Fair trade: still centred on smallholders?

Sian Lewis's picture
Insight by 
Sian Lewis
27 June 2011

To what extent do approaches such as fair trade, corporate social responsibility and inclusive business models allow the private sector to meet commercial objectives while also reducing poverty and empowering small-scale farmers? This was the question posed at the latest in a series of IIED and Hivos ‘provocations’ held at the European Parliament in Brussels last week (22 June).

Fairtrade is one of the best known models of deliberately structuring the market around inclusiveness. But participants of the provocation — which was hosted by Richard Howitt, MEP, Vredeseilanden and the UN Research Institute for Social Development (UNRISD) — seemed divided on the extent to which it is genuinely good for small-scale farmers.

[flickr-photo:id=2909253327, class=right, size=m, caption=Is fair trade genuinely good for small-scale farmers? Credit: Flickr/Shared Interest]

When the first Fairtrade label was launched more than 20 years ago, the initiative had a strong focus on ‘empowerment’ — acting not only to guarantee fair prices and working conditions for poor farmers in the global South but also to build their capacity to make their own decisions and choose their own paths to development.

At the first provocation last September, Lorenzo Castillo from Junta Nacional del Café said that Fairtrade, compared with other chain initiatives, has been a vehicle for small-scale producers to set their own agenda for engaging in markets. Other market certification programmes and other market segments do not have a mechanism that really makes collective action possible.

Fairtrade’s growth has been impressive — today there are nearly 3,000 licensees selling Fairtrade products in more than 70 countries, including some of the world’s biggest players such as Starbucks, Cadbury/Kraft Foods and Ben and Jerry’s. In 2009, £799 million was spent on Fairtrade goods in the UK alone.

There’s little doubt that the initiative has, over the years, had many positive development impacts. Chris Bacon, professor of environmental politics and policy at Santa Clara University, said that the fair trade model has enabled many small-scale producers to access land, gain land tenure and achieve some of their self-defined goals.

“In other areas we’ve seen benefits in terms of education,” he added. “There is some evidence from Nicaragua and Guatemala showing the average number of years completed in school is higher among households that are connected, through a cooperative, to Fairtrade.”

A change for the worse?

But ‘mainstreaming’ Fairtrade has inevitably involved change and, in many cases, compromise. “There’s a danger that [Fairtrade’s] agenda is getting diluted... there can be an excessive focus on ‘the price’ instead of empowerment and social organisation,” said Peter Utting, deputy director of UNRISD.

Bacon also warned that the ‘agency’ that the fair trade model can deliver is often overstated. As Fairtrade has grown, we have seen a shift from working to establish an alternative market ‘with the poor’ to simply making a market ‘for the poor’.

Some participants at the Brussels provocation argued that the system is riddled with problems, not least when it comes to applying standards for labour practices. “The kind of inspection that goes on and fair trade certification is not adequate at all. We know that in many cases workers engaged by smallholdings are not the beneficiaries of any of the premiums that are paid,” said Dwight Justice from the International Labour Organization.

Other participants shared Justice’s concerns over the infrastructure for fair trade certification. Jorge Chavez-Tafur, from the Centre for learning on sustainable agriculture (ILEIA), asked “Is it true that fair trade standards are so complicated that companies can’t cope?”

Calls to address standards

It seems the answer is yes. Even from within the movement itself, there were calls to address standards. Merlin Preza, coordinator of Fairtrade Small Producers in Latin America and the Caribbean, said “the problem lies not in meeting standards — of course producers can meet them — the problem is verification”. She explained that poor farmers, who are often illiterate and live in isolated rural areas, often find it very difficult to navigate all the ‘red tape’ involved in registering products and proving where and how products are grown.

“We are asking for simpler — not lower — standards,” said Preza. “They need to be regionally specific because local contexts and cultures can be very different,” she added.

A bigger problem for fair trade — especially as it goes ‘mainstream’ — is competitiveness. Being able to compete with big business has always been a major challenge for small-scale farmers, who have fewer resources, less bargaining power and limited access to the latest technologies.

Big businesses are taking advantage of a scheme that was originally designed for small-scale producers and now compete with those producers, creating a major problem, said Preza.

The room generally agreed that fair trade can’t just be about certification or about getting a fair price. It must include other elements that build capacity and empower small-scale farmers to take control of their lives. That means investing in local communities, supporting education, improving product quality and, above all else, enabling organisation so that poor farmers can gain a stronger position in the market, widen their choices and negotiate better deals.