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3591 views April 20, 2017 posted by Maja Wallengren

SPECIAL REPORT: Is Fairtrade Coffee Based On An Unjust Movement That Only Serves The Rich?

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Fair Trade coffee has for years been at the heart of a highly controversial debate about whether it really serves the promised purpose of bringing better living conditions to the farmers selling these beans — or not. At SpillingTheBeans it’s no secret that we think many of the most important socio economic issues related to basic health and education at the root of origin simply are NOT addressed by Fair Trade certification, or most other certification programs for that matter. While we do recognize that Fair Trade has helped raise consumer awareness about the difficult plight millions of impoverished coffee producers face on a daily basis, we continue to encourage both consumers and stakeholders — from trade and coffee lovers to the governments in coffee nations and the decision makers based in the political capitals of policy making in Washington and Brussels — to establish parallel development models that provides real social development and economic progress to the coffee growing communities, which are always found among the poorest, most isolated and least developed marginal regions across the world. Yes, this makes development and trade much more complicated, but without including social development in a parallel track to any business models no certification programs or direct trade with farmers or communities will ever bring about the prosperity they promise for those who need it the most. The following comment was written by Ndongo Samba Sylla, a Senegalese researcher and author as a critical account of the Fair Trade movement. By re-publishing part of his comment published in the Guardian SpillingTheBeans don’t say we agree with everything Ndongo says, but we do believe he brings a lot of interesting points to light and for all those concerned with Fair Trade coffee, this is a very interesting read.

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Coffee children in Chiapas, Mexico (C) Maja Wallengren

By Ndongo Samba Sylla

SEP 5 (The Guardian)–The unequal distribution of the gains of Fairtrade (FT) derives in a large part from the characteristics of certification. The certification system presents a twofold bias against the poorest developing countries. First, there are considerations related to the costs of certification. These being the same everywhere, they are relatively more expensive for the most disadvantaged countries, all other things being equal. Then, due to its sliding-scale price structure, certification is less costly for large producer organisations than for smaller ones. Finally, the cost of compliance with FT standards (changes in agricultural and administrative practices that often lead to an increase in working hours) is higher for small organisations due to their lower productivity and lower economies of scale.

FT-certified articles tend to be based on products usually exported by Latin American countries. Coffee represents 36% of certification demand. Tea (9.3%), fresh fruit and vegetables (9.1%) and bananas (8%) complete the list of top certified products in 2009. One out of two FT-certified products is either coffee, bananas or cocoa. In terms of export revenue, coffee is also the most sold FT product, at 47%, followed by bananas at 18.8%. Coffee and bananas account for two-thirds of export revenue generated by FT. Yet, Latin America accounts for 263 out of the 317 coffee certifications granted in 2009 (or 83% of certifications) and 70 out of the 71 banana certifications.
The Fair Trade Scandal by Ndongo Samba Sylla. Photograph: Pluto Press

Latin America enjoys a double benefit compared with Africa and Asia, namely that certification is less costly in its case and FT markets are dominated by its main exports. The result of this bias is that Latin America accounts for 56% of effective certification demand against 29% for Africa, 14% for Asia and 1% for Oceania. Though Latin American countries are no doubt among the most unequal in the world, they are certainly not among the poorest. Mexico is the first country where FT was tried out. Yet this OECD member state accounts for nearly a quarter of the GDP of Latin America and the Caribbean. Its GDP is actually higher than that of the whole of sub-Saharan Africa. Seen from this angle, it would seem that the FT system was biased right from the start.

FT no doubt helps poor and vulnerable producers, but it certainly is not at the service of the poorest. Effective certification demand is positively correlated to country income. Countries ranked by the World Bank as upper middle-income account for 54% of producer organisations having received FT certification against 21% in the case of low-income countries. As for least developed countries (LDCs), they only account for 13.5% of effective certification demand. Whatever definition of poverty and economic vulnerability is used, the conclusion is the same: FT tends to exclude the poorest countries.

Some argue that in rich countries such as Mexico, there are huge social and economic inequalities as a result of which some populations find themselves in a situation of extreme poverty. This is undeniable, but not convincing. First, this argument does not explain why within these inegalitarian countries, the least poor groups are generally selected by FT. Then, the criterion used to justify which nations deserve to enter the FT system is contradictory. France, for example, is a very rich country. Yet it has many poor workers and farmers. So why not promote FT in France, as some have argued, or in the US or UK? FT protagonists will argue that these countries can tackle their own problems, as they have the means to do so. But this is also the case of Mexico and of the richest developing countries. Better still, differences in income between France and Mexico are much less pronounced than between Mexico and LDCs. If we choose to favour Mexico over France based on the need criterion, the same logic should mean favouring the poorest countries at the expense of wealthier developing countries.

Let us take the case of coffee, a product with a major distributive advantage, as it is mostly produced by small producer organisations. Ethiopia and Burundi are among the countries most dependent on coffee. Coffee accounts for 34% and 26% of their export revenue, respectively. For both these countries, only three FT coffee certifications were issued in 2009. In contrast, Mexico and Peru received 42 and 57 certifications, respectively, which represents nearly 31% of the effective certification demand for coffee. Yet these two economies are relatively diversified and, at any rate, coffee exports account for less than 2% of their export revenue.

In Latin America, Honduras and Nicaragua are two countries relying greatly on coffee. In relative terms, their dependency on coffee is at least 10 times higher than that of Mexico and Peru. But their share of certification demand is lower. FT bananas, cocoa and cotton follow a similar narrative. The countries most dependent on these products are underrepresented in the FT system. Among flagship products, only FT tea seems to be an exception. Yet, one of its specificities (as for bananas, flowers and plants, fruit and vegetables) is that it is produced primarily by male and female wage workers in plantations.

This exclusion of LDCs and other vulnerable developing countries is not the result of a deliberate choice by FT labelling initiatives. The path taken by FT is much too narrow for …

To read the full comment, please see: http://www.theguardian.com/global-development/2014/sep/05/fairtrade-unjust-movement-serves-rich

–From This is an edited extract from The Fair Trade Scandal: Marketing Poverty to Benefit the Rich by Ndongo Samba Sylla, published by Pluto Press
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3 Comments

  • The issue of Fair-trade is a bit complicated. Yes, it’s a feel good label for those who buy it, but who does Fair Trade really benefit? Well, it really benefits the wealthier farmer. Let’s not worry about certification because its complicated for most small farmers. A typical coffee farmer has less than 1.5 Hectares, or 2 Manazas of coffee (1 mañzana = 0.7 hectare or 1.73 acres). A typical manzana of coffee produces 10-15 quintiles (1000-1500 lbs) of coffee. High producing farms can produce 2000 lbs in Nicaragua. The poorest who can’t afford fertilizer and agrochemicals, produce “organic” coffee, averaging maybe 500 lbs per manzana. So that means, a typical coffee farmer will have 8-12 bags of 69kg of green coffee to sell. How is this farmer 6 hours away from Managua going to sell it? It goes to the co-op if he has a truck, or he just sells it at a discount to the large dry mills (beneficios) who have coffee collecting stations everywhere in Nicaragua. (Remember also, it costs $130-140 dollars to produce 100 lbs of green coffee, which includes fungicides, herbicides, 180 grams of fertilizer per tree per year, labor, harvest costs, taxes, food, fuel, energy, fees to the dry mills and export costs, along with discount when sold as parchment to the mills)

    So does Fair Trade prices reach these 1 to 1.5 hectare farmers? Not really. It reaches the wealthier farmers that can advertise and promote itself to the fair-trade community.

    So when we in the First-World buy Fair Trade, we basically give the farmer an extra 10-20% over C-price. And when a farmer sells as fair-trade coffee, this money does not trickle down. It stays with the farmer. Maybe a new truck, or extension to a house, or fertilize and agrochemicals. Extra money for the farmer isn’t always about food, even in the third world, people use money for entertainment, luxuries, TV, cell phones, etc. This extra Fair Trade money doesn’t benefit the harvesters, or the workers on the farm. These farm workers are paid the minimum wage, and given the basic foods mandated by the Labor Ministries, if the farmers follow the labor laws (many don’t to save money). Even a farmer who is a businessman, is going to hold down costs and keep most of it for him/herself and not pass it on to the workers or coffee pickers.

    So when talking about helping the less fortunate in the coffee industry, folks need to separate the farmers from the workers. Unfortunately, Fair Trade, when it does reach the small farmer, it helps a little, but the effect of Fair Trade on the worker of the farm, likely is non-existent, at least from my vantage point in mountains of Jinotega, Nicaragua.

    I really see the Fair Trade movement like soup kitchens or church charities handing out warm clothes and service groups helping the disabled. It helps a little, but won’t affect the coffee industry in any major earth shaking ways. As in if it makes you feel better being selfless and giving that you donated to the United Way, then feel better by buying Fair Trade Coffee.

    • So happy to see you back here Scott, thanks for bothering to take the time and share all this very valuable and spot-on input 🙂

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