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Geography Compass 2/6 (2008): 19221942, 10.1111/j.1749-8198.2008.00171.

The Impact of Fair Trade on Social and


Economic Development: A Review of
the Literature
Ann Le Mare*
Durham University

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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A commonly used definition of Fair Trade is that by FINE:


Fair Trade is a trading partnership based on dialogue, transparency, and respect,
that seeks greater equity in international trade. It contributes to sustainable
development by offering better trading conditions to, and securing the rights
of, marginalized producers and workers especially in the South. Fair Trade
organisations (backed by consumers) are engaged actively in supporting
producers, awareness raising and in campaigning for changes in the rules and
practice of international trade. (FINE1 cited in Fair Trade Advocacy Office
2006, 10)

Thus, Fair Trade includes practical developmental and commercial activities,


as well as advocacy campaigns linked to consumer action. A well-known
aspect of the Fair Trade movement is fairtrade, a mark given to those
products (such as tea, coffee and sugar) which are certified by the
Fairtrade Labelling Organisations International (FLO). However, it should
be remembered that Fair Trade also includes organisations registered with
the International Fair Trade Association (IFAT) that produce hand-made
items, as well as the often hidden, but crucial, ongoing developmental work
that is undertaken to bring marginalised producers and their organisations
up to the standards set by FLO and IFAT. In this article, the term Fair
Trade will be used to cover both trading activity certified by FLO and
registered by IFAT, as well as developmental activity supporting producer
organisations to reach the standards of certification and registration.
Analysis of previous research demonstrates the range of individual and
institutional responses to fairer trade (Becchetti and Costantino 2005;
Lyon 2007; Murray et al. 2006; Ronchi 2002). How one defines Fair
Trade is contested (Beji-Becheur et al. 2008), with benefits and limitations
assessed through personal and institutional lenses. This point is illustrated
with a brief review of two studies on Fair Trade, one by Oxfam and the
other by the Department for International Development (DFID), which
took rather different perspectives on the value of Fair Trade. Oxfam
undertook a participatory study of the APECA coffee programme in Haiti
and found that many of the good changes such as greater access to food,
more children in school, and improved gender equity were linked to
specific practices of the Fair Trade cooperatives, and to the partnerships
between the cooperatives, their buyers, an intermediary non-governmental
organisation (NGO), and Oxfam GB (Villaseor 2000, 8 12). These
practices included improving decision-making, providing access to credit,
introducing new technologies, developing networks with other small
producers, and engaging in continuous monitoring and participatory
evaluations, their focus being on local action and the nature of decisionmaking. In contrast, the DFID conducted case studies of coffee in Tanzania
and cocoa in Ghana, and argued that the most important impact of Fair
Trade was on capacity building and trade facilitation (DFID 2000). The
report suggests that DFID should encourage governance arrangements of
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1924 The impact of Fair Trade

fairtrade labelling systems, promote new alliances with Fair Trade


Organisations (FTOs) to influence policy reform at European and international levels, and support the exchange of information and experiences
between FTOs and mainstream businesses, thus improving the functioning
of private trading systems emerging or expanding in the wake of market
liberalisation (DFID 2000, viiviii). Both reports locate the main benefits
of Fair Trade within their own institutional standpoint: Oxfam within its
traditional role of supporting cooperative relationships and participatory
local development, and DFID within its focus on improving the function
of markets as the primary strategy for reducing poverty. The literature also
demonstrates that what Fair Trade is depends on whether one is speaking
from the point of view of a Northern Fair Trade Organisation (NFTO)
usually a buyer, a Southern Fair Trade Organisation (SFTO) usually
a producer, a farmer or artisan, or a consumer. Such views are often
complementary, but it is important to acknowledge the differences in
priorities depending on ones experience of Fair Trade.
1.1

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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Fig. 1. Summary of issues.


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2 Market Relations
2.1 IN

BUT NOT OF THE MARKET

The goals of achieving greater equity in international trade and improving


the livelihoods of producers and artisans, are achieved, partly, through the
establishment of successful and profitable Fair Trade businesses. The
challenge of campaigning for change, at the same time, as operating
within wholly commercial markets remains a central concern of the Fair
Trade movement (Gent and Braithwaite 2005; Murray et al. 2006; Poncelet
2005; Raynolds et al. 2007). The tension between these two spheres has
been conceptualised as:
[A]lternative civic/domestic conventions rooted in trust, place attachment, and
social benefits, and conventional industrial/market norms, practices, and institutions
ruled by price and efficiency. (Raynolds and Murray 2007)

Many studies suggest that progress is being made on managing these


challenges. In his study of Fair Trade-certified coffee and Forest Stewardship Council Certification (FSO), Taylor found both systems maintaining
economic profitability and success in social goals, where they neither
isolate themselves from mainstream markets nor abandon their alternative
vision of the market (Taylor 2005, 143). Such success is achieved, in part,
through including an ethical dimension to business decisions (Davies and
Crane 2003; Wempe 2005), improving business practices and the quality
of products (Randall 2005; Traidcraft Market Access Centre 2005), and
establishing long-term partnerships with producer organisations.
An important aspect of the philosophy of Fair Trade is to work with
and enable the market activity of poor and disadvantaged producers,
traditionally organised in small producer units. The production of commodities in Fair Trade has generally been through cooperatives and there is
considerable research into governance within cooperatives and relationships
between NFTOs and SFTOs (Millford 2004; Nigh 2002; Scherer-Haynes
2007; Tallontire 2000; Tiffen 2002). Increasingly, however, there are demands
to engage with factories and plantation-based crops (Murray et al. 2006).
For example, a recent study of cotton (Gent and Braithwaite 2005) states
that Fair Trade is only a marginal player in the cotton industry. However,
Fair Trade could build producers financial capital and improve the position
of social values within cotton production if it began working with larger
units in order to respond to the commercial demands of mainstream suppliers
in terms of quality, volume and time (Gent and Braithwaite 2005, 23).
Fair Trade is also committed to marketing handicrafts as it employs
mainly very poor women with few other opportunities. The producers
are not organised in cooperatives (though in Latin America this can be
the case), and often work from home (Buchler et al. 2001; ECOTA
2005), and are employed on a casual basis with a SFTO. They may have
full-time work, but many are part-time, and do not have paid work unless
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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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dependency on NFTOs for access to international markets has meant that


producers do not move up the value chain and therefore also remain poor
(Traidcraft Market Access Centre 2005, 28). The VCA on rice not only
highlighted the benefits of Fair Trade to farmers, but also discussed how
benefits were limited by price volatility, the cycle of debt faced by farmers,
the use of child labour, and working conditions in mills (van Dooren
2005, 121). Although the farmers felt more in control of the production
process, there were still many problems, such as poor quality and a lack
of adequate transparency between the rice producers and buyers.
2.2

INCREASING ACCESS TO MARKETS

An important feature of Fair Trade is the additional responsibilities placed


on the NFTO, the buyer, to support producers while they gain the skills
to compete successfully and to enter new markets. Case studies of fairtrade
coffee production in Nicaragua (Bacon 2005), Chiapas, Mexico (Millford
2004) and Mexico (Calo and Wise 2005) suggest that Fair Trade networks
can reduce vulnerability, but that niche markets need to expand in order
to bring more producers into the networks. Thus, many coffee cooperatives
are following a strategy of diversification, building on the security provided
by Fair Trade to enter organic and specialty markets, at the same time,
supplying to mainstream buyers, such as Starbucks and Carrefour. Both
fairtrade and organic certification requires considerable organisational
support to monitor production (Taylor 2002) and Fair Trade encourages
individual farmers to improve their practices through the sharing of
technical expertise and market information. Development of the cooperatives
is achieved through business and developmental inputs from NFTOs and
the rigours of the certification system. In addition, some fairtrade coffee
cooperatives are developing their own direct links with buyers outside Fair
Trade networks. This strategy also has risks, where large firms could
green wash their non-Fair Trade coffee and eventually undermine the
FLO system (Taylor 2002, 10). However, there are also large coffee
companies that are now implementing standards that are clearly based on
organic and Fair Trade models (Nigh 2002, 17).
One of the neo-liberal critiques of Fair Trade is that it supports inefficient
producers. Research, however, suggests the reverse, that investment by
NFTOs encourages good business practices, better products and more
efficient producers. Ronchis study of coffee in Costa Rica (2006) found
that Fair Trade improved the efficiency of cooperatives, and a similar study
on banana production found that Fair Trade did not protect inefficiencies,
but instead supported sustainable production practices (La Cruz 2006).
Taking the argument a stage further, Doherty and Meehan (2006) argue
that the social resources learnt as part of sustainable business practices
(which includes efficient forms of production) allow Fair Trade enterprises
to compete with larger and more powerful companies.
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Using trade as a means to achieve wider development goals is also a


theme that runs through the literature (Bacon 2005; Becchetti and
Costantino 2005; Biggs and Messerschmidt 2005; La Cruz 2006; Nel
et al. 2007; Raynolds 2002; Utting-Chamorro 2005). Drawing on a range
of case studies on coffee and banana production, Paul considers Fair Trade
as a development project and argues that one of the main gains of Fair
Trade is to enlarge market access for producers, and that impact was
strengthened where FTOs co-operated with NGOs (Paul 2005). The
suggestion that FTOs should work with others in order to improve the
developmental impact is a common suggestion, for example, the previously
cited study by Bunin (2001). Nel et al. (2007) also found that the impact
of fairtrade certification of organic tea on poor communities in South
Africa was strengthened by active NGO support. International and
national context remains crucial to the potential for wider application of
the principles of fairer trade. A recent study found that fairtrade coffee
cooperatives strengthened the cooperative movement in Nicaragua, while
the impact of Fair Trade cooperatives in Tanzania was more limited
(Pirotte et al. 2006).
2.3

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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is based on the movements experience of current tensions and debates


leading to the next wave of social movement reformation of Fair Trade
ideas and practices (Raynolds and Murray 2007, 233).
3 Institutional Development and the Partnership Model
Fair Trade is a trading partnership based on common values and shared
objectives between buyers and sellers, partnerships with principles of
commitment, transparency, and accountability at their heart (Willis 2006,
10). Such an approach to market relations contributes to sustainable
cooperatives and craft enterprises (Calo and Wise 2005; Littrell and
Dickson 1999; Lyon 2007; Millford 2004; Ronchi 2002). The language
of partnership should not hide the very real difficulties in maintaining
cooperative relationships while being embedded in competitive markets.
In an extensive case study of Cafdirect and the Kilimanjaro Native
Cooperative Union (KNCU) coffee cooperative in Tanzania, Tallontire argues
that effective partnerships are based on shared knowledge and particular
ways of working together, emphasising mutual commitment and trust, where
accountability, transparency, and clear boundaries and responsibilities are
necessary for successful partnerships (Tallontire 2000, 172). While stressing
the value of new trading relationships in international business, there is
concern about how to manage such partnerships (Renard 2002; Tiffen
2002). In a study on the Kuapa Kokoo cocoa cooperative in Ghana,
Tiffen (2002) argues that partnership can be a good model for institutional
development, providing start-up loans, training, and increased dignity for the
producer. She warns against working only at the local level, as development
initiatives need to address the whole value chain (Tiffen 2002, 394 395).
Partnerships have also been assessed in terms of different models of
participation: beneficiaries, partners or owners, where Wright (2003)
makes a distinction between consultation and representation, arguing that
the Day Chocolate Company (partners with the Kuapa Kokoo cooperative)
facilitates representation (rather than just consultation) since the producers
are part-owners of the company.
Additional research into coffee production has established a firm link
between the development of sustainable commercial institutions and
benefits to individual producers. In her study on coffee in Costa Rica,
Ronchi argued that the indirect benefits those to the organisations,
which then provide services to their members were as important, or
more important than the direct impacts to producers, such as the fair price
and social premium (Ronchi 2002, 3). The 2-year programme of seven
case studies on coffee cooperatives conducted by Colorado State University,
five in Mexico, one in El Salvador, and one in Guatemala, provides
interesting detail on these processes. The benefits of Fair Trade to coffee
farmers in Latin America were both more significant and more complex
than previously understood (Murray et al. 2006, 180). They argue that
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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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explicitly prefer long term, stable relations with individual persons in


supplying organizations (Taylor 2002, 12). There is the regular loss of
institutional memory as elected leaders leave office, and the process
begins again with ordinary members, often with low levels of formal
education, to understand and assimilate new information. Such tensions
within organisational governance are not unique to Fair Trade, or to
coffee cooperatives, but are pertinent to many membership organisations
and those which strive for inclusive decision-making.
4 Economic Development and Poverty Reduction
The argument within Fair Trade is that a secure income, prepayments,
and access to loans and credit will contribute to reducing poverty. While
there are some studies that found it difficult to measure the role played by
Fair Trade (Knorringa 2003), most argue that the fair wage/price and other
financial benefits have a direct impact on reducing poverty (Calo and Wise
2005; Imhof and Lee 2007; Le Mare 2007; Ronchi 2002). However, there
are many factors that influence the extent of the impact, such as global
and national policies, the organisation and qualities of the FTOs, and the
individual characteristics of producers (Raynolds 2002). Bacon (2005)
found that Fair Trade and organic networks (he does not distinguish
between the two) can provide security and increased income, but do not
offset the many factors leading to a general decline in quality of life for
the farmers (p. 506). The VCA on handicrafts suggests that, although
insecure (due to a lack of regular orders) Fair Trade usually provided a
higher income than other possible activities, and that Fair Trade craft
producers were able to meet their most basic needs for food, shelter, a
minimum level of education for children and access to health (Traidcraft
Market Access Centre 2005, 32). This judgement depends not only on
what is meant by basic needs, but also on specific context. In Bangladesh,
it would be truer to say that Fair Trade producers are able to secure more
of their basic needs (Le Mare 2007).
Morsellos (2002) study of Brazil nut oil production by the Kayapo, an
indigenous group in the Amazon, through a partnership with the Body
Shop, contrasted the impact of conventional and Fair Trade markets. Those
people who had access to Fair Trade markets had more security, a better
income, and less social differentiation than those associated with conventional
markets. Such projects were so popular that many people moved to the
villages that were involved in the Fair Trade production. Becchetti and
Costantino use econometric analysis to compare four different groups of farmers
in Kenya growing herbs, defined according to their association with Fair
Trade networks. Affiliation with Fair Trade was associated with higher food
consumption, lower child mortality and significantly higher schooling
(Becchetti and Costantino 2005, 1), and with crop diversification, creation
of an additional trade channel and higher price satisfaction of marginalised
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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)

Artisans generally answered that Fair Trade had fostered empowerment


and improved the quality of their lives (Littrell and Dickson 1999). They
conclude that in order for FTOs to understand these processes, there will
need to systematically monitor and collect quantitative data on business
sustainability and on individual, household, and community impact (Littrell
and Dickson 1999, 303).
Some studies also found a link between involvement in FTOs, and the
ability to develop additional social skills and contact with new institutions.
For example, increased confidence and self-esteem with better education and
information, improved the ability of individuals to deal with government
and other institutions (Nigh 2002; Villaseor 2000), and can contribute
to new forms of social and economic relationships (Tiffen 2002). In
addition, the establishment of strong producer organisations has an impact
on the society, for example, in providing an alternative to migration
(Taylor 2005), and allowing for the development of community-based
activity and the promotion of human rights in Guatemala (Lyon 2007).
In Nicaragua, there are limitations to the impact of Fair Trade on the lives
of small coffee producers because of the inherited debt of the cooperative, a
lack of government support, and volatile coffee prices (Utting-Chamorro
2005, 584). Although significant gains are reported on five objectives of
FLO improved livelihoods, stronger producer organisations, rural
community development, gender equity and environmental protection
she concludes that the benefits of Fair Trade are limited by wider societal
problems. Therefore, FTOs should get involved in traditional development
activity, such as slowing the migration to cities through education, training,
and associated activities for young people (Utting-Chamorro 2005, 597).
An important issue to consider is how such activity is to be funded
(adding the cost to products?), and whether FTOs should do this directly
(gaining expertise, resources and time) or work in cooperation with
NGOs and other social organisations.
6 Gender Equality
Standards on gender equity (equal pay and conditions for men and
women) are widespread among FTOs (www.fairtrade.org.uk). There are
studies that report some progress (Taylor 2002; Utting-Chamorro 2005;
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Villasenor 2000) in achieving gender equity. However, almost all studies


that mention gender, conclude that more needs to be done to further
both gender equity within Fair Trade, and gender equality within societies
(van Dooren 2005; Hopkins 2000; Imhof and Lee 2007; Le Mare 2007;
Murray et al. 2006; Poncelet 2005; Ronchi 2002; Taylor 2002; UttingChamorro 2005). While women often have an increase in their workloads, in both commodity production and in the handicraft sector, their
income is often less then men (Imhof and Lee 2007), and they may be
excluded from positions of leadership or management (Taylor 2002). A
common situation is that recorded in the VCA of rice, where in spite
of the fact that 25 70% of rice production was done by women they
are paid less than men, or not at all and do not always participate in
decision making (van Dooren 2005, 124125). Although Green Net is
trying to promote gender equality, the situation appears to replicate rather
than challenge inequalities. Awareness of these complex issues led FLO to
conduct a study of gender practices within fairtrade (Wach 2006), with a
view to promoting best practice.
There are continued calls for FTOs to be more proactive in tackling
the social, cultural and economic basis of gender inequality (Hopkins
2000; Murray et al. 2006). Generally, studies demonstrate little knowledge
of the household, or of how Fair Trade employment interacts with the
domestic responsibilities of women. Additional research is needed to
uncover the wider circumstance and position of women, including the
gendered nature of most economies, where women are only allowed or
thought able to do certain types of paid work (Le Mare 2007; UttingChamorro 2005). Many studies suggest that the involvement of women is
the main variable for improving their circumstances, though, even with
their active participation, gender roles can often remain unaffected (Hopkins
2000). The participation of women can be actively contested, or seen as
relatively unimportant. Research into coffee cooperatives found that the
role of women in the institutions was very limited. They were allowed to
be members of cooperatives, but not as leaders, and there was little
concern within the cooperatives to address wider social issues that contributed
to gender inequalities (Taylor 2002). While gender equity is an explicit
goal, this is because of pressure from international buyers and the Fair
Trade movement, rather than being considered an important internal
issue (Taylor 2002, 4). Therefore, it would seem from the empirical
studies, that gender equity and changes in gender relationships remain
difficult to achieve.
7 Fair Trade and Sustainable Development
Sustainable development combines aspects of economic, social and
environmental sustainability. The Fair Trade movement argues that it is
contributing to sustainable development by working in partnership with
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1936 The impact of Fair Trade

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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8 Conclusion: Lessons from Previous Research


Summarising such a range of studies and impact assessments is difficult as,
inevitably, significant issues are left out. However, there are some common
themes that emerge from these studies. At the level of the individual:
many studies have identified the achievement of social benefits, such as
improvements in confidence, self-esteem, dignity and increases in social
capital
most studies suggest that the economic position of producers is improved,
although there is disagreement on whether it is a living wage, and
whether all basic needs are met
involvement in Fair Trade has a significant correlation with improved
health and increased food consumption and schooling
most participants have improved their ability to diversify livelihoods
These are significant benefits, because it helps individuals and households to
increase their assets and to gradually escape poverty. At the very least, Fair
Trade reduces exploitation. Thus, one could argue that Fair Trade makes
a significant contribution to the achievement of economic and social
developmental goals for individual producers and their families.
There are also a number of benefits that are attributed to the level of
organisations:
improved institutional capacity and sustainability of commercial
organisations
improved market access and diversification
growth of networks and collaboration with NGOs and other organisations
At the same time, many studies suggest that working through partnerships
is difficult and demands considerable time and commitment, where issues
remain such as providing adequate transparency, developing local ownership,
finding ways of combining expertise and democratic decision-making.
The link between strong producer organisations and sustainable livelihoods
has been established in many studies, as has the spin-off in terms of
community projects, second-level organisations and increased involvement
in political activity. Strong producer organisations improve markets,
through the sharing of information and knowledge, investment in efficient
production and improvement in the quality of products.
Most studies of Fair Trade also locate the analysis within national and
international context, where gains in social and economic development
continue to be hampered by:
volatile prices, and the actions of markets that treat the concerns of
fairer trade as external to market decisions
wider problems of development in marginal areas with few advantages
or assets
social and cultural constraints which reinforce inequality, especially for women
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1938 The impact of Fair Trade

Achievement in complex developmental goals needs analysis, commitment


and action by a range of actors, such as local government, national
governments, international agencies and market agents, to overcome the
many disadvantages faced by poorer farmers and artisans. It is important
that FTOs continue to cooperate with other development agents in order
to extend and build on their interventions.
The area of most concern is the limited achievements in terms of
gender equality.
Due to the experience of responding to the paradox of market relations,
theorising of Fair Trade is moving towards institutionalisation (Davies
2007) and the constructive reformation of ideas and practices (Raynolds
and Murray 2007). An implication of this review is that research into Fair
Trade practices and impact needs to move on as well, adopting a more
nuanced stance, considering not just correlation and trends, but causal
relationships, including such factors as the relationship between Fair Trade
and other household livelihood strategies, and the how and when of
poverty reduction, as well as continued research into governance and
market relations. However, there are new areas for research including:
generational and longitudinal studies to asses the benefits to children of
Fair Trade producers
studies that differentiate between male and female workers, full and part
time workers
consideration of the home environment, the workload of women, and
the interaction between Fair Trade production and other livelihood
strategies
In summary, Fair Trade can be seen as making a significant contribution to
development by improving the well-being of individuals and families and
in fostering sustainable institutions. The actions of Fair Trade practitioners
and organisations are complex and variable, with multiple outcomes with
rather less of the certainty than is offered in some marketing portrayals of
Fair Trade. While Fair Trade has brought positive benefits, it cannot, on
its own, solve the complex problems of marginalised areas, but should be
seen as part of a diversified strategy of development (Taylor 2002, 18).
Thus, research not only needs to consider Fair Trade organisations and
networks, but also how Fair Trades actors link in with other development
actors and processes.
Short Biography
Ann Le Mare has recently completed a PhD at Durham University, UK,
on the social and economic impact of Fair Trade on handicraft producers
in Bangladesh. She has a background in development (BA anthropology/
social science, Postgraduate Diploma Community Development, MSc
Development Management), and was a development worker before taking
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1939

a position as an Associate Lecturer at the Open University, UK. She is


currently a Lecturer at Durham University and works as an independent
consultant on a range of development, education and research projects.
Her main interests are in poverty reduction, empowerment, gender and
the impact of alternative trades. She plans to continue to conduct research
on Fair Trade, and to encourage producer organisations and Universities
in producer countries to develop their capacity and interest in conducting
research into Fair Trade. She is currently publishing articles on Fair Trade,
and also has an interest in preparing materials for producers and artisans
that are based on research findings.
Notes
* Correspondence address: Ann Le Mare, Geography Department, Durham University, Science
Site, South Road, Durham DH1 3LE, UK. E-mail: ann.lemare@durham.ac.uk.
1

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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