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The Impact of Fairtrade a Review of Research Evidence 2009-2015 Report The impact of Fairtrade A review of research evidence 2009-2015 Emily Darko, Alainna Lynch and William Smith September 2017 Overseas Development Institute 203 Blackfriars Road London SE1 8NJ Tel. +44 (0) 20 7922 0300 Fax. +44 (0) 20 7922 0399 E-mail: [email protected] www.odi.org www.odi.org/facebook www.odi.org/twitter Readers are encouraged to reproduce material from ODI Reports for their own publications, as long as they are not being sold commercially. As copyright holder, ODI requests due acknowledgement and a copy of the publication. For online use, we ask readers to link to the original resource on the ODI website. The views presented in this paper are those of the author(s) and do not necessarily represent the views of ODI. © Overseas Development Institute 2017. This work is licensed under a Creative Commons Attribution-NonCommercial Licence (CC BY-NC 4.0). Cover photo: Fairtrade coffee cherries harvested in Peru. © Danielle Villasana Acknowledgements Many thanks to Jessica Hagen-Zanker for her inputs on methodology, to Maria Quattri for her econometric analysis work, and to Claudia Pompa and Carolin Williams for their support with Spanish and German language documents, respectively. Thanks to Kofo Sanusi and Richard Hughes for project management support. Thanks are also due to the experts who provided suggestions of documents for review, those who assisted with copy editing, peer review and publication, and to Fairtrade International staff, in particular Kate Kilpatrick and Vidya Rangan. The impact of Fairtrade: a review of research evidence 2009-2015 3 Contents Acknowledgements 3 Key messages 6 1. Introduction 7 Summary of Fairtrade Standards for small producer organisations 8 Summary of Fairtrade Standards for hired labour organisations 9 2. Methodology 11 2.1. Research question 11 2.2. Search process 12 2.3. Filtering process 13 2.4. Search and filter results 13 2.5. Classification of studies found 14 3. Access to Fairtrade markets and Fairtrade prices 15 3.1. Conclusions 17 4. Farming performance and protection of the environment 18 4.1. Farming performance 18 4.2. Environmental protection 20 4.3. Conclusions 21 5. Investment of the Fairtrade Premium in small producer and worker organisations and communities 23 5.1. Conclusions 26 6. Producer and worker organisational strength and democracy 27 6.1. Conclusions 29 7. Decent work conditions 30 7.1. Conclusions 33 8. Household income, wellbeing and resilience 34 8.1. Conclusions 36 9. Gender equity 38 9.1. Conclusions 39 10. Conclusions 40 References 42 4 ODI Report Annex 1. Methodology 44 Search methodology 44 Filtering or screening process 44 Inclusion and exclusion criteria 45 Annex 2. Fairtrade Theory of Change summary 46 Fairtrade’s approach 46 Linking Fairtrade’s ‘vision, goals and approach’ 46 Fairtrade’s overarching Theory of Change 47 Fairtrade Theory of Change for small producer organisation situations 47 Fairtrade Theory of Change for hired labour organisation situations 48 List of tables and figures Tables Table 1. Output, outcome and impact categories covered by the initial analysis 12 Table 2. Inclusion and exclusion criteria 13 Figures Figure 1. Differences in price and yields between coffee standards 19 The impact of Fairtrade: a review of research evidence 2009-2015 5 Key messages • This review synthesises results from 45 recently • Qualitative studies show considerable benefits from published studies to assess the impacts of Fairtrade the Fairtrade Premium to certified small producers certification for smallholder producer groups and and workers in hired labour situations. The Fairtrade workers in hired labour organisations. Premium is an additional payment made to Fairtrade producers over and above the purchase price for • Fairtrade Minimum Prices act as a safety net providing Fairtrade products, and used for collective investment. varied direct price benefits to certified producers depending on trends in market prices. • The Fairtrade model has until recently focused primarily on smallholder farmers and on workers in hired • Levels of supply and demand for certified products labour (plantation) situations. As such, the limited determine the spread of income benefits to producers. evidence available suggests that Fairtrade has tended to This is difficult for the Fairtrade system to regulate. underestimate and neglect the issue of labour standards on small farms and has not had significant impacts in • Contextual factors such as existing land distribution this area. patterns, national labour laws and social gender norms affect the nature and degree of Fairtrade impacts in • Studies show positive effects of Fairtrade certification on different producer markets and communities. improved management and organisation of co-operatives or producer groups. In some cases this may be partly • Fairtrade Standards focus on regulating price and trading due to organisational strengthening support from other relationships but have limited impacts on improving sources. Other studies have highlighted the potential yields and quality through good agricultural practice. threat to co-operative trust and unity from co-operative leadership control of resources, as well as challenges • Fairtrade certification in hired labour situations has relating to member participation and information. enabled a cost-efficient expansion of positive Fairtrade effects on labour conditions in agricultural sectors previously closed to third party inspection, and where exploitative labour relations have previously flourished. 6 ODI Report 1. Introduction The Fairtrade movement is part of a wider civil society In 2009, Fairtrade International (the umbrella organisation movement that supports fair and ethical trade.1 Fairtrade of national Fairtrade organisations and three producer networks that coordinates the Fairtrade movement is a certification scheme which also engages in civil society worldwide, including the development of Fairtrade campaigning, advocacy work for trade justice, consumer Standards) commissioned a study to ‘systematically analyse awareness raising, and agricultural extension and capacity- the impact of Fairtrade certification as demonstrated by building. Fairtrade is half-owned by representatives of the current evidence base’. The study, conducted by the producer organisations. Natural Resources Institute (University of Greenwich), Fairtrade applies standards to smallholder producers reviewed documents from the previous 10 years and working together in cooperatives or other organisations presented findings from 23 research reports (Nelson and with democratic structures (known as small producer Pound, 2009). organisations), and to organisations hiring workers and In 2014, Fairtrade International commissioned the paying decent wages, guaranteeing the right to join trade Overseas Development Institute (ODI) to conduct a new unions, ensuring health and safety standards and providing rigorous review of literature for the last five years, from adequate housing where relevant (referred to in the 2009-2015, using the Fairtrade Theory of Change as remainder of the paper as ‘hired labour organisations’). the framework for analysing evidence. The aim of this Many Fairtrade certified products also have a guaranteed review is to understand the extent to which Fairtrade is minimum price which must be paid to producers. When the contributing towards its intended impacts across sectors market price is higher than the guaranteed minimum price, and geographies, and to support internal learning and the buyer must pay the higher of the two prices. Fairtrade improvement of the Fairtrade system. This review only aims to ensure sustainable production and minimise considers the impact of Fairtrade organisations certified fluctuations in producers’ incomes. under the standards of Fairtrade International and its In addition, producers receive an additional sum based member organisations. It does not consider literature on the volume of their Fairtrade sales – the Fairtrade relating to the wider Fair Trade movement. Premium – which they decide collectively how to The overall research question posed for the study is: spend within the producer organisation and the wider What is the impact2 of Fairtrade on certified smallholder community. They may choose to invest this in economic, producer groups and workers in certified hired labour social or environmental projects that aim to contribute to organisations in terms of fostering sustainable livelihoods the development of their communities, farms or producer and empowerment? organisations. The report is structured as follows. Section 2 provides The main components of the Fairtrade Standards an overview of the methodology used, along with a for small producer organisations and hired labour summary of the number of papers reviewed and their organisations are set out below. Certification is conducted overall focus in terms of geography, product and research by the independent certifier, FLOCERT. FLOCERT design. Subsequent sections consider evidence relating conducts initial on-site audits prior to first certification, to Fairtrade impact in line with the Fairtrade Theory of followed by full site audits at least twice during the three- Change (see Annex 2) year certification period. 1. The international Fairtrade system includes three producer networks, 25 Fairtrade organisations, Fairtrade International and FLOCERT, the independent certification body of the global Fairtrade system. See: www.fairtrade.net 2. The term ‘impact’ is quite contested
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