Limitations of Fair Trade for Producers
Negative Effects of Fair Trade Certification for Farmers
Aug 6, 2009
Based on on-going fair trade research, many consumers of fair trade coffee think that they are buying a product produced through more equitable, just, and humane production methods. While there are definitely benefits to smalls fair trade producers, there are also some issues with the system. The following is a breakdown of the limitations on coffee producer households, organizations, and communities participating in fair trade practices as described in Dean Cycon's book Javatrekker, Daniel Jaffee's Brewing Justice, and Latin American and Caribbean Network of Fair Trade Producers (CLAC) and Fairtrade Labeling Organizations (FLO) impact reports.
There are three main problems facing producers of fair trade producers: lack of market, increasing costs of sustainable production, and lack of representation.
Lack of Fair Trade Market
Most coffee that is grown by fair trade cooperatives is sold in the conventional markets. Even though coffee is the second highest traded commodity (only behind petroleum), Fair trade coffee only made up 1% of the global coffee trade in 2007.
Besides being a small percentage of the overall market, there is an over-production of fair trade certified coffee. CLAC reported that between 20 and 25 percent of coffee grown by certified cooperatives is sold as fair trade coffee. The rest of the coffee, while of high quality and up to fair trade standards is sold on the conventional market because of a lack of demand.
Producers go through the effort to receive fair trade certification and to follow all of the fair trade standards even though they are not selling all of their coffee as fair trade. This means that even though producers are going through the higher cost production methods to generate fair trade coffee, they are not reaping the rewards. because of the lack of a consumer market.
Increased Cost of Sustainable Production
Sustainable production is more costly than traditional farming methods. Most of this is due to the requirement to pay workers the national minimum wage or better. Jaffee found that fair trade producers spent nearly 3 times what conventional producers spent during the 2002-03 harvest season because of how much more labor intensive fair trade production. So even though fair trade producers make more money for their product, they are also paying much more to produce it. This makes it difficult for small producers to save any of the extra money and keeps them stuck in a cycle of poverty.
The recent increase in transportation and food costs have dramatically effected all small farmers, both fair trade and conventional.
Besides the cost of workers, CLAC identifies other costs that are increasing faster than the fair trade price for fair trade organizations.
- improving coffee quality
- complying with certification (attending meetings, paperwork, etc.)
- on-farm investments to meet quality and fair trade standards
- processes of participatory governance (transportation, paperwork, etc.)
- supporting the social welfare of member families
All of these costs cut into the amount of money available to pay small producers for their crops.
Lack of Representation of Small Producer Needs
The third issue is that small farmers only represent one of the invested interests in the fair trade movement. CLAC, the Latin American representatives of the regional fair trade producers put forth a proposal to increase the fair trade price to a level that would cover the increased cost of sustainable production. In an effort to increase the market share, the price was increased, but not to the full amount. With Starbucks as the largest consumer of fair trade coffee as of this year, many producer organizations are worried the needs of small producers will be over-shadowed by the demands of large consumers.
Overall, producers benefit in many ways from the fair trade movement, but CLAC reports the benefits are still "insufficient, unequal, and unjust."
 |
