to food, from production to disposal. Officials estimate that the new standards will cover a whopping £375m worth of public expenditure on food.  This wide-ranging edict sets a new and ambitious bar for what government food buyers should buy, how to buy it and how it should be produced. 

The standards include a requirement to buy at least half of all tea and coffee from ‘fairly traded’ sources. As the UK’s leading and most trusted certifier of ethically sourced food, the Fairtrade Foundation has welcomed the new standards. Whilst the target of half of all tea and coffee has not gone as far as it could, it represents a clear starting point.

What is particularly welcome is that best practice guidance proposes that 100 per cent of tea, coffee, bananas and cocoa should be certified Fairtrade, clearly setting a new ethical gold standard.

A CLEAR POLICY
Issuing a minimum standard as well as clear best practice is a welcome innovation in public procurement policy. This carrot and stick approach leaves those selling into government in no doubt as to what is required in terms of supplying fairly traded products. Canny suppliers will quickly work out that bananas are actually the most readily available product in the UK, with almost a third of bananas sold being Fairtrade. Therefore, dazzling public authority buyers with 100 per cent Fairtrade bananas will be quite straight forward.

The Fairtrade Foundation’s interest in public procurement can be traced back to the year 2000 when Garstang in Lancashire declared itself the first ‘Fairtrade’ town. As the Fairtrade town concept grew, activists turned their attention to the buying practices of the towns, boroughs and counties declaring themselves ‘Fairtrade’. These days, one of the key criteria to gaining Fairtrade Town status is that Fairtrade certified products are made available in the town halls, kitchens and public facilities of those towns.

MEETING THE STANDARDS
So, who exactly will have to meet these standards? Officially, all central government departments and their related organisations must meet at the least the mandatory 50 per cent tea and coffee standard when buying goods and services in the product groups covered. Therefore, from September 2011 even for those detained at Her Majesty’s pleasure at least fifty per cent of the cuppas served will need to be a Fairtrade brew, although perhaps not from the premium blends. Military mess halls from Colchester to Kandahar will have to have a Fairtrade offering. Even Whitehall mandarins’ Darjeeling will have to be procured in a way that gives the farmers who picked it a fair deal. To make the job easier, government procurement, the government agency established to promote more efficiency in public buying, has set about re-labelling its catalogue with three levels of green ticks indicating product compliance with the new standards. 

Unfortunately, not all government departments are covered by these new standards. The elephant in the room when it comes to food standards is hospitals. The NHS alone spends a whopping £500m a year on food. With such huge potential benefits, to both patients and the wider world, it is unclear why hospitals are being left behind.

Some might question why, in a time of swingeing austerity, the government is imposing such seemingly authoritarian and, what might be perceived, costly standards.  Such a view overlooks the cost saving potential of buying big, which is only possible through uniform standards. It also ignores the competitive reality of modern sustainable sourcing beyond the public sector.

Setting standards is clearly a route to better prices. With roughly twenty government departments, and countless associated agencies, quangos and commissions, twenty different sets of standards are unhelpful, to say the least, for companies trying to sell into government. When it comes to food, the previous lack of clarity and sheer variety of policy on ethical standards led to simple confusion. Uncertainty about what the government buyers wanted and expected has made some caterers hesitant to invest in the supply chains needed to bring more ethically and sustainably sourced products to canteens and kitchens.

VALUE FOR MONEY
It is this lack of clarity and devolved purchasing standards that has also led to government procurers simply not getting the best price. Bitty and fragmented buying practices have failed to unleash fully the scales of economy in sourcing Fairtrade, that in consumer retailing, has allowed many majors retailer to switch at a cost they could absorb whilst remaining competitive.

Sir Philip Green, British retail tycoon, indentified these problems in his review of public procurement requested by ministers in the early days of the coalition government.         

As well as criticising the lack of centralised food purchasing, his overall verdict of buying practices was, ‘the government is failing to leverage ... its scale.’ Across Whitehall he found eight different facility management companies operating 16 different contracts, with in one instance, a 38 per cent difference in the price paid between departments for the same cup of coffee.

An unexpected benefit of the new standards, particularly welcome at a time of economic difficulties, is the opening of public contracts to some of Britain’s most innovative social enterprises. Cafédirect, Traidcraft, Divine chocolate, to name but a few, are all commercial organisations, supplying tea, coffee and other staples, established with the sole aim of improving the livelihoods of the people involved in the primary production.

BENEFITS ABROAD
But the greatest and most socially transforming benefits of Fairtrade happen abroad. Officials estimate that central government spends £7.5m on tea and coffee. A 100 per cent Fairtrade would bring hundreds of thousands of pounds worth of benefits to producers and farmers covered by the system. Selling Fairtrade not only guarantees a minimum price, but also affords these producers, often the most marginalised farmers in the world, an additional payment, which they can chose to invest in their business or community.

Because the cost of the actual primary products, such as the ingredient cocoa or tea leafs, make up only a fraction of the final price of any products, these benefits can be bestowed to the farmers with a minimal knock on cost to the final consumer. When the cocoa for a chocolate bar makes up five percent of the final cost, paying a small percentage on that five percent is neither here nor there, when compared to marketing or distribution costs. But this extra can mean the difference between making ends meet and not for the farmer that grows that cocoa.

A CATALYST FOR CHANGE
Beyond the product, the new standards have the potential to spark new thinking in Whitehall. New buying standards will help end the ‘silo thinking’ between departments. In this way, public health is no longer seen just as a concern of the department of health, but a problem that can be tackled through the thousands of mouths public kitchens in all departments feed each day.

Likewise, helping the world’s poor is not only a problem for the Department of International Development, but any one department that buys a product sourced in the developing world. It is counterproductive, to say the least, if UK aid programmes are trying to raise prosperity when at the same time, taken to its extreme, sweatshops of supply chains that are eventually led to government warehouses, are keeping those very same people poor.

But some fear all this comes at a cost that is too great. This is plainly wrong. The strongest evidence for the affordability of higher ethical standards is found in the procuring practices of several major UK retailers and confectionary brands. In spite of operating in ruthlessly competitive markets, many have been able to switch key products to Fairtrade without passing on any additional cost to their consumers.

In 2007, Sainsbury’s, the UK’s second largest retailer, switched its entire banana range, with sales of over ten million a week, to Fairtrade.  Dairy Milk, Britain’s top selling chocolate bar with sales of £371m last year, switched to Fairtrade in 2009. 

Successive British governments have been slow to fully wake up to power of its purchasing. For some time consumers have been demanding more in responsible sourcing. In a recent independent survey of over 1,500 people, more than six out of ten people questioned agreed we must still think about poor countries, even in these difficult financial times. Perhaps there has been a slow realisation that these consumers are voters too. By raising the ethical standards of its purchasing, the government is closing the gap between what they expect as shoppers and what the government should expect when buying on their behalf. 

The government will not be tackling these targets from a standing start. Even before these new standards, there were a growing number of innovative and nibble-footed public procurers who had gone it alone and pressed ahead in buying Fairtrade, with some very impressive results. 

As with any public policy, the proof is in the pudding – quite literally in this case. If public authorities embrace these standards there are clearly huge benefits for all involved. The first billion pounds Fairtrade sales in the UK, reached in 2010, was the driven force of private citizens. These bold new set of standards have the potential to drive the second billion of sales further.

Written by the Fairtrade Foundation

For more information
www.fairtrade.org.uk