The Impact of Fair Trade on Social and Economic Development: A Review of the Literature
Ann Le Mare*Durham University
AbstractThis article explores the outcomes of Fair Trade for producers, artisans and theirorganisations. It asks the question, ‘what happens to people who are involved in FairTrade?’, and reviews the case studies and empirical research conducted on Fair Tradefor a range of products in different countries. The article is organised aroundimportant aspects of development which Fair Trade seeks to influence, includingmarket relations, institutional development, economic development and reductionsin poverty, social development, gender equity and sustainable development. Theoutcomes are diverse and complex, though, most studies found significant impacton social and economic aspects of development, contributing to the capacity toimprove and diversify livelihoods. Fostering sustainable commercial organisationsis an important contribution of Fair Trade networks. However, there appears tobe less success in achieving gender equality and dealing with issues of importance towomen. Both the enactment of partnership and the achievement of developmentgoals require continuous commitment, a variety of strategies and cooperationwith other actors, such as government and non-governmental organisations.
1 Introduction
The debates for and against Fair Trade are well rehearsed with articlespositioning Fair Trade within various discourses: free markets (Booth andWhetsone 2007; Doane 2005; Lindsey 2004; Sidwell 2008; Singleton 2005),fairer markets (Barratt Brown 1993; Fairtrade Labelling OrganisationsInternational 2007; Grimes 2005; Grimes and Miligram 2000; Hayes2006; Johnson and Sugden 2001; Leclair 2003; Moore 2004; Raynoldset al. 2007; Rice 2000), alternative development (Littrell and Dickson1999; Morsello 2002; Zaccai 2007), and ethical consumption (Barnett et al.2005; Becchetti and Rosati 2004; Bryant and Goodman 2004; Campbell2005; Goodman 2004; Nicholls and Opal 2005). The focus of this article,however, is on the outcomes of Fair Trade, particularly for producers andartisans and their organisations. It addresses the question, what happenswhen people and organisations are involved in Fair Trade networks?
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 sustainabledevelopment by offering better trading conditions to, and securing the rightsof, marginalized producers and workers – especially in the South. Fair Tradeorganisations (backed by consumers) are engaged actively in supportingproducers, awareness raising and in campaigning for changes in the rules andpractice of international trade. (FINE1 cited in Fair Trade Advocacy Office2006, 10)
Thus, Fair Trade includes practical developmental and commercial activities,as well as advocacy campaigns linked to consumer action. A well-knownaspect of the Fair Trade movement is ‘fairtrade’, a mark given to thoseproducts (such as tea, coffee and sugar) which are certified by theFairtrade Labelling Organisations International (FLO). However, it shouldbe remembered that Fair Trade also includes organisations registered withthe International Fair Trade Association (IFAT) that produce hand-madeitems, as well as the often hidden, but crucial, ongoing developmental workthat is undertaken to bring marginalised producers and their organisationsup to the standards set by FLO and IFAT. In this article, the term ‘FairTrade’ will be used to cover both trading activity certified by FLO andregistered by IFAT, as well as developmental activity supporting producerorganisations to reach the standards of certification and registration.
Analysis of previous research demonstrates the range of individual andinstitutional responses to fairer trade (Becchetti and Costantino 2005;Lyon 2007; Murray et al. 2006; Ronchi 2002). How one defines ‘FairTrade’ is contested (Beji-Becheur et al. 2008), with benefits and limitationsassessed through personal and institutional lenses. This point is illustratedwith a brief review of two studies on Fair Trade, one by Oxfam and theother by the Department for International Development (DFID), whichtook rather different perspectives on the value of Fair Trade. Oxfamundertook a participatory study of the APECA coffee programme in Haitiand found that many of the good changes – such as greater access to food,more children in school, and improved gender equity – were linked tospecific practices of the Fair Trade cooperatives, and to the partnershipsbetween the cooperatives, their buyers, an intermediary non-governmentalorganisation (NGO), and Oxfam GB (Villaseñor 2000, 8–12). Thesepractices included improving decision-making, providing access to credit,introducing new technologies, developing networks with other smallproducers, and engaging in continuous monitoring and participatoryevaluations, their focus being on local action and the nature of decision-making. In contrast, the DFID conducted case studies of coffee in Tanzaniaand cocoa in Ghana, and argued that the most important impact of FairTrade was on capacity building and trade facilitation (DFID 2000). Thereport suggests that DFID should encourage ‘governance arrangements of
fairtrade labelling systems’, promote ‘new alliances with Fair TradeOrganisations (FTOs) to influence policy reform at European and inter-national levels’, and support the exchange of information and experiencesbetween FTOs and mainstream businesses, thus ‘improving the functioningof private trading systems emerging or expanding in the wake of marketliberalisation’ (DFID 2000, vii–viii). Both reports locate the main benefitsof Fair Trade within their own institutional standpoint: Oxfam within itstraditional role of supporting cooperative relationships and participatorylocal development, and DFID within its focus on improving the functionof markets as the primary strategy for reducing poverty. The literature alsodemonstrates that what Fair Trade ‘is’ depends on whether one is speakingfrom the point of view of a Northern Fair Trade Organisation (NFTO)– usually a buyer, a Southern Fair Trade Organisation (SFTO) – usuallya producer, a farmer or artisan, or a consumer. Such views are oftencomplementary, but it is important to acknowledge the differences inpriorities depending on one’s experience of Fair Trade.
1.1 ORGANISING FRAMEWORK
The Fair Trade movement has led to the development of particular typesof FTOs and to specific institutional practices as a means of achievingeconomic success and social goals. It is argued that ‘trade not aid’ willachieve developmental goals such as a reduction in poverty, the improvedwell-being of producers and the building of sustainable producer organisations.Thus, this article will analyse the impact of Fair Trade in terms of differentaspects of development, with each section highlighting some of the keydebates 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 modellong-term relationships, capacity building and governance
• economic development and reducing povertythe affect on poverty, links to new markets, opportunities for neweconomic activity
• social developmentconfidence, status, and social capital, improvement in well-being,links to other institutions
• gender equalitydiffering affects on men and women, attention to gender inequalities
The goals of achieving greater equity in international trade and improvingthe livelihoods of producers and artisans, are achieved, partly, through theestablishment of successful and profitable Fair Trade businesses. Thechallenge of campaigning for change, at the same time, as operatingwithin wholly commercial markets remains a central concern of the FairTrade movement (Gent and Braithwaite 2005; Murray et al. 2006; Poncelet2005; Raynolds et al. 2007). The tension between these two spheres hasbeen conceptualised as:
[A]lternative civic/domestic conventions rooted in trust, place attachment, andsocial benefits, and conventional industrial/market norms, practices, and institutionsruled by price and efficiency. (Raynolds and Murray 2007)
Many studies suggest that progress is being made on managing thesechallenges. In his study of Fair Trade-certified coffee and Forest Steward-ship Council Certification (FSO), Taylor found both systems maintainingeconomic profitability and success in social goals, where they ‘neitherisolate themselves from mainstream markets nor abandon their alternativevision of the market’ (Taylor 2005, 143). Such success is achieved, in part,through including an ethical dimension to business decisions (Davies andCrane 2003; Wempe 2005), improving business practices and the qualityof products (Randall 2005; Traidcraft Market Access Centre 2005), andestablishing long-term partnerships with producer organisations.
An important aspect of the philosophy of Fair Trade is to work withand enable the market activity of poor and disadvantaged producers,traditionally organised in small producer units. The production of com-modities in Fair Trade has generally been through cooperatives and there isconsiderable research into governance within cooperatives and relationshipsbetween NFTOs and SFTOs (Millford 2004; Nigh 2002; Scherer-Haynes2007; Tallontire 2000; Tiffen 2002). Increasingly, however, there are demandsto engage with factories and plantation-based crops (Murray et al. 2006).For example, a recent study of cotton (Gent and Braithwaite 2005) statesthat Fair Trade is only a marginal player in the cotton industry. However,Fair Trade could build producers’ financial capital and improve the positionof social values within cotton production if it began working with largerunits in order to respond to the commercial demands of mainstream suppliersin terms of quality, volume and time (Gent and Braithwaite 2005, 23).
Fair Trade is also committed to marketing handicrafts as it employsmainly very poor women with few other opportunities. The producersare not organised in cooperatives (though in Latin America this can bethe case), and often work from home (Buchler et al. 2001; ECOTA2005), and are employed on a casual basis with a SFTO. They may havefull-time work, but many are part-time, and do not have paid work unless
there are orders, unlike commodities, such as coffee and tea, that have tobe harvested and can be sold to commercial buyers. Considerable invest-ment and capacity building is necessary with artisans so that products canbe sold in Northern markets (Scrase 2003). One of the few studies froma business perspective, Randall (2005) argues that Fair Trade organisationsinvolved in handicraft production need to develop better business practices,improve quality, and expand their customer base.
Practitioners often conceptualised Fair Trade as ‘changing the powerrelationships along the supply chain’, increasing the power of the consumerto make ethical decisions, and, of the producer so they can capture moreof the value of the product.
Fair trade aims to re-balance power between producer and buyer, with rightsand responsibilities on both sides. (Traidcraft 2005, 4)
However, the use of power by organisations that are not Fair Trade, suchas buying houses and middle men remains problematic. Some studiesargue that global markets and commercial intermediate organisationsseverely limit the possibilities of achieving the goals of fairer trade (Bunin2001; Low and Davenport 2006; Shreck 2005). In evaluating fairtradeorganic banana production, Shreck (2005) identifies the problem in terms ofunequal power relations between producer organisations and the commercialimporters, shippers, ripeners and retailers. Bunin’s research on fair andorganic cotton, found that farmers adopted strategies to minimise the riskof diverse market relationships (Bunin 2001). In order to deal with pressuresfrom liberalised markets, FTOs emphasise the importance of collaborationnot 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 understoodas a process, helping producer organisations to achieve certification orregistration as Fair Trade, continually making improvements within FTOs,and striving to influence markets and business practices generally. Thecomplex processes of achieving fairer trade are often analysed through theuse of value chain analysis (VCA), where production is traced fromthe provision of raw materials to the final product.2 A distinction is madebetween buyer-driven (characterised by labour-intensive chains) and supplier-driven chains (associated with key producers, new technology and significantlinkages across sector) (Traidcraft Market Access Centre 2005, 27). Manyproducts dealt with by Fair Trade are buyer-driven. The competence ofthe supplier is often inversely associated with the control of the buyer:low competence equates with high control from the buyer. This relationshipis often in flux within Fair Trade networks, as they attempt to buildcapacity with poor producers with low competence, by improving skills,use of technology and linkages to other organisations. One problem thatcan occur is producers becoming dependent on Fair Trade networks(Hopkins 2000), a theme reflected in the VCA on handicrafts, where
‘dependency on NFTOs for access to international markets has meant thatproducers do not move up the value chain and therefore also remain poor’(Traidcraft Market Access Centre 2005, 28). The VCA on rice not onlyhighlighted the benefits of Fair Trade to farmers, but also discussed howbenefits were limited by price volatility, the cycle of debt faced by farmers,the use of child labour, and working conditions in mills (van Dooren2005, 121). Although the farmers felt more in control of the productionprocess, there were still many problems, such as poor quality and a lackof adequate transparency between the rice producers and buyers.
2.2 INCREASING ACCESS TO MARKETS
An important feature of Fair Trade is the additional responsibilities placedon the NFTO, the buyer, to support producers while they gain the skillsto compete successfully and to enter new markets. Case studies of fairtradecoffee production in Nicaragua (Bacon 2005), Chiapas, Mexico (Millford2004) and Mexico (Calo and Wise 2005) suggest that Fair Trade networkscan reduce vulnerability, but that niche markets need to expand in orderto bring more producers into the networks. Thus, many coffee cooperativesare following a strategy of diversification, building on the security providedby Fair Trade to enter organic and specialty markets, at the same time,supplying to mainstream buyers, such as Starbucks and Carrefour. Bothfairtrade and organic certification requires considerable organisationalsupport to monitor production (Taylor 2002) and Fair Trade encouragesindividual farmers to improve their practices through the sharing oftechnical expertise and market information. Development of the cooperativesis achieved through business and developmental inputs from NFTOs andthe rigours of the certification system. In addition, some fairtrade coffeecooperatives are developing their own direct links with buyers outside FairTrade networks. This strategy also has risks, where ‘large firms couldgreen wash their non-Fair Trade coffee and eventually undermine theFLO system’ (Taylor 2002, 10). However, there are also large coffeecompanies that are now ‘implementing standards that are clearly based onorganic and Fair Trade models’ (Nigh 2002, 17).
One of the neo-liberal critiques of Fair Trade is that it supports inefficientproducers. Research, however, suggests the reverse, that investment byNFTOs encourages good business practices, better products and moreefficient producers. Ronchi’s study of coffee in Costa Rica (2006) foundthat Fair Trade improved the efficiency of cooperatives, and a similar studyon 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) arguethat the ‘social resources’ learnt as part of sustainable business practices(which includes efficient forms of production) allow Fair Trade enterprisesto compete with larger and more powerful companies.
Using trade as a means to achieve wider development goals is also atheme that runs through the literature (Bacon 2005; Becchetti andCostantino 2005; Biggs and Messerschmidt 2005; La Cruz 2006; Nelet al. 2007; Raynolds 2002; Utting-Chamorro 2005). Drawing on a rangeof case studies on coffee and banana production, Paul considers Fair Tradeas a ‘development project’ and argues that one of the main gains of FairTrade is to enlarge market access for producers, and that impact wasstrengthened where FTOs co-operated with NGOs (Paul 2005). Thesuggestion that FTOs should work with others in order to improve thedevelopmental impact is a common suggestion, for example, the previouslycited study by Bunin (2001). Nel et al. (2007) also found that the impactof fairtrade certification of organic tea on poor communities in SouthAfrica was strengthened by active NGO support. International andnational context remains crucial to the potential for wider application ofthe principles of fairer trade. A recent study found that fairtrade coffeecooperatives strengthened the cooperative movement in Nicaragua, whilethe 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 ser-vices within trading relationships, should be expanded to the ‘mainstream’,in order to scale up impact and improve the capacity to influence marketsand government policy (Redfern and Snedker 2002). Mainstreamingrefers to both increasing markets for Fair Trade within commercial retailerslike supermarkets, and the increased application of Fair Trade practicesand values by conventional companies. An empirical study of the processof mainstreaming with the major supermarkets considers whether FairTrade can be an ‘examplar’ for sustainable consumption (Moore et al.2006). There are negative views of efforts to mainstream (Low and Davenport2006), as well as the counter argument based on the experiences of theDay Chocolate Company (Doherty and Tranchell 2007). In a study of variousFair Trade initiatives, including Starbucks’ CAFÉ Practices Programme,Macdonald (2007) found that many such initiatives have contributed to‘the empowerment of marginalized workers and producers in the globalcoffee industry’ (p. 793), but that such gains are often discrete steps withinspecific supply chains, and that more work needs to be done to buildinstitutional models that can be replicated by a range of organisations inorder to consistently enforce positive outcomes across markets. Such aprogression is supported by Davies (2007) where, in an article that combinesempirical data with grounded theory, he argues that Fair Trade has beendistinguished by four ‘eras’: solidarity, niche marketing, mass markets, andis now entering a period of institutionalisation. Such ‘institutionalisation’
is based on the movement’s experience of current tensions and debatesleading to ‘the next wave of social movement reformation of Fair Tradeideas 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 sharedobjectives 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 sustainablecooperatives and craft enterprises (Calo and Wise 2005; Littrell andDickson 1999; Lyon 2007; Millford 2004; Ronchi 2002). The languageof ‘partnership’ should not hide the very real difficulties in maintainingcooperative relationships while being embedded in competitive markets.In an extensive case study of Cafédirect and the Kilimanjaro NativeCooperative Union (KNCU) coffee cooperative in Tanzania, Tallontire arguesthat effective partnerships are based on shared knowledge and particularways of working together, emphasising mutual commitment and trust, whereaccountability, transparency, and clear boundaries and responsibilities arenecessary for successful partnerships (Tallontire 2000, 172). While stressingthe value of new trading relationships in international business, there isconcern about how to manage such partnerships (Renard 2002; Tiffen2002). In a study on the Kuapa Kokoo cocoa cooperative in Ghana,Tiffen (2002) argues that partnership can be a good model for institutionaldevelopment, providing start-up loans, training, and increased dignity for theproducer. She warns against working only at the local level, as ‘developmentinitiatives need to address the whole value chain’ (Tiffen 2002, 394–395).Partnerships have also been assessed in terms of different models ofparticipation: beneficiaries, partners or owners, where Wright (2003)makes a distinction between consultation and representation, arguing thatthe Day Chocolate Company (partners with the Kuapa Kokoo cooperative)facilitates representation (rather than just consultation) since the producersare part-owners of the company.
Additional research into coffee production has established a firm linkbetween the development of sustainable commercial institutions andbenefits 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, ormore important than the direct impacts to producers, such as the fair priceand social premium (Ronchi 2002, 3). The 2-year programme of sevencase studies on coffee cooperatives conducted by Colorado State University,five in Mexico, one in El Salvador, and one in Guatemala, providesinteresting detail on these processes. The benefits of Fair Trade to coffeefarmers in Latin America were ‘both more significant and more complexthan previously understood’ (Murray et al. 2006, 180). They argue that
Fair Trade has provided traceable benefits to the coffee producers: first,the extra income and social premiums provide economic and socialbenefits to producers and their communities (Nigh 2002; Raynolds 2002),and second, at an institutional level, in supplying important marketinformation, credit, pre-financing and social premiums that supportinvestment in quality and new technology (Nigh 2002, 3). The processesfor both Fair Trade and organic certification have a direct impact on ‘first-level grower organisations’.
There are also studies that demonstrate the link between successfulSFTOs and development generally. Millford (2004) found that the financialsupport of the Fair Trade system helped the cooperatives in the Chiapasregion of Mexico to thrive, where earlier attempts at rural developmenthad failed. More recently, Lyon (2007) argues that the Fair Trade partnershipfosters institutional development of local organisations that are necessaryfor initiating community social activities. And Taylor found that participationin Fair Trade networks encourages the development of new secondaryorganisations based on ‘collaboration among producer organizations’ (Taylor2002, 8). Such second-level organisations include umbrella groups forcooperatives 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 ofunderstanding about Fair Trade, including the emphasis on cooperationalong 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 arethe individual farmers who have a relative lack of understanding of whatFair Trade is, other than the payment of a higher price. Second, delegates tomeetings have more information on Fair Trade and the opportunity todevelop additional skills. Third, the elected leaders and technical advisorsacquire a sophisticated understanding of coffee markets and have contact witha greater range of people. Problems identified with broadening the under-standing of Fair Trade are a lack of interest amongst farmers, who are mainlyconcerned 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 FairTrade relations are handled mainly at the organizational level’ (Taylor2002, 4).
Another dilemma to emerge from an analysis of organisational devel-opment in Fair Trade coffee cooperatives is, on the one hand, the needfor expert knowledge on coffee markets to inform decisions, with thedesire, on the other hand, for the widespread involvement of farmers,who do not understand market mechanisms, in the decision-makingprocess. It is the tension between ‘a Fair Trade system which requiresparticipants to be democratically organized yet also involves buyers who
explicitly prefer long term, stable relations with individual persons insupplying organizations’ (Taylor 2002, 12). There is the ‘regular loss ofinstitutional memory’ as elected leaders leave office, and the processbegins again with ordinary members, often with low levels of formaleducation, to understand and assimilate new information. Such tensionswithin organisational governance are not unique to Fair Trade, or tocoffee cooperatives, but are pertinent to many membership organisationsand 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. Whilethere are some studies that found it difficult to measure the role played byFair Trade (Knorringa 2003), most argue that the fair wage/price and otherfinancial benefits have a direct impact on reducing poverty (Calo and Wise2005; Imhof and Lee 2007; Le Mare 2007; Ronchi 2002). However, thereare many factors that influence the extent of the impact, such as globaland national policies, the organisation and qualities of the FTOs, and theindividual characteristics of producers (Raynolds 2002). Bacon (2005)found that Fair Trade and organic networks (he does not distinguishbetween the two) can provide security and increased income, but do notoffset the many factors leading to a general decline in quality of life forthe farmers (p. 506). The VCA on handicrafts suggests that, althoughinsecure (due to a lack of regular orders) Fair Trade usually provided ahigher income than other possible activities, and that ‘Fair Trade craftproducers were able to meet their most basic needs for food, shelter, aminimum level of education for children and access to health’ (TraidcraftMarket Access Centre 2005, 32). This judgement depends not only onwhat 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 moreof their basic needs (Le Mare 2007).
Morsello’s (2002) study of Brazil nut oil production by the Kayapo, anindigenous group in the Amazon, through a partnership with the BodyShop, contrasted the impact of conventional and Fair Trade markets. Thosepeople who had access to Fair Trade markets had more security, a betterincome, and less social differentiation than those associated with conventionalmarkets. Such projects were so popular that many people moved to thevillages that were involved in the Fair Trade production. Becchetti andCostantino use econometric analysis to compare four different groups of farmersin Kenya growing herbs, defined according to their association with FairTrade networks. Affiliation with Fair Trade was associated with higher foodconsumption, lower child mortality and significantly higher schooling(Becchetti and Costantino 2005, 1), and with ‘crop diversification, creationof an additional trade channel and higher price satisfaction of marginalised
producers’ (Becchetti and Costantino 2005, 14). They argue that FairTrade works ‘quite well’ in improving the well-being of farmers. Thecombination of a relatively secure income and increased capacities hasmeant that some Fair Trade producers seek new specialist markets (Bacon2005; Becchetti and Costantino 2005; Calo and Wise 2005) and are ableto engage in new forms of economic activity (Le Mare 2007).
Two case studies on handicrafts conducted by Fair Trade AssistanceHolland with the Institute of Social Studies, The Hague, sought to analysechanges in the livelihoods of handicraft producers and ‘to measure to whatextent these changes in livelihood can be attributed to interventions bytrading partners and by Fair Trade’ (Knorringa 2003, 3). They argue thatthe contribution of Fair Trade was difficult to discern. The conditions andprices given in Fair Trade were similar to those in the conventionalchannels in Mexico (Parrilli 2000, 3, 13), and in Thailand, pay andconditions were similar across companies. However, a role for Fair Tradewas identified in providing services and market access for those microand informal businesses that could not access local service providers(Tiyapongpattana 2001, 25). The limited impact attributed to FTOs couldbe related to the more mature economy in Thailand, the proactive roleof 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 ina middle-income economy. Should Fair Trade be primarily about reducingpoverty (thus, only work in poor countries with poor people), or alsoabout expanding the use of Fair Trade practices in mainstream commercialbusinesses, and thus relevant to any economy?
5 Social Development
Ideas about social development are embedded in the philosophy of FairTrade, and overwhelmingly, studies of Fair Trade suggest that it doescontribute to improving the general well-being of producers (Becchettiand 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 ofenvironmentally and socially focused trade, fairtrade organic coffee fromVenezuela and environmentally friendly pest management citrus fruit inSouth Africa found that there had been a significant impact in strengtheningsocial capital, trust and self-esteem (Robbins et al. 2000). The socialbenefits of Fair Trade are as important, or more important than theeconomic benefits (Ronchi 2002). The VCA on rice found that ‘socialbenefits appear to be the major achievement of the Fair Trade project’such as the creation of a learning environment, growing confidenceand self-esteem, with members of Fair Trade cooperatives having‘significantly better opportunities than conventional farmers’ (van Dooren2005, 122).
Littrell and Dickson (1999) carried out extensive research with FairTrade handicraft organisations in North America, Latin America andIndia, and artisans gave a range of indicators for assessing impact that wentbeyond the economic:
[A]cquiring transferable language, business and computer skills, . . . gainingindependence and control over one’s life; participating in organizational,community, and regional planning; preserving and elevating the stature of crafttradition . . . (Littrell and Dickson 1999, 37–38)
Artisans generally answered that Fair Trade had fostered empowermentand improved the quality of their lives (Littrell and Dickson 1999). Theyconclude that in order for FTOs to understand these processes, there willneed to ‘systematically monitor and collect quantitative data on businesssustainability and on individual, household, and community impact’ (Littrelland Dickson 1999, 303).
Some studies also found a link between involvement in FTOs, and theability to develop additional social skills and contact with new institutions.For example, increased confidence and self-esteem with better education andinformation, improved the ability of individuals to deal with governmentand other institutions (Nigh 2002; Villaseñor 2000), and can contributeto new forms of social and economic relationships (Tiffen 2002). Inaddition, the establishment of strong producer organisations has an impacton the society, for example, in providing an alternative to migration(Taylor 2005), and allowing for the development of community-basedactivity and the promotion of human rights in Guatemala (Lyon 2007).In Nicaragua, there are limitations to the impact of Fair Trade on the livesof small coffee producers because of the inherited debt of the cooperative, alack of government support, and volatile coffee prices (Utting-Chamorro2005, 584). Although significant gains are reported on five objectives ofFLO – improved livelihoods, stronger producer organisations, ruralcommunity development, gender equity and environmental protection –she concludes that the benefits of Fair Trade are limited by wider societalproblems. Therefore, FTOs should get involved in traditional developmentactivity, 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 withNGOs and other social organisations.
6 Gender Equality
Standards on gender equity (equal pay and conditions for men andwomen) are widespread among FTOs (www.fairtrade.org.uk). There arestudies that report some progress (Taylor 2002; Utting-Chamorro 2005;
Villasenor 2000) in achieving gender equity. However, almost all studiesthat mention gender, conclude that more needs to be done to furtherboth 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; Utting-Chamorro 2005). While women often have an increase in their work-loads, in both commodity production and in the handicraft sector, theirincome is often less then men (Imhof and Lee 2007), and they may beexcluded from positions of leadership or management (Taylor 2002). Acommon situation is that recorded in the VCA of rice, where in spiteof the fact that 25–70% of rice production was done by women ‘theyare paid less than men, or not at all and do not always participate indecision making’ (van Dooren 2005, 124–125). Although Green Net istrying to promote gender equality, the situation appears to replicate ratherthan challenge inequalities. Awareness of these complex issues led FLO toconduct a study of gender practices within fairtrade (Wach 2006), with aview to promoting best practice.
There are continued calls for FTOs to be more proactive in tacklingthe social, cultural and economic basis of gender inequality (Hopkins2000; Murray et al. 2006). Generally, studies demonstrate little knowledgeof the household, or of how Fair Trade employment interacts with thedomestic responsibilities of women. Additional research is needed touncover the wider circumstance and position of women, including thegendered nature of most economies, where women are only allowed orthought able to do certain types of paid work (Le Mare 2007; Utting-Chamorro 2005). Many studies suggest that the involvement of women isthe main variable for improving their circumstances, though, even withtheir active participation, gender roles can often remain unaffected (Hopkins2000). The participation of women can be actively contested, or seen asrelatively unimportant. Research into coffee cooperatives found that therole of women in the institutions was very limited. They were allowed tobe members of cooperatives, but not as leaders, and there was littleconcern within the cooperatives to address wider social issues that contributedto gender inequalities (Taylor 2002). While gender equity is an explicitgoal, this is because of pressure from international buyers and the FairTrade movement, rather than being considered an ‘important internalissue’ (Taylor 2002, 4). Therefore, it would seem from the empiricalstudies, that gender equity and changes in gender relationships remaindifficult to achieve.
7 Fair Trade and Sustainable Development
Sustainable development combines aspects of economic, social andenvironmental sustainability. The Fair Trade movement argues that it iscontributing to sustainable development by working ‘in partnership with
farmers and artisans . . . [providing] the best possible return for labourwithout damaging the environment’ (Willis 2006, 9), linking sustainabilityto commercially secure organisations and the reduction poverty. A fewstudies have considered the natural environment and reflected the complexitiesinvolved in achieving sustainable development. For example, Philpottet al. (2007) found that while Fair Trade coffee brought economic benefitsto farmers, neither it nor organic production necessarily protectedbiodiversity. Oxfam (Villaseñor 2000) worked with coffee producers toimprove the productivity of their land, forest conservation and increasingvegetable cover while acknowledging a need for greater analysis andresponse to ensure progress in environmental regeneration.
Research undertaken at the University of Liege (Belgium) considersFair Trade in terms of various types of ‘capital’ linked to sustainabledevelopment (Poncelet 2005). They evaluate the ‘Fair Trade project’ onbananas in Costa Rica and Ghana, and coffee in Tanzania and Nicaragua,and conclude that the impact of Fair Trade is ‘greatest and mosteasily identifiable in terms of human capital (knowledge, new know-how). . . or social capital (networks, relationships)’ (Poncelet 2005, 7), and isambiguous on physical, natural and financial capital. The examples theygive concern the financial situation of the cooperatives, so it is lessclear what the implication is of a fair wage to the producers, althoughit is also claimed that the specific objective of improving the livingconditions of small producers is achieved virtually everywhere (Poncelet2005, 8).
An interesting approach to assessing sustainability comes from Biggsand Messerschmidt (2005). They argue that the hand made paper industryin Nepal is economically, socially and environmentally sustainable becausethe production processes are supported by traditional concerns and theapplication 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 notthe result of a ‘project, programme, or policy’ (Biggs and Messerschmidt2005, 1833), but is rooted in Nepalese society, and ‘embedded inmany of the long-held cultural values of Nepalese society’ (Biggs andMesserschmidt 2005, 1838). Thus, Fair Trade can be seen as embeddedin the perspectives and actions of local organisations, is sustainable, andoffers ‘positive change’ because of its local and indigenous nature. Asimilar view is taken by Lyon (2007), in regard to coffee in Guatemala,where fairtrade standards support existing cultural norms of cooperationand mutual aid, and by Morsello (2002) who found that one of thestrengths of Fair Trade production was the support it gave to collectiveand traditional practices. Thus, sustainability, while primarily discussedin the literature in terms of sustainable institutions and secure livelihoods,also has links to environmental protection and supporting traditionalcultures.
Summarising such a range of studies and impact assessments is difficult as,inevitably, significant issues are left out. However, there are some commonthemes that emerge from these studies. At the level of the individual:
• many studies have identified the achievement of social benefits, such asimprovements in confidence, self-esteem, dignity and increases in socialcapital
• most studies suggest that the economic position of producers is improved,although there is disagreement on whether it is a living wage, andwhether all basic needs are met
• involvement in Fair Trade has a significant correlation with improvedhealth 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 toincrease their assets and to gradually escape poverty. At the very least, FairTrade reduces exploitation. Thus, one could argue that Fair Trade makesa significant contribution to the achievement of economic and socialdevelopmental goals for individual producers and their families.
There are also a number of benefits that are attributed to the level oforganisations:
• improved institutional capacity and sustainability of commercialorganisations
• 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 partnershipsis difficult and demands considerable time and commitment, where issuesremain 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 livelihoodshas been established in many studies, as has the spin-off in terms ofcommunity projects, second-level organisations and increased involvementin political activity. Strong producer organisations improve markets,through the sharing of information and knowledge, investment in efficientproduction and improvement in the quality of products.
Most studies of Fair Trade also locate the analysis within national andinternational context, where gains in social and economic developmentcontinue to be hampered by:
• volatile prices, and the actions of markets that treat the concerns offairer trade as external to market decisions
• wider problems of development in marginal areas with few advantagesor assets
• social and cultural constraints which reinforce inequality, especially for women
Achievement in complex developmental goals needs analysis, commitmentand action by a range of actors, such as local government, nationalgovernments, international agencies and market agents, to overcome themany disadvantages faced by poorer farmers and artisans. It is importantthat FTOs continue to cooperate with other development agents in orderto extend and build on their interventions.
The area of most concern is the limited achievements in terms ofgender equality.
Due to the experience of responding to the ‘paradox’ of market relations,theorising of Fair Trade is moving towards ‘institutionalisation’ (Davies2007) and the constructive ‘reformation’ of ideas and practices (Raynoldsand Murray 2007). An implication of this review is that research into FairTrade practices and impact needs to move on as well, adopting a morenuanced stance, considering not just correlation and trends, but causalrelationships, including such factors as the relationship between Fair Tradeand other household livelihood strategies, and the ‘how’ and ‘when’ ofpoverty reduction, as well as continued research into governance andmarket relations. However, there are new areas for research including:
• generational and longitudinal studies to asses the benefits to children ofFair Trade producers
• studies that differentiate between male and female workers, full and parttime workers
• consideration of the home environment, the workload of women, andthe interaction between Fair Trade production and other livelihoodstrategies
In summary, Fair Trade can be seen as making a significant contribution todevelopment by improving the well-being of individuals and families andin fostering sustainable institutions. The actions of Fair Trade practitionersand organisations are complex and variable, with multiple outcomes withrather less of the certainty than is offered in some marketing portrayals ofFair Trade. While Fair Trade has brought positive benefits, it cannot, onits own, solve the complex problems of marginalised areas, but should beseen as ‘part of a diversified strategy of development’ (Taylor 2002, 18).Thus, research not only needs to consider Fair Trade organisations andnetworks, but also how Fair Trades actors link in with other developmentactors 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 producersin Bangladesh. She has a background in development (BA anthropology/social science, Postgraduate Diploma Community Development, MScDevelopment Management), and was a development worker before taking
a position as an Associate Lecturer at the Open University, UK. She iscurrently a Lecturer at Durham University and works as an independentconsultant on a range of development, education and research projects.Her main interests are in poverty reduction, empowerment, gender andthe impact of alternative trades. She plans to continue to conduct researchon Fair Trade, and to encourage producer organisations and Universitiesin producer countries to develop their capacity and interest in conductingresearch into Fair Trade. She is currently publishing articles on Fair Trade,and also has an interest in preparing materials for producers and artisansthat are based on research findings.
Notes
* Correspondence address: Ann Le Mare, Geography Department, Durham University, ScienceSite, South Road, Durham DH1 3LE, UK. E-mail: [email protected].
1 FINE refers to the network of FLO, IFAT, NEWS (Network of European World Shops) andEFTA (European Fair Trade Association)2 In 2005, IFAT, EFTA and FLO commissioned three VCAs, on handicrafts, cotton and rice.
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