Fair World Project’s Statement in Response to the “Fair Trade Employment and Poverty Reduction in Uganda and Ethiopia Report”

The Fair Trade, Employment and Poverty Reduction Project (FTEPR) released its final report on its four-year research into agricultural labor in Ethiopia and Uganda this past April. One of the main conclusions of this report was that wages among workers in fair trade certified operations were on average lower, and working conditions no better or sometimes worse, than on farms that were not certified as fair trade. Included in the farms researched were large-scale plantations, which are relatively recent and controversial additions to fair trade and their inclusion in the study complicates its findings.

This report focuses on complex and important issues, and highlights the prevalence of wage laborers even on small-scale fair trade farms. However, though this report contributes to our understanding of fair trade’s strengths and weaknesses, it does not mean that the fair trade model—conceived as a way to enhance opportunities and market access for small-scale farmers—is not working or should be abandoned.

Too often, farmers and co-ops cannot sell all that they produce on fair trade terms. The report does not consider this as a factor in whether farmers are able to provide adequately for their workers. One conclusion that could be drawn is that we need to support with our purchasing dollars those committed brands that put people before profits throughout their entire supply chain so that organized farmers may sell all products under fair trade terms. This would increase the stability of these farms and benefit both producers and workers.

Most commerce and trade worldwide favors the large-scale farms, multinational corporations and other conglomerates that have easy access to capital and can take advantage of economies of scale. These large companies, land-owners, and investors continue to grab land at an alarming rate around the globe. That is why small-scale farmers, despite growing most of the world’s food and making up most of the world’s farmers, have access to just 25% of the world’s land, a proportion that continues to shrink. Those who benefit most are the individuals within this system with power; it is not uncommon for CEOs of these businesses to earn millions of dollars a year. To take one example of this skewed system, a small-scale coffee farmer who sells 100 pounds of coffee to Starbucks, the world’s largest coffee retail chain and one of the largest food companies, in 2013 received on average only $192. A shareholder who owned 100 shares of Starbucks stock in 2013 earned $226. In fact, Starbucks paid only $760.3 million total to coffee farmers in 2013, while returning $1.2 billion to shareholders.

The fair trade movement seeks to change this system and offer an alternative economic model based on long-term relationships, democratic control, and empowerment, which enables small-scale farmers to stay on their land, against all odds, and compete in the global marketplace. Fundamental to the fair trade model is democratic organization allowing farmers to act collectively to access markets and change policies as well as share in profits. Transforming trade and agriculture policies to benefit, not harm, small-scale farmers while simultaneously increasing their market access opportunities is a huge task, and although fair trade alone can never address all the ills of the global trading system, if done well, it can have a big impact on the lives of many of the world’s most marginalized farmers.

Reports such as the FTEPR and subsequent media coverage generates outrage that fair trade isn’t “working.” This is disappointing as it implies the conclusion is that conventional trade is just as good or better than fair trade, even as most people, consumers and producers alike, recognize that our food system is broken and our economic system doesn’t work for many people involved in the production of consumer goods including apparel, body-care, and handicrafts. It concludes that fair trade has failed to fix a problem it never set out to address. That would be like condemning a hospital because your knee surgery did not make your headaches go away. Yes, they are both important problems to address that fit into a similar category (groups marginalized by the current system in one case and medical problems in the analogy), but may not be addressed by the same mechanisms.

Not only was this study limited in its scope to wage laborers in just two countries, it did not look at whether fair trade increased quality of life for small-scale farmers, nor did it examine whether farmers were selling all of their harvest under fair trade terms and how the inability to receive fair trade prices for all or most of their crop may impact their ability to provide benefits and increased wages to employees. Moreover, the study only looked at one tool of the fair trade movement, that is certification, which is a tool primarily designed to verify fair trade standards and principles are being upheld, not to create impact in a fair trade void.

Other researchers who have studied fair trade have found more positive social and economic impacts generated by fair trade. For example, the sociologist Daniel Jaffee, in his landmark book Brewing Justice, compared organized small coffee producers in Oaxaca, Mexico who participated in fair trade markets with their neighbors who sold their harvests to conventional markets, and found statistically significant differences between the two groups. Based on in-depth household surveys, he found that, “in Yagavila and Teotlasco, Oaxaca, the coffee producers who belong to organizations participating in the fair-trade market clearly receive real and significant benefits–social, economic, and environmental–even in the midst of a severe price crisis”. Jaffee detailed the positive impact producer groups experienced working under fair trade conditions: “Compared with their conventional neighbors, the Michiza [cooperative] member families who participate in fair trade are more food secure and less indebted, have higher gross incomes, engage in more environmentally beneficial organic coffee farming methods (and spread those methods beyond coffee plots to their milpas [subsistence food plots]), generate more paid work for local people, and are more likely to continue growing coffee than to abandon or raze their shade-coffee plots. These differences are evidence that fair trade does indeed constitute a fairer, more sustainable market”.

Researchers from the University of Göttingen in Germany, in their 2013 report Food Standards, Certification, and Poverty among Coffee Farmers in Uganda state that Fair Trade certified farms have increased household living standards by 30% significantly reducing the prevalence of poverty.

Fair trade is motivated by the principle that the global economy should be just, fair and equitable. The certified fair trade marketplace is but one of many tools that contribute to a just economy. Fair World Project will continue to stand up for the integrity of fair trade, pressure companies to improve their sourcing and labor practices, educate consumers and manufacturers, and persist in building a global movement toward a just economy.

Posted on  June 9, 2014