2016 01 04

Smallholder farmers producing for Fair Trade market outlets are usually considered to benefit from better prices and stable market outlets. However, different studies provide opposing results.

Detailed case studies from coffee cooperatives state that FT strengthened producer organizations and suggest that FT standards improved returns to smallholder producers, positively affected their quality of life and reinforced the strength of local organizations, particularly due to better access to credit facilities and external funds, as well as through training and improved product management, improvements in food consumption and living conditions that resulted in a significant drop in child mortality.

Other studies suggest that FT farmers achieved only slightly better yields but required considerable higher labour efforts. Therefore, the increase in farm income proved to be modest, and many farmers remained in poverty despite being connected to FT organic markets.

Therefore, the assessment of the net impact of FT has become more important with the recent proliferation of coffee certification schemes. Farmers increasingly get options to sell (part of) their production under labels of ‘responsible’ trade (Utz-Certified), ‘sustainable’ trade (Rainforest Alliance) or to deliver directly to commercial coffee companies like Starbucks (C.A.F.E. Practices) and Nestle (Nespresso AAA) that aim to guarantee sustainable sourcing under private labels. Consequently, Fair Trade Labelling Organization (FLO) and other organizations need to communicate soundly how the FT label influences the welfare of local farming communities.

Study on FT impact amongst coffee producers in central Peru (Ruben and Fort, 2012) aims at comparing conventional and FT organic coffee producers having the advantage that coffee farmers operating in a broadly similar agro-ecological and commercial environment were analysed. Selected three FT cooperatives have the major part of their associates involved in organic coffee production. Three other neighbouring organizations as the control group were also selected. The total sample consisted of 360 households, including 180 FT farmers and 180 non-FT producers.

In general, it was assessed that, farmers in older FT cooperatives appear to be better-off than the ones in cooperatives with recent FT involvement. Nevertheless, scientists assessed significant differences between FT and non-FT organic coffee producers:

• FT farmers receive better average prices;

• Total gross and net household income in FT households is a little bit lower as seems to be driven by the significantly lower coffee yields of FT producers as compared to conventional non-FT farmers;

• Not all certified FT production could be sold under FT price conditions;

• FT farmers present higher levels of animal stocks and have accumulated significantly more agricultural assets;

• FT farmers’ access to credit and amounts of loans has increased substantially due to the collateral value of FT delivery contracts;

• FT farmers have also pursued more house improvements and land-attached investments compared to their counterparts in non-FT cooperatives;

• FT farmers are more satisfied compared to their non-FT counterparts in terms of prices, technical assistance and market management services;

• FT farmers also feel more identified with their cooperatives and are more convinced of its bargaining power;

• FT organic farmers perceived their land having a higher renting value;

• FT farmers use more organic fertilizers for coffee production than farmers in non-FT cooperatives;

Based on:

Ruben R., Fort R. 2012. The Impact of Fair Trade Certification for Coffee Farmers in Peru. World Development, Vol. 40, No. 3, 570–582