Fairtrade fails the poor

June 2, 2014

A study into Fairtrade shows it fails the poor it purports to help:

Sales of Fairtrade-certified products from Uganda and Ethiopia are not benefiting poor farmworkers as profits fail to trickle down to much of the workforce, says a groundbreaking study.

The Fairtrade Foundation is committed to “better prices, decent working conditions, local sustainability and fair terms of trade for farmers and workers in the developing world”. But a UK government-sponsored study, which investigated the production of flowers, coffee and tea in Ethiopia and Uganda, found that “where Fairtrade flowers were grown, and where there were farmers’ groups selling coffee and tea into Fairtrade certified markets, wages were very low”.

Christopher Cramer, an economics professor at Soas, University of London and one of the report’s authors, said: “Wages in other comparable areas and among comparable employers producing the same crops but where there was no Fairtrade certification were usually higher and working conditions better. In our research sites, Fairtrade has not been an effective mechanism for improving the lives of wage workers, the poorest rural people.”

Researchers who collected detailed information on more than 1,500 people said they also found evidence of the widespread use of children being paid to work on farms growing produce for Britain’s leading ethical label. . . .

Fairtrade is supposed to help the poor, improving their wages and cutting out costs between workers and customers.

Fair Trade, organic and sustainability certification organizations make claims that they reduce poverty and improve sustainability – through price premiums, ownership stakes, higher output demand, more environmentally sustainable production conditions, and/or ‘civil society empowerment’ activities.


Unfortunately, there is a bewildering variety of schemes, with varying content to their certification processes and auditing procedures. . .

This research was unable to find any evidence that Fairtrade has made a positive

difference to the wages and working conditions of those employed in the production of the commodities produced for Fairtrade certified export in the areas where the research has been conducted. This is the case for ‘smallholder’ crops like coffee – where Fairtrade standards have been based on the erroneous assumption that the vast majority of production is based on family labour – and for ‘hired labour organization’ commodities like the cut flowers produced in factory – style greenhouse conditions in Ethiopia.


In some cases, indeed, the data suggest that those employed in areas where there are Fairtrade producer organisations are significantly worse paid, and treated, than those employed for wages in the production of the same commodities in areas without any Fairtrade certified institutions (including in areas characterised by smallholder production).

At the very least, this research suggests that Fairtrade organizations need to pay far more attention to the conditions of those extremely poor rural people – especially women and girls – employed in the production of commodities labelled and sold to ‘ethical consumers’ who expect their purchases to improve the lives of the poor.

The FTEPR research design did not set out to capture comprehensive data on child labour. However, in the quantitative survey results and especially in the qualitative life’s work interviews, the fact of widespread wage labour by children and teenagers (specifically, children working for wages and during school time) was inescapable.

 Another issue of importance both to the Fairtrade literature and more widely is the governance and structure of producer cooperatives. . . . The research finds a high degree of inequality between members of these cooperatives, i.e. the area cultivated with the certified crop (tea and coffee) and the share of the cooperative’s output are very unevenly distributed among members: there are large numbers of members who have tiny plots of land and sell very little to the cooperative, and there is a small number of members who dominate sales to and through the cooperative. One clear implication of this is that the many benefits of being a member of a Fairtrade certified cooperative – tax breaks, direct marketing channels to high – value niche markets, international donor financed subsidies – accrue very unequally.

 Fairtrade may ‘work’ but it does not quite do what it says on most of the labels: it aggravates rural inequality and at best may do so by supporting the emergence of rural capitalist producers; and it fails to make a difference, on the data collected, to the welfare of the poorest people involved in the Fairtrade chain, i.e. manual agricultural wage workers.

If Fairtrade does not make a positive difference in these research areas to the wages and working conditions of manual workers, then it is challenging to explain what accounts for this and what does make the most difference to wages and conditions. . .

That Fairtrade doesn’t  help the poor by improving wages is bad enough.

That there’s widespread use of child labour to provide produce for supposedly ethical Fairtrade labels is even worse.

Fairtrade is a supposedly ethical brand.

Fair trade is supposedly ethical commerce which helps the poorest producers and workers.

This report shows it fails to live up to its promise, at least in the places studied.

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