Evidence Based Sustainability: “Fair” Trade’s Challenge
This month, I’m excited to have a piece in Supply Chain Management Review discussing mounting evidence that Fair Trade has little proven impact on poverty, and the companion piece by professors of supply chain management Robert Handfield and Andreas Wieland explores how emerging supply chain technologies make monitoring distant supply chain conditions an affordable reality.
Recently Fair Trade Labeling Organization’s CEO, Harriet Lamb, asked for dangerous ideas. The most dangerous idea of all for Fair Trade might be to cooperate with peer organizations to commission a series of independently managed evaluations to test the income and poverty impacts of specific farm-level interventions, regardless of certification scheme.
Fair Trade represents an important historical aspect of grassroots consumer advocacy, and it’s vital to remember its groundbreaking work through the late 80s and 90s to make supply chain issues visible and relevant to the world at large. Unfortunately, this early pioneer has aged poorly, and the current Fair Trade marketing bureaucracy has morphed into something else entirely. In the spirit of the original Fair Trade “revolution,” now is the time to radically rethink how we make global trade “fair,” and new evidence is pushing us to think even more aggressively about what specific field interventions will reduce poverty.
Far from having a complete “model” ready to be sold as a “guarantee” to consumers via a packaging label, we still don’t have convincing evidence to show what actually works in the field to make farmers more money and ensure effective local investment in social welfare projects. Arguments for Fair Trade point to glossy photos and emotional success stories from individuals, as well as a very limited pool of quantitative evidence claiming the excellent impact of Fair Trade compared to the lackluster impact of “competing” standards like UTZ and the Sustainable Agriculture Network (Rainforest Alliance). Frequently, these studies have very small samples, concerning potential for sampling bias and strong indications of confounding variables like multiple certifications. Further, pro-Fair Trade studies often over-emphasize small gains that don’t have a significant long-term effect on poverty or income, and many are further biased by receiving direct funding and management from Fair Trade organizations.
On the other side, growing evidence continues to suggest that Fair Trade is prohibitively expensive, cannot effectively reach the poorest majority of rural smallholder farmers and only provides modest benefits that do not reliably nor significantly reduce poverty. Although these studies also suffer from difficulties controlling a large number of social variables and smaller samples, there are a greater number of them, and most were produced independently from Fair Trade. Additionally, the evidence in these studies is increasingly supported by farm-level research that is beginning to reveal what specific interventions are strongly associated with higher incomes and lower poverty rates. Typically, while higher market prices can mean higher incomes for farmers, these increases are marginal compared to larger potential cash returns from increased productivity, higher quality and crop diversification.
No single pre-defined model or brand will solve the myriad environmental, social and economic problems endemic in many global supply chains. Rather, we must study specific actions, like financing inputs, training farmers in good agricultural practices and rehabilitating farms with improved planting material, that are most likely to increase incomes and reduce poverty. Competing as sustainability “brands” and fighting for meaningless space on packaging and in expensive advertisements defeats this important work and must be left behind as another historical artifact.
References
Barham, Bradford L. “The Economic Sustainability of Certified Coffee: Recent Evidence from Mexico and Peru.” World Development Volume 40, Issue 6, June 2012, Pages 1269–1279.
Beuchelt, Tina and Manfred Zeller. “Profits and Poverty: Certification’s Troubled Link for Nicaragua’s Organic and Fairtrade Coffee Producers.” Ecological Economics 70 (2011). 1316–1324.
Chiputwa, Brian and Matin Qaim and David J. Spielman. “Food Standards, Certification, and Poverty among Coffee Farmers in Uganda.” University of Goettingen. December 2013.
Cramer, Christopher and Deborah Johnston, Carlos Oya and John Sender. “Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda.” SOAS University of London Fair Trade, Employment and Poverty Reduction Research. April 2014.
Imhof, Sandra and Andrew Lee. “Assessing the Potential of Fair Trade for Poverty Reduction and Conflict Prevention: A Case Study of Bolivian Coffee Producers.” Swisspeace. June 2006.
Hudson, Ian, Mark Hudson and Mara Fridell. Fair Trade, Sustainability and Social Change. Palgrave Macmillan: 2013.
KPMG. “Sustainable Cocoa Fund Study: Cost/benefit analysis of cocoa certification in West-Africa.” Dutch Sustainable Trade Initiative (IDH). December 2, 2011.
Levi, Margaret and April Linton. “Fair Trade: A Cup at a Time?” Politics and Society. Vol. 31 No. 3 September 2003, 407–432
Mohan, Sushil. “Fair Trade without the Froth: A Dispassionate Economic Analysis of ‘Fair Trade.’” Institute of Economic Affairs. November 4, 2010.
Murray, Douglas, Laura T. Raynolds and Peter Leigh Taylor. “One Cup at a Time: Poverty Alleviation and Fair Trade Coffee in Latin America.” March 2003.
Ronchi, Loraine. “‘Fairtrade’ and Market Failures in Agricultural Commodity Markets.” World Bank Policy Research Working Paper 4011, September 2006.
Weber, Jeremy. “Rationing in the Fair Trade Coffee Market: Who Enters and How?” Paper delivered at 2e colloque International sur le commerce équitable et le développement durable June 19–21 2006, Montréal, Québec, Canada.
— , “How Much More do Growers Receive for Fair Trade-Organic Coffee?” Food Policy Volume 36, Issue 5, October 2011, Pages 678–685.
Originally published at impactprogramdesign.com on November 6, 2014.
