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Abstract
This article explores the outcomes of Fair Trade for producers, artisans and their
organisations. It asks the question, what happens to people who are involved in Fair
Trade?, and reviews the case studies and empirical research conducted on Fair Trade
for a range of products in different countries. The article is organised around
important aspects of development which Fair Trade seeks to influence, including
market relations, institutional development, economic development and reductions
in poverty, social development, gender equity and sustainable development. The
outcomes are diverse and complex, though, most studies found significant impact
on social and economic aspects of development, contributing to the capacity to
improve and diversify livelihoods. Fostering sustainable commercial organisations
is an important contribution of Fair Trade networks. However, there appears to
be less success in achieving gender equality and dealing with issues of importance to
women. Both the enactment of partnership and the achievement of development
goals require continuous commitment, a variety of strategies and cooperation
with other actors, such as government and non-governmental organisations.
1 Introduction
The debates for and against Fair Trade are well rehearsed with articles
positioning Fair Trade within various discourses: free markets (Booth and
Whetsone 2007; Doane 2005; Lindsey 2004; Sidwell 2008; Singleton 2005),
fairer markets (Barratt Brown 1993; Fairtrade Labelling Organisations
International 2007; Grimes 2005; Grimes and Miligram 2000; Hayes
2006; Johnson and Sugden 2001; Leclair 2003; Moore 2004; Raynolds
et al. 2007; Rice 2000), alternative development (Littrell and Dickson
1999; Morsello 2002; Zaccai 2007), and ethical consumption (Barnett et al.
2005; Becchetti and Rosati 2004; Bryant and Goodman 2004; Campbell
2005; Goodman 2004; Nicholls and Opal 2005). The focus of this article,
however, is on the outcomes of Fair Trade, particularly for producers and
artisans and their organisations. It addresses the question, what happens
when people and organisations are involved in Fair Trade networks?
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ORGANISING FRAMEWORK
The Fair Trade movement has led to the development of particular types
of FTOs and to specific institutional practices as a means of achieving
economic success and social goals. It is argued that trade not aid will
achieve developmental goals such as a reduction in poverty, the improved
well-being of producers and the building of sustainable producer organisations.
Thus, this article will analyse the impact of Fair Trade in terms of different
aspects of development, with each section highlighting some of the key
debates raised by practitioners and academics (Figure 1).
market relations
in but not of the market, improving market access for poor producers,
and mainstreaming
institutional development and the partnership model
long-term relationships, capacity building and governance
economic development and reducing poverty
the affect on poverty, links to new markets, opportunities for new
economic activity
social development
confidence, status, and social capital, improvement in well-being,
links to other institutions
gender equality
differing affects on men and women, attention to gender inequalities
sustainable development
economic, social, environmental sustainability
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2 Market Relations
2.1 IN
1927
there are orders, unlike commodities, such as coffee and tea, that have to
be harvested and can be sold to commercial buyers. Considerable investment and capacity building is necessary with artisans so that products can
be sold in Northern markets (Scrase 2003). One of the few studies from
a business perspective, Randall (2005) argues that Fair Trade organisations
involved in handicraft production need to develop better business practices,
improve quality, and expand their customer base.
Practitioners often conceptualised Fair Trade as changing the power
relationships along the supply chain, increasing the power of the consumer
to make ethical decisions, and, of the producer so they can capture more
of the value of the product.
Fair trade aims to re-balance power between producer and buyer, with rights
and responsibilities on both sides. (Traidcraft 2005, 4)
However, the use of power by organisations that are not Fair Trade, such
as buying houses and middle men remains problematic. Some studies
argue that global markets and commercial intermediate organisations
severely limit the possibilities of achieving the goals of fairer trade (Bunin
2001; Low and Davenport 2006; Shreck 2005). In evaluating fairtrade
organic banana production, Shreck (2005) identifies the problem in terms of
unequal power relations between producer organisations and the commercial
importers, shippers, ripeners and retailers. Bunins research on fair and
organic cotton, found that farmers adopted strategies to minimise the risk
of diverse market relationships (Bunin 2001). In order to deal with pressures
from liberalised markets, FTOs emphasise the importance of collaboration
not only within Fair Trade networks, but also with other organisations,
such as government, agro-scientists and service providers (Bunin 2001).
Another important feature of Fair Trade is that it should be understood
as a process, helping producer organisations to achieve certification or
registration as Fair Trade, continually making improvements within FTOs,
and striving to influence markets and business practices generally. The
complex processes of achieving fairer trade are often analysed through the
use of value chain analysis (VCA), where production is traced from
the provision of raw materials to the final product.2 A distinction is made
between buyer-driven (characterised by labour-intensive chains) and supplierdriven chains (associated with key producers, new technology and significant
linkages across sector) (Traidcraft Market Access Centre 2005, 27). Many
products dealt with by Fair Trade are buyer-driven. The competence of
the supplier is often inversely associated with the control of the buyer:
low competence equates with high control from the buyer. This relationship
is often in flux within Fair Trade networks, as they attempt to build
capacity with poor producers with low competence, by improving skills,
use of technology and linkages to other organisations. One problem that
can occur is producers becoming dependent on Fair Trade networks
(Hopkins 2000), a theme reflected in the VCA on handicrafts, where
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MAINSTREAMING
Redfern and Snedker argue that the success of the Fair Trade model,
building on the private sector and embedding business development services within trading relationships, should be expanded to the mainstream,
in order to scale up impact and improve the capacity to influence markets
and government policy (Redfern and Snedker 2002). Mainstreaming
refers to both increasing markets for Fair Trade within commercial retailers
like supermarkets, and the increased application of Fair Trade practices
and values by conventional companies. An empirical study of the process
of mainstreaming with the major supermarkets considers whether Fair
Trade can be an examplar for sustainable consumption (Moore et al.
2006). There are negative views of efforts to mainstream (Low and Davenport
2006), as well as the counter argument based on the experiences of the
Day Chocolate Company (Doherty and Tranchell 2007). In a study of various
Fair Trade initiatives, including Starbucks CAF Practices Programme,
Macdonald (2007) found that many such initiatives have contributed to
the empowerment of marginalized workers and producers in the global
coffee industry (p. 793), but that such gains are often discrete steps within
specific supply chains, and that more work needs to be done to build
institutional models that can be replicated by a range of organisations in
order to consistently enforce positive outcomes across markets. Such a
progression is supported by Davies (2007) where, in an article that combines
empirical data with grounded theory, he argues that Fair Trade has been
distinguished by four eras: solidarity, niche marketing, mass markets, and
is now entering a period of institutionalisation. Such institutionalisation
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Fair Trade has provided traceable benefits to the coffee producers: first,
the extra income and social premiums provide economic and social
benefits to producers and their communities (Nigh 2002; Raynolds 2002),
and second, at an institutional level, in supplying important market
information, credit, pre-financing and social premiums that support
investment in quality and new technology (Nigh 2002, 3). The processes
for both Fair Trade and organic certification have a direct impact on firstlevel grower organisations.
There are also studies that demonstrate the link between successful
SFTOs and development generally. Millford (2004) found that the financial
support of the Fair Trade system helped the cooperatives in the Chiapas
region of Mexico to thrive, where earlier attempts at rural development
had failed. More recently, Lyon (2007) argues that the Fair Trade partnership
fosters institutional development of local organisations that are necessary
for initiating community social activities. And Taylor found that participation
in Fair Trade networks encourages the development of new secondary
organisations based on collaboration among producer organizations (Taylor
2002, 8). Such second-level organisations include umbrella groups for
cooperatives that lobby government, make representations on rural issues,
and organisations that market Fair Trade coffee within Mexico.
However, not everyone benefits equally and there is often a lack of
understanding about Fair Trade, including the emphasis on cooperation
along the supply chain. As cooperatives are membership organisations,
such a lack of knowledge can weaken the organisation. Taylor (2002)
analyses this by identifying three levels of understanding. First, there are
the individual farmers who have a relative lack of understanding of what
Fair Trade is, other than the payment of a higher price. Second, delegates to
meetings have more information on Fair Trade and the opportunity to
develop additional skills. Third, the elected leaders and technical advisors
acquire a sophisticated understanding of coffee markets and have contact with
a greater range of people. Problems identified with broadening the understanding of Fair Trade are a lack of interest amongst farmers, who are mainly
concerned with farm gate prices, the holding of information by officials,
and a lack of priority given to training and awareness-raising. Interestingly,
producers appear to understand organic production because it is more
concrete and because it deals with their everyday activities while Fair
Trade relations are handled mainly at the organizational level (Taylor
2002, 4).
Another dilemma to emerge from an analysis of organisational development in Fair Trade coffee cooperatives is, on the one hand, the need
for expert knowledge on coffee markets to inform decisions, with the
desire, on the other hand, for the widespread involvement of farmers,
who do not understand market mechanisms, in the decision-making
process. It is the tension between a Fair Trade system which requires
participants to be democratically organized yet also involves buyers who
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producers (Becchetti and Costantino 2005, 14). They argue that Fair
Trade works quite well in improving the well-being of farmers. The
combination of a relatively secure income and increased capacities has
meant that some Fair Trade producers seek new specialist markets (Bacon
2005; Becchetti and Costantino 2005; Calo and Wise 2005) and are able
to engage in new forms of economic activity (Le Mare 2007).
Two case studies on handicrafts conducted by Fair Trade Assistance
Holland with the Institute of Social Studies, The Hague, sought to analyse
changes in the livelihoods of handicraft producers and to measure to what
extent these changes in livelihood can be attributed to interventions by
trading partners and by Fair Trade (Knorringa 2003, 3). They argue that
the contribution of Fair Trade was difficult to discern. The conditions and
prices given in Fair Trade were similar to those in the conventional
channels in Mexico (Parrilli 2000, 3, 13), and in Thailand, pay and
conditions were similar across companies. However, a role for Fair Trade
was identified in providing services and market access for those micro
and informal businesses that could not access local service providers
(Tiyapongpattana 2001, 25). The limited impact attributed to FTOs could
be related to the more mature economy in Thailand, the proactive role
of government, and the development of a range of business service providers.
This leads to the question of what role, if any, Fair Trade should play in
a middle-income economy. Should Fair Trade be primarily about reducing
poverty (thus, only work in poor countries with poor people), or also
about expanding the use of Fair Trade practices in mainstream commercial
businesses, and thus relevant to any economy?
5 Social Development
Ideas about social development are embedded in the philosophy of Fair
Trade, and overwhelmingly, studies of Fair Trade suggest that it does
contribute to improving the general well-being of producers (Becchetti
and Costantino 2005; Hopkins 2000; Imhof and Lee 2007; Lyon 2007;
Millford 2004; Morsello 2002; Poncelet 2005; Ronchi 2002; Taylor 2002;
Tiffen 2002). For example, one of the earliest studies on the benefits of
environmentally and socially focused trade, fairtrade organic coffee from
Venezuela and environmentally friendly pest management citrus fruit in
South Africa found that there had been a significant impact in strengthening
social capital, trust and self-esteem (Robbins et al. 2000). The social
benefits of Fair Trade are as important, or more important than the
economic benefits (Ronchi 2002). The VCA on rice found that social
benefits appear to be the major achievement of the Fair Trade project
such as the creation of a learning environment, growing confidence
and self-esteem, with members of Fair Trade cooperatives having
significantly better opportunities than conventional farmers (van Dooren
2005, 122).
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Littrell and Dickson (1999) carried out extensive research with Fair
Trade handicraft organisations in North America, Latin America and
India, and artisans gave a range of indicators for assessing impact that went
beyond the economic:
[A]cquiring transferable language, business and computer skills, . . . gaining
independence and control over ones life; participating in organizational,
community, and regional planning; preserving and elevating the stature of craft
tradition . . . (Littrell and Dickson 1999, 37 38)
1935
farmers and artisans . . . [providing] the best possible return for labour
without damaging the environment (Willis 2006, 9), linking sustainability
to commercially secure organisations and the reduction poverty. A few
studies have considered the natural environment and reflected the complexities
involved in achieving sustainable development. For example, Philpott
et al. (2007) found that while Fair Trade coffee brought economic benefits
to farmers, neither it nor organic production necessarily protected
biodiversity. Oxfam (Villaseor 2000) worked with coffee producers to
improve the productivity of their land, forest conservation and increasing
vegetable cover while acknowledging a need for greater analysis and
response to ensure progress in environmental regeneration.
Research undertaken at the University of Liege (Belgium) considers
Fair Trade in terms of various types of capital linked to sustainable
development (Poncelet 2005). They evaluate the Fair Trade project on
bananas in Costa Rica and Ghana, and coffee in Tanzania and Nicaragua,
and conclude that the impact of Fair Trade is greatest and most
easily identifiable in terms of human capital (knowledge, new know-how)
. . . or social capital (networks, relationships) (Poncelet 2005, 7), and is
ambiguous on physical, natural and financial capital. The examples they
give concern the financial situation of the cooperatives, so it is less
clear what the implication is of a fair wage to the producers, although
it is also claimed that the specific objective of improving the living
conditions of small producers is achieved virtually everywhere (Poncelet
2005, 8).
An interesting approach to assessing sustainability comes from Biggs
and Messerschmidt (2005). They argue that the hand made paper industry
in Nepal is economically, socially and environmentally sustainable because
the production processes are supported by traditional concerns and the
application of Fair Trade codes of conduct. It is a good example of
positive deviance, where a range of actors are involved in promoting
something positive or better than average and such good change is not
the result of a project, programme, or policy (Biggs and Messerschmidt
2005, 1833), but is rooted in Nepalese society, and embedded in
many of the long-held cultural values of Nepalese society (Biggs and
Messerschmidt 2005, 1838). Thus, Fair Trade can be seen as embedded
in the perspectives and actions of local organisations, is sustainable, and
offers positive change because of its local and indigenous nature. A
similar view is taken by Lyon (2007), in regard to coffee in Guatemala,
where fairtrade standards support existing cultural norms of cooperation
and mutual aid, and by Morsello (2002) who found that one of the
strengths of Fair Trade production was the support it gave to collective
and traditional practices. Thus, sustainability, while primarily discussed
in the literature in terms of sustainable institutions and secure livelihoods,
also has links to environmental protection and supporting traditional
cultures.
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1937
1939
FINE refers to the network of FLO, IFAT, NEWS (Network of European World Shops) and
EFTA (European Fair Trade Association)
2
In 2005, IFAT, EFTA and FLO commissioned three VCAs, on handicrafts, cotton and rice.
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