How fair is FairTrade (coffee) really?

Discuss The Industry
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I just stumbled upon an interesting article in the newspaper “Die Zeit” (unfortunately in German): Wenn Kaffee bitter schmeckt
It argues, that the FairTrade system for coffee is ineffecient, expensive for farmers (due to high license fees) and sets wrong incentives for them. This is based on a couple of studies who found no long- or short-term benefit for farmers participating in the FairTrade system.

The Guardian and The Huffington post had similar articles recently:
Guardian: Fairtrade accused of failing to deliver benefits to African farmworkers -
Study claims wages on officially certified markets are below what is paid by comparable employers
Huffington Post: 10 reasons FairTrade coffee doesn’t work

Personally, I’ll still try to buy Fairtrade, when possible. I think that this is a system, which at least can be improved, though I’m quite disapointed with the studies’s results. But at the very least do the controls from FairTrade guarantee that neither child labor nor slave work is performed during the production.
And I don’t see real alternatives as direct trade doesn’t really seem to offer guaranteed working standards.

So - what are your thoughts about that issue?

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Devastating. This system is corrupted.
You can’t trust anybody, you can’t trust any corporation, you can’t trust any government, you can’t trust these studies.
Now: What to do? Stop buying Fair Trade, take the money and free some children!

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Hey there, I work for Fairtrade International (and also eagerly awaiting for a FairPhone) and saw this post. We do have responses on our website in each of these cases. I’ll just post links to them in case folks are interested in Fairtrade’s side of the story.

Huffington Post Response
Die Zeit article (response in German)

Let us know if you have other questions. From the big picture perspective - Fairtrade is not a cure-all for poverty. It’s just one tool farmers can use to take more control over trade chains. But poverty has many dimensions and there needs to be efforts to support economic diversification in many of these communities, there needs to be better access to finance, and more.

Seems I can only put two links, but if you visit the Fairtrade website, you can find the article in our latest news section about the SOAS study on farm workers.

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Hi @Kyle_Freund

Thank you very much for your reply. I actually have a couple of questions and I would appreciate answers by you, as you seem quite involved in the fairtrade system.

Firstly, I have been a “fan” and advocate for the FairTrade system, but the recent wave of coverage about FairTrade makes it hard for me to still support the label like I used to in the past.

First of all: The reply to the Zeit’s article seems to be a mere translation of the reply to the Huffington’s article. Can you be more specific about the issues, that the Zeit raised?

Secondly: There have been huge discussions about ongoing slavework, generally bad working conditions and problems affiliated with the introduction of large farmers to the FairTrade system. How exactly is FairTrade going to respond to these claims, where will the system be improved.
How has FairTrade reacted to the claims, a recent ARTE documentary made?

Thirdly: The largest pile of the money collected by the FairTrade system is used for personell. Can you briefly explain to me why there is so much money spent on them an controls of farms and working conditions still seem to be rather weak?

Criticism about FairTrade in the article was mostly based on the situation for coffee-farmers. Are coffee farmers special, as the market price significantly increased in recent years, or do you find these claims to be true for cacao farmers,… as well?

Thanks for your reply in advance!

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First problem is the imperfect economic system, then the government which lets it continue, then corporations which lobbied for it, only then comes the consumer.
Critics will say FT is counter-productive, uneffective, consumer-unfriendly. How can it be worse than child and forced labour, use of chemicals that are toxic to environment and humans?
Why is FT critizised when it means spending more money? That’s the capitalist way. People who call FT-buyers do-gooders are afraid they are called misanthropists.

TL;DR
FT is not perfect but as an alternative I gladly take it.

EDIT:
Doesn’t mean of couse that there shouldn’t be any discussion or inquiries. But you have to question some people’s goals.

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@Kyle_Freund

Thank you for responding to this and sharing the official responses from Fairtrade Int. Unfortunately it seems like everything we try to put in place to pull people out of poverty or to change one aspect of the world (such as Rainforest Alliance) will end up being criticised by somebody. We have to continue fighting and supporting and as you say realise that this is just one tool and not a cure-all. I for one will continue supporting Fairtrade because I think it is an important step in achieving a fairer, more equitable society, certainly in the context of developing countries whom we exploit for our own benefit.

I’ll stop ranting as I fear I’ll go well off-topic!

BTW, I noticed you mention about only being able to post 2 links - this is because you still have the ‘new user’ status on your account. You need to do a bit more interaction on the forum and you’ll be moved up. See this for an explanation about the user access levels

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Thanks @Chris_R - I noticed that fact while posting. As an FYI, here’s the link to the official SOAS response.

Yes, the coverage of late has made it pretty difficult. In all honesty, the SOAS report had good information - it was just unfortunate the way it was presented. While the research focused on casual laborers, it came out as if Fairtrade was failing all producers. Regarding labour on small farms and casual workers, it is an issue to be addressed, and it is being worked on. New work on living wages will give us and others good tools to use, plus we recently announced work on how Fairtrade can better benefit workers on small-scale farms.

But it is a step-by-step process. We’ve come a long way and there’s a long way to go. Check out our website Latest News section for these as I still can’t add more links.

The Arte documentary was interesting - it first aired last year and we did a full briefing about it here. There’s a lot more to say, but those links should give you enough background. Specifically regarding workers on farms and plantations in Haiti - it’s not as clearcut as he presented it in the film - there are governmental issues at play as well (we have some stories about this on our website if you do a search for ‘Haiti’). And the final example he showed in the documentary wasn’t actually a Fairtrade certified farm.

To @Madde’s comment on how money is spread through the system, setting up a certification system is no small task. Creating the standards and working to get international agreement, surveying and checking prices, generating interest and educating the general public, addressing the continuing challenges to make sure Fairtrade adapts and improves - these are all important to our mission.

You can see in our Annual Reports the income and expenses at Fairtrade International and how it’s distributed (next one being released 2 Sept). We create the Standards and our certifier FLOCERT handles the auditing. It is a robust system, but there is no system that could guarantee with absolute certainty 100% of the time that there are no issues at origin (which is why our allegations procedure is so important - it helps flag problems).

And regarding coffee as the main subject - there are different realities for every product, which is one of the reasons we have different standards for each product instead of just one generic standard. In coffee, it’s mostly produced by smallholders. It is an extremely volatile market (Just watch the NY ICE - which a lot of companies use as the indicator for pricing - sometime to understand the kind of uncertainty coffee farmers live with everyday - it’s not about high or low prices, it’s the speed at which it changes). But coffee is where Fairtrade began, so I think people tend to focus on that. In other products, we face different challenges.

All of that aside, we do have good news to share, check out the latest monitoring/impact report that highlights the who, what, where, how of Fairtrade around the world, along with a overviews of impact reports with the good news and the challenges to be faced yet. You can also check out our Slideshare page, which has more digestible bits of information from that report slideshare.net/fairtrade.

(PS I wrote this response a while back, but seems I still can’t post more than one link)

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What one needs to understand is that the working and living conditions of labor workers in the coffee industry, excluding Fair Trade, have low standard living conditions. This is the reason why a project like Fair Trade was created. It is a goal to help progress the lives of the underprivileged in these developing countries. Fair trade USA claims, “Through Fair Trade, farmers earn better incomes, allowing them to hold on to their land and invest in quality.” This is a good thing because at least we realize the depraved side of the industry and we are trying to fix that. Now, the real question is if Fair Trade coffee is working the way it should. Are Fair Trade farmers getting better economic stability? In order to answer this question the marketing, economics and business side of things need to be addressed. For one thing, this title of Fair Trade coffee has increased the number of its consumers. In an article called, Journal of Economic Perspectives, it states “growth has been very rapid over the past decade. Fair Trade coffee sales have increased from 12,000 tonnes in 2000 to 123,200 tonnes in 2011” (Vol 28, Pg. 217). This means that people realize the goal of Fair Trade coffee and are supporting it. But, many of these consumers probably don’t understand what they are actually supporting. In a paper titled “the Impact of Fair Trade Coffee on Economic Efficiency and the Distribution of Income” written by two scholars, Gareth P. Green and Matthew J. Warning it states, “more than 250,000 family coffee farmers participating in the Fair Trade system earned an additional $54 million in income through Fair Trade in 2006” (Pg. 4). This is a good sign because it means that Fair trade is accumulating more income, but where is that money really going. In an article “The Problem with Fair Trade Coffee”, by Colleen Haight, Haight explains that, “Although FLO (the Fairtrade Labelling Organizations International umbrella group) does dictate certain minimal labor standards, such as paying workers minimum wage and banning child labor, the primary focus and beneficiary is the small farmer, who, in turn, is defined as a small landowner. The poorest segment of the farming community, however, is the migrant laborer who does not have the resources to own land and thus cannot be part of a cooperative” (“An Imperfect Model”). Because the migrant workers don’t have the assets to own land, they are not able to be a part of the Fair Trade movement receiving low wages. They would not be the ones receiving economic stability, but this is only half the side.

People tend to overlook how Fair Trade coffee can affect the coffee industry as a business. On the Business Ethics Blog, Chris MacDonald, Ph.D., references economist Tim Hardford’s argument on the Fair Trade coffee business. It states, “Coffee farmers are poor, and will generally remain poor, because the thing they produce isn’t scarce. Coffee is relatively easy to grow, and can be grown in relatively many (hot) places. Buying fair trade coffee (at a premium price) means paying coffee farmers more. Now, recall what I said above about the role of prices in motivating people. Paying more for coffee is likely to draw more growers into the business. And drawing more growers into the business will increase the supply of coffee. And if you increase the supply of coffee, you inevitably depress its market price — and along with it the wages of those who labor on coffee plantations” (“Ethics and Economics (And Coffee Too)”). Basically, this is saying that because Fair Trade coffee is sold above your average non Fair Trade coffee company they will bring in more revenue. As a result more people will enter the industry because it would be doing so well, causing an oversupply. This then lowers coffee’s market value and then companies will have to lower wages or fire people. So, Fair Trade affects the supply and demand of its labor workers as well. Fair Trade works as a marketing tool and brings more revenue nut it fails to provide for the people at the low end. People who grow coffee that don’t own land don’t apply to this movement making the fortunate more fortunate. Also, because coffee is a product that is so easily mass produced, it will affect how it is sold on the market which creates a ripple effect and, in term, affects the labor workers directly. Fair Trade has a possibility of working great but because the system is flawed, it is unfair and not very effective.

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quick update:
New article on that matter: http://www.zeit.de/wirtschaft/2015-01/fairtrade-qualitaet
And a reply from GEPA: http://www.gepa.de/home/tipps-themen/fair-trade-und-qualitaet.html

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quick update:
The weekly German tabloid “Der Freitag” has a 15 page extra issues on Fairtrade in General in this week’s issue. It has been co produced with transfair ev so I wouldn’t count on it’s neutrality. But might be an interesting read for anyone interested in this topic.

cheers!

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