Some Insights Into Assessing the Impacts of Fair Trade for Producers

On August 4, FTRN produced Webinar 115: Assessing the Impacts of Fair Trade for Producers.   The two panelists were Sarah Lyon, Assistant Professor of Anthropology at the University of Kentucky, and Daniele Giovannucci, Executive Director of Committee on Sustainability Assessment (COSA).  You can download the 50-min recording, or register for upcoming webinars, at FTRN webinars.

Some of the speakers’ main points from the webinar include comments below.

Sarah:

Almost all research in the current literature is about FLO-certified Fair Trade, not other forms.

Systematic assessment is difficult .

The most obvious/assumed benefit is higher prices, however data shows results are mixed.

Other demonstrated benefits include forming direct & long-term market relationships with Fair Trade importers and retailers, and organizational capacity building.

However, research shows producers face drawbacks such as greater surveillance and a loss of control.

Gender relations are also an important impact, but research also shows mixed results.

The most complete price data are available for fair trade coffee.

With high variability in coffee markets over the past decade, research at the height of the coffee crisis (around ten years ago) showed that Fair Trade did offer significantly higher prices.

Recent studies show the price impact is not clear cut, or not positive.

Fair trade’s potential to offer higher prices to producers is limited by increased production costs, certification & management expenses, and heavy debt burdens.

Fair Trade often allows producers to bypass exploitative local buyers, build confidence & market knowledge, legitimize producer associations, and enhance organization & financial stability.

There also are some negative impacts, such as the need to meet certification & quality standards resulting in internal & external monitoring, which disrupts cultural norms. This also results in a double standard of higher transparency required of producers than retailers.

Daniele:

This webinar is quite important and timely with a lot of recent attacks on Fair Trade in the media and academia.

I want to introduce you to some of the data, and its value and importance, which is just starting to be adopted by certain members of the Fair Trade community.

There are a lot of issues in looking at sustainability. What we tend to have are case studies, anecdotal stories (though not counterfactuals or control groups), and partisan methods, with each study significantly different. What we need are longer-term data, of statistical significance, from studies that are replicable & transparent, and data that is comparable across countries and sectors.

These gaps are both challenges and opportunities.

Some samples of significant impact analyses are:

While the same # of children are in school for certified producers (including Fair Trade) as for non-certified, the difference comes when comparing whether students are at their appropriate grade levels. One credible study, for example, showed that Fair Trade producers saw 61% of students at grade level, whereas non-Fair Trade saw only 46%.

Significant studies in Guatemala and Nicaragua showed that Fair Trade, and other sustainability certifications, significantly raised farmer net incomes. Some other certifications besides Fair Trade resulted in higher net incomes, while a couple resulted in lower net incomes, with one even lower than the non-certified group.

Fair Trade and other certifications, according to a reliable study, helped producers get more training. However, training is an output, not an impact, so we need to look at outcomes, like changes in yields. One significant study did show a significant increase in yields for Fair Trade farmers.

One negative impact was shown by a study of prohibited agrochemicals for 1000 farmers. Despite a standard prohibiting dangerous pesticides and fertilizers, 75-80% of farmers were actually using such agrochemicals.

COSA doesn’t support setting benchmarks to assess certifications, since benchmarks are highly subjective and vary a lot by who sets them. We do support generating quality data, on over 100 impact indicators, and letting each person/group make their own judgments.

Sarah:

I agree with Daniele’s points about benchmarks. I would add that it seems like certification bodies set benchmarks, and I wouldn’t set higher ones.

Academic researchers do play an important role in assisting Fair Trade, despite occasional criticisms of Fair Trade.  The Fair Trade movement already has made changes to its models based on analysis from academics.

Oversight of, and transparency from, retailers would help prevent fairwashing.

Daniele:

Academic work needs to be practical and applied to be useful. I’m not a fan of purely academic exercises.

I agree that transparency from retailers, and even all actors in the supply chain, would be important for improving Fair Trade.

We do need to have more quantifiable data on the intangible benefits of Fair Trade, surely beyond price alone, even if they are not measured in dollar terms.

Sarah:

Case studies can very valuable in understanding the non-quantifiable benefits, and for then developing metrics by which to measure them.

To explain what I meant by Fair Trade producers facing serious debt burdens, a lot of coffee farmers have been supported in the last 10 years by NGOs and development organizations who implemented microlending programs.  For example, a group I worked with in Guatemala got loans from USAID at 18% interest, which was difficult to pay back. I can provide more complete data later if anyone contacts me.

Since Fair Trade coffee has often been certified organic, or shade grown, and has been sold in US specialty coffee markets where quality requirements were implied, farmers faced increased costs.

Standards and certifications are simply not credible if they don’t include producer voices in the entire process.

A beneficial shift could be made in auditing to a more participatory approach involving producers more.

From my research on coffee farmers in Guatemala, the social fabric of a producer group can be hurt by internal monitoring of quality (mostly due to organic standards).

Daniele:

Producers, and consumers, don’t have enough adequate information about the costs and benefits economically, environmentally and socially to determine which, if any, certifications are worth supporting. My personal sense is that Fair Trade does provide some definite benefits, but also has some flaws. The Fair Trade movement does a lot of flag-waving, but doesn’t take enough time to look internally and critically.

The Fair Trade movement should empower, and help build the capacity of, local organizations in producer countries to continually gather useful information.

Sarah:

Producers are the most underrepresented voice in Fair Trade, so a more participatory approach would improve certification models.

Despite seeing mixed data, I, and most Fair Trade researchers that I know, think the Fair Trade movement is worthy of support.  Perhaps the biggest challenge facing Fair Trade is the small size of the markets. The movement can really benefit from a plurality of approaches, and from a plurality of certifications.

Daniele:

In this hyperconnected world, it is critical to understand the quality of the information that we are getting. We don’t really have good information about how to move things forward: you cannot manage what you cannot measure.  It’s time to start pushing the necessary and real measurements of what’s going on in Fair Trade, as well as other schemes. That would require 3 things: a participatory process inclusive of local partners, neutral science, and comparable data that allows a common language.