2020 Annual Report. A Year of Challenges, Changes, and Resiliency

A Year of

Challenges,

Changes, and

Resiliency

Table of Contents

2

Words from our Leadership

The Impact of the Global Pandemic on Fairtrade Farmers and Workers

The Impact of a Global Pandemic on Fairtrade Canada’s business partners

Ethical Consumership and the Rise of Fairtrade: Leger Report

Overview of the Scope and Benefits of the Fairtrade system

Canadian sales, volumes, and Premium

All in on Digital: Adapting Communications to a Fully Digital Reality

2020 Schedule of Expenses

A Message from our Leadership

Words from our Leadership

While the COVID-19 pandemic left many wondering how long they would have to stay inside, our energy was focused on what challenges would arise for the people who work outside. 2020 left many questions unanswered – the future was uncertain, and the present was tense. The health crisis put the world on hold, but what did that mean for producers, consumers, commercial partners?

Tackling each challenge as it came, all actors of the supply chain adapted to new safety and hygiene norms, new consumption habits, new consumer-provider interactions. The world may have temporarily turned inwards, yet the need for connection was stronger than ever. Inequalities were brought to the forefront and exposed more blatantly. There has never been a bigger need for fairness than now. From the way we distribute vaccines to ensure the most vulnerable and at risk are protected, to the way we share the higher costs burden equally across a value chain, or how we fight climate injustices not just for our children, but for future generations across the globe: Fairtrade is more relevant than ever.

The year was also marked by the rise of social justice movements, such as Black Lives Matter protests, or catastrophic natural events, like the wildfires in Australia. By nurturing our digital presence and developing our social platforms as a means to be heard, we were able to join in global movements towards altruism, ethics-based consumer choices, solidarity, awareness and sustainability.

JULIE FRANCOEUR

Executive Director

EUGENE ELLMEN

Chair

The health crisis has already had devastating effects on producers and farmers, causing job loss and transportation restrictions, requiring costly solutions for the people whom are most vulnerable. On another hand, it led to a rise in consumer awareness of the origin of their food and appreciation for the people at the frontlines of food production and distribution. We placed our trust in our ethical consumers to believe in their direct positive impact. Our Canadian commercial partners, although severely impacted and facing their share of hardships, rose to the occasion as well – we have never had a more unified vision across the supply chain than in the face of this global challenge. Our values are strengthened, as is our faith in those we work with. We celebrate all of this year’s wins, big or small, and accept the challenges ahead to continue to place making trade fair as our utmost priority.

We are especially thankful for the whole Fairtrade Canada team that has adapted to the unknown almost overnight. We have grown as a team in numbers but also in courage, in kindness and passion; doubling our efforts to create impact through the pandemic storm.

Adapting to the

Global Pandemic

The Fairtrade System Responds to COVID-19

Annual Report 2020

Accelerating support and innovation

Early in 2020, the world changed dramatically with the spread of the COVID-19 pandemic. Farmers and workers in the global south, already living in precarious conditions, were plunged into extreme uncertainty as the pandemic affected every aspect of food supply chains. From delays in farmers getting necessary fertilizers, to shipments stranded in ports; to businesses closing and people being laid off; to challenges stocking supermarket shelves, our interconnectedness as a global economy has never been clearer.

Fairtrade mobilizes resources through two new funds

The Fairtrade system also reacted quickly to provide additional financial support to producer organizations. With seed funding of over $4.5 CAD million contributed by Fairtrade organizations in the north, Fairtrade’s three regional producer networks spearheaded the distribution of funds for two purposes: immediate relief and longer-term resilience. As of September 2020, more than 580 producer organizations had received financial assistance for projects that benefited more than 475,000 people.

Despite facing their own risks, Fairtrade producers were some of the many everyday heroes who kept supplies moving. This required ingenuity,

flexibility and cooperation. Fairtrade International responded quickly to allow more flexible use of the Fairtrade Premium so producers could use their own Premium funds to meet urgent needs and keep their families and communities safe.

Advocating for support for hard-hit producers

At a global level, Fairtrade called on G20 governments early on to target resources toward the most vulnerable populations, including farmers and workers. From supporting jobs and incomes during shutdowns, to ensuring PPE supplies, healthcare, and social safety nets, we called on countries to provide this support in the context of sustainability goals.

We joined with the Fair Trade Advocacy Office and other civil society organizations to urge that pandemic response efforts ‘build back better,’ so that global supply chains do not revert to business as usual, but rather are redesigned to respect human, worker and environmental rights, incentivize sustainability and fairness, and share the benefits of trade more equally. The Fairtrade producer network in Latin America, CLAC, called for food sovereignty in the region as part of a “recovery with justice,” including roles for governments, civil society, consumers, companies and farmers to play so that livelihoods and food supply can be sustainably ensured.

Fairtrade certification is very

important for the cooperative

because it has allowed us to sell

our certified coffee and earn the

Premium, which we can invest in

the many needs of our members. At

this specific time of isolation and

pandemic, it allows us to have the

possibility to keep buying the

coffee from our producers and that

is a big strength that Fairtrade

certification has given us.

- César Julio Díaz, Executive Manager,

One Year Later, Fairtrade COVID-19

Fund Continues to Deliver

Significant Impact for Farmers

More than 500,000 farmers and agricultural workers in nearly 60 countries across the globe are reaping the benefits of Fairtrade’s COVID Relief and Resilience Fund – a joint effort developed by Fairtrade International, its member organizations, and government and commercial partners, aimed at delivering direct financial help to small-scale producers hard-hit by the COVID-19 pandemic.

The $22 CAD million Fund launched last year in response to the pandemic and runs until 2022, providing a range of short-term relief and long-term recovery measures across Asia, Africa, Latin America and the Caribbean, including the provision of emergency measures, like personal protection equipment, COVID-19 prevention awareness campaigns and livelihood

diversification.

“The COVID-19 pandemic shook the very foundations of our global economic and social systems. But for farming and agricultural communities in vulnerable regions around the world, the impact of COVID-19 was especially devastating,” noted Dr. Nyagoy Nyong’o, Global CEO at Fairtrade.

“By rolling out the COVID-19 Relief and Resilience Fund with our key partners, we have been able to ensure that farmers and agricultural workers in the Fairtrade community have the financial and health protections necessary to continue their valuable work, shield themselves from further systemic shocks caused by the pandemic, and build back fairer for a more sustainable and equitable future.”

Annual Report 2020

Along with immediate health and safety measures to prevent the spread of COVID-19, the Fund is also helping to address economic recovery needs within affected producer organizations. Additional recovery efforts include helping small-scale producers initiate and carry out programs to ensure food security, to secure and increase incomes by diversifying crops and markets, to address human rights risks in supply chains and improve digital

technologies as the foundations for a fairer recovery and to build future business resilience.

Half a million people in more than 900 producer organizations from almost 60 countries have already benefited from the Fund with producers in Colombia, Nicaragua, Kenya, Côte d’Ivoire, India and Indonesia receiving the lion share of relief.

The impact of the COVID-19 pandemic on producers has been dramatic. At the Hatton Plantations Limited multi-estate tea plantation in Sri Lanka, the pandemic meant that workers were faced with both financial difficulties and a health crisis when shipping ports closed, halting tea exports. Fairtrade funds helped provide for medical essentials and protective gear, including over 30,000 reusable masks, sanitizer bottles, and disinfectant.

“Through the Fairtrade Relief Initiative, we were provided with fully-equipped personal protective gear. All the five divisions in the estate have also

received face masks, hand sanitizers for the entire work force,” explained R. Murali, a tea worker.

“Our workers can now work safely in a protected environment,” they added. Meanwhile, in southern Morocco, the Coopérative Imgoun’s operations were similarly impacted by the pandemic’s economic fall-out. With the Fairtrade COVID-19 Fund, the cooperative was able to construct water wells and reservoirs using sustainable solar piping, to expand the amount of land that can be irrigated and allowing them to increase and diversify production. In addition, the Fund enabled Coopérative Imgoun to launch a new website and facilitate sales operations by ensuring their products can be promoted and seamlessly accessible to potential customers.

“We applaud the Fairtrade producers for their resilience in this difficult time,”

Dr. Nyagoy Nyong’o added. “And we are thrilled that they are investing

their part of the Fairtrade COVID-19 Fund to build back fairer for a greener and more equitable future.”

See how producers have used these funds:

Resiliency and

Partnership:

Fairtrade Canada’s

Business Partners

Adapt to the

Pandemic Reality

There is no debate that the global COVID-19 pandemic was devastating for the Canadian business community. Over one-quarter of small and medium-sized businesses* reported revenues were down 30% or more in 2020 compared with 2019.

And yet, we witnessed incredible resiliency, compassion, innovation and partnerships across our community. We saw our Fairtrade licensees come together like never before, partnering together to lift one another up, and to support our front-line workers through donations and fundraising.

Contraction of the out-of-home market by -22% from C$12 billion (2019) to C$9.5 billion (2020) had a devastating impact on many Canadians. Our foodservice focused licensees saw on average -30% decline in volume as cafés and foodservice locations closed. Allegra predicts the market will recover to pre-pandemic levels by 2023, and Fairtrade is committed to supporting all our foodservice focused licensees as we build back.

Despite these challenges, Fairtrade still managed to grow, and licensees remained steadfast in their commitments to economic, social, and environmental sustainability. We saw strong growth in several of our core commodities, including coffee, bananas, cocoa, and sugar in particular, much of which can be attributed to new product launches, distribution gains, and higher consumption rates.

We saw many licensees successfully pivot their business and diversify their business model, including switching to grocery channel distribution, developing online sales

channels, and growing cross-border sales. Overall, retail focused coffee licensees grew at +17% in 2020.

In total, Fairtrade Canada saw 14 new licensees while 17 licensees were delicensed, closing out of December 31, 2020 with a total of 154 licensees and now 4,825 Fairtrade products approved for Mark use in market.

The Global

Fairtrade System

11

Almost

$280M

*

in

Fairtrade Premium

was earned by farmers

and workers

Almost

2 Million

Farmers and workers in Fairtrade

certified producer organizations

Fairtrade by the Numbers

Latest figures from Fairtrade International. Financial figures are estimated and converted from Euros to Canadian dollars.

Fairtrade certified

producer organizations

A total of

1,822

SMALL-SCALE PRODUCER ORGANIZATIONS HIRED LABOUR ORGANIZATIONS

How Producers Elected to Use

the Fairtrade Premium

The Fairtrade Premium is an important benefit for farmers and workers. Producer organizations choose democratically how to spend their Premium, which they earn as an additional amount on top of the selling price for every Fairtrade sale.

Business

Development

and Sales Growth

in Canada

Overall Fairtrade Sales Growth

Outpaces Total Grocery Performance

Annual Report 2020

14

Retail sales of Fairtrade products grew an estimated +12.5% in the market. This is ahead of total

grocery performance which showed +11.5% growth over 2019, according to Statistics Canada.

392,000,000 456,000,000 500,000,000 $606,000,000 $681,458,298 $0 $100,000,000 $200,000,000 $300,000,000 $400,000,000 $500,000,000 $600,000,000 $700,000,000 $800,000,000 2016 2017 2018 2019 2020

Almost $682M in Sales

of Fairtrade Products

Canadians and

Fairtrade Coffee:

New Habits,

Steady Growth

Coffee is Canada’s most consumed beverage amongst adults – even more than tap water. But as a year marked by a global pandemic and various levels of self-isolation and lock-down restrictions, 2020 saw Canadians start to consume coffee in new ways. We also saw many of our Fairtrade coffee licensees adapt their business strategies their ensure survival.

Out-of-home coffee consumption declined from 91% before the COVID-19 pandemic to just 46%, hitting cafes and the food service sector hard. Yet, while 78% of Canadian coffee consumers used to prepare their coffee at home prior to the pandemic, unsurprisingly that number grew to 87% in 2020.

Temporary closures of the food service industry, restrictions on non-essential businesses, and a growing number of online coffee options facilitated a new stay-at-home lifestyle amongst

Canadians. We saw a 5.2% growth in volume of Fairtrade coffee sold in Canada in 2020,

showing that though times were tough, Canadians stick to their values and support for Fairtrade. The key driver in Fairtrade coffee sales in 2020 is attributed to strong retail sales. An increase of 17% in volume of Fairtrade coffee sold in store more than compensated for the 30% decline seen in out-of-home coffee sector. Coffee consumers continued to show up for Fairtrade coffee, adapting to alternative purchasing outlets without sacrificing their ethical consumption habits. We also saw our coffee business partners pivot and adapt to the “new normal”, all while showing up for coffee farmers and staying true to their commitment to ensuring farmers get paid fairly and that the planet is protected. We were inspired to see so many licensees come together to

Annual Report 2020

16

of Fairtrade coffee sold by

Canadian licensees in Canada

5.2% growth

in volume

was labelled and sold as Fairtrade

by our Canadian coffee licensees

4.7% of all coffee

imported to Canada

Fairtrade Coffee Continues

to Grow in Canada

generated from green

coffee purchases generated in organic differential for coffee farmers

$6.7M USD + $8.1M USD

In combined Fairtrade Premium

was Generated in 2020!

Fairtrade Certified Coffee Volumes between 2018-2020

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

Q1

Q2

Q3

Q4

2018

2019

2020

A 41% Increase in Canadian Sales of

Fairtrade Certified Bananas Over 2019

With an investment in a Leger study on bananas in September 2020, we gained an increased understanding of the Fairtrade banana shopper and overall consumer sentiment towards Fairtrade. This allowed us to engage with major retailers and support our licensees in their conversations. We also saw a strong launch of a Fairtrade organic banana program across all Longo’s in ON stores after a successful trial in Q1 2020.

1,063,230 1,144,886 1,046,819 1,044,822 1,068,313 1,442,073 1,165,879 1,194,477 1,600,971 2,019,470 1,642,414 _1,617,339

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Q1

Q2

Q3

Q4

2018

2019

2020

A 21% Increase in Canadian Sales of

Fairtrade Certified Cocoa Over 2019

249,512 _242,236 280,426 379,333 307,139325,291 275,514 313,715 326,636 410,368 325,897 477,065

0

100,000

200,000

300,000

400,000

500,000

600,000

Q1

Q2

Q3

Q4

2018

2019

2020

Fairtrade Certified Cocoa Volumes (Kgs) 2018-2020

Strong retail sales and new product launches contributed to strong volume growth in the cocoa category. With stay-at-home orders and Canadians working from home there was an increase in sales of snack foods and indulgence items. In our continued push for a Living Income in cocoa, Fairtrade International introduced a new Premium for cocoa in 2020, which increased from $200 USD/MT to $240 USD/MT. Premiums generated increased by +51% as new rate of $240/MT was introduced.

A 27% Decline in Canadian Sales of

Fairtrade Certified Tea Over 2019

14,779 17,664 19,008 25,014 22,592 27,244 18,297 22,846 19,615 17,957 13,143 15,604

0

5,000

10,000

15,000

20,000

25,000

30,000

Q1

Q2

Q3

Q4

2018

2019

2020

Fairtrade Certified Tea Volumes (Kgs) 2018-2020

The 2019 introduction of the Connect reporting system led to updates in tea recipes and Fairtrade ingredient inputs, ensuring a higher level of accuracy in the data. Although retail sales remained strong, food service business took a hit with the closure of restaurants, cafés, and university campuses, and thus impacted sales of Fairtrade tea in Canada.

2020 performance for Fairtrade certified

sugar sold in Canada

Fairtrade sugar saw strong retail sales and new product launches, contributing to a +63% volume growth.

360,477 293,683 243,517 226,464 314,766 274,701 336,851 180,687 438,283 513,318 385,341 467,907

0

100,000

200,000

300,000

400,000

500,000

600,000

Q1

Q2

Q3

Q4

2018

2019

2020

2016 2017 2018 2019 2020

↑

12%

↑

13%

↑

9%

↑

15%

Fairtrade Premiums Generated in Canada

Overall $7.6M

Generated in Fairtrade

Premium

Consumer

Attitude &

Acceptance

Research

Building a Stronger

Understanding of the

Ethical Canadian

Consumer

In 2020, we engaged Canadian-owned market research firm Leger to undertake specific research for us. The overall objective of this research was to provide us with data on the Canadian consumer’s attitudes, perception, level of knowledge, and understanding of Fairtrade products in general and more specifically of Fairtrade bananas.

The Leger research was designed to uncover market potential for Fairtrade bananas in addition to identifying clear geographic and demographic differences in this potential in order to ensure that retailers can clearly understand not only the potential but also which groups of consumers this product will appeal to most. The Leger data also identified general consumer perceptions on Fairtrade products more generally, providing additional insight into awareness, trust, and purchasing intent of Fairtrade products amongst Canadians

Fairtrade logo awareness

34

%

54

%

69

%

Impact of Fairtrade logo & opinions

46

%

75

%

58

%

Aware of logo

Opinion of Fairtrade products

Are likely to buy

product with logo

Logo has a positive

impact on opinion

Is worth paying

more for

Supports an

_{important cause}

Is trustworthy

*

Purchased in the past Total Survey FT Coffee 82% FT Chocolate 54% FT Bananas 29% FT Tea 24% FT Sugar 14%

Shoppers are more likely to have purchased Fairtrade products in the past

and over–index in terms of their future consideration of Fairtrade products

Future consideration Total Survey

FT Coffee 85%

FT Chocolate 72% FT Bananas 54% FT Nuts 47% FT Tea 47% FT Herbs & Spices 46% FT Sugar 37%

26

Annual Report 2020

80

%

Category usage & attitudes:

Fair Trade products

Annual Report 2020

Strong resonance with the

idea of supporting farmers and

ensuring

fair pay

90%

are aware and

58%

are

familiar

On par with eco-friendly and plant-based products

with Fairtrade products

51

%

Prefer to buy products

which are sourced from

small farms

51

%

Are more likely to buy

food products from

companies that

gives

back to the community

Response towards Fairtrade products

is positive amongst shoppers

Annual Report 2020

say it resonates with values that matter to

them personally

68%

say its important in

the current times

72%

say it is trustworthy

58%

say it is worth paying

more for

46%

say it supports a

very important cause

75%

say it is high quality

Organic vs Fairtrade products

There is a large segment of customers who purchase both Fairtrade and Organic products.

*24% didn’t purchase Organic & Fairtrade products

Purchased

Organic

Purchased

Fairtrade

Adapting our

Communications

to a fully

Keeping United

While Staying Apart:

Strengthening

Communication

in Times of Need

With so much uncertainty in 2020, communication became an essential

component of supporting our various stakeholder groups. We dedicated ourselves to establishing strong lines of communication with the business community, who were concerned not only about uncertainties in their future but also that of their producer partners.

As part of our response efforts, we developed a dedicated landing page on “How Fairtrade is Responding to COVID-19” that saw continual updates from Producer Networks, commodity-specific impact updates, and business supports and

resources in Canada. We also sent regular monthly communications to the business community with a summary of the latest news and updates.

With Canadians wanting to support their local businesses more than ever, we built Fairtrade Local, a dedicated landing page featuring Canadian licensees. The Fairtrade Local page became one of our most visited pages through 2020 and has become a staple in Fairtrade Canada’s communications repertoire.

Despite the challenges in their own lives, our community overwhelmingly asked “how can I help Fairtrade producers right now?” We wanted to enable our

community to join our efforts: from campaigners, Fair Trade Programs members, businesses, retailers, and other partners. We launched a GoFundMe for the Producer Resilience Fund and raised almost $3,000 towards the fund.

Going All-In on Digital

32

Landing Pages

Influencers

Community Support

The pandemic forced us to pivot our communications, marketing and campaigning efforts to a fully digital

reality. Our core communications strategy focused on three areas: Creating dedicated web landing pages so

that critical information could be accessed in a user-friendly way; leveraging content creators and influencers

to widen the scope of our campaigns; and building our action toolkits and resources to allow our community

carry the Fairtrade message across their digital networks.

Our Fairtrade Local landing page

saw over

4,000 visits in 2020,

making it one of our most visited

web pages of the year. The

COVID-19 Information page saw

over

1,000 visits in 2020.

During Fairtrade Month and Fair

Trade Campus Week, we engaged

with

10 new sustainability-minded

content creators with a cumulative

reach of almost

100,000 Canadians!

Our Fairtrade Month and Fair Trade

Campus Week toolkits saw a

cumulative

1,757 visits over 2020.

33

With Fairtrade, we

have been able to take

courses, educate the

women. We have a

group of women

farming entrepreneurs

with the help of

Fairtrade.

- Yadira Orozco, a Colombian banana farmer and

plantation owner at ASOBANAR Cooperative

2020 Schedule of Expenses

$202,532.00

$1,162,416.00

$137,699.00

$913,513.00

$3,729.00

$51,829.00

Finance & Administration

Canadian Initatives

Certification

Funding of International System and Producer Programs

Governance

Fairtrade Canada 250 City Centre Ave Suite 800

Ottawa K1R 6K7

Phone / 613.563.3351