Wed 11 Jun 2014
Fairtrade never worked. Why is everyone so excited now?
Posted by Ed under development, Livelihoods, policy, research
[3] Comments
So, DfID paid London’s School of Oriental and African Studies (SOAS) more than $1 million to answer a pretty important question: Whether or not Fairtrade certification improves growers’ lives. As has shown up in the media (see here and here) and around the development blogosphere (here), the headline finding of the report was unexpected: wage workers on Fairtrade-certified sites made less than those working on regular farms. Admittedly, this is a pretty shocking finding, as it undermines the basic premise of Fairtrade.
Edit 12 June: As Matt Collin notes in a comment below, this reading of the study is flawed, as it was not set up to capture the wage effects of Fairtrade. There were no baselines, and without baselines it is impossible to tell if there were improvements in Fairtrade sites – in short, the differences seen in the report could just be pre-existing differences, not a failure of Fairtrade. See the CGDev blog post on this here. So the press’ reading of this report is pretty problematic.
At the same time, this whole discussion completely misses the point. Fairtrade doesn’t work as a development tool because, in the end, Fairtrade does absolutely nothing to address the structural inequalities faced by those in the primary sector of the global economy relative to basically everyone else. Paying an African farmer a higher wage/better price means they are now a slightly wealthier farmer. They are still exposed to environmental shocks like drought and flooding, still tied to shocks and trends in global commodities markets over which they have almost no leverage at all, often still producing commodities (like coffee and cocoa) for which demand is very, very elastic, and in the end still living in states without safety nets to help them weather these economic and environmental shocks. Yes, I think African farmers are stunningly resilient, intelligent people (I write about this a lot). But the convergence of the challenges I just listed means that most farmers in the Global South are addressing one or more of them almost all the time, and the cost of managing these challenges is high (both in terms of hedging and coping). Incremental changes in agricultural incomes will be absorbed, by and large, by these costs – this is not a transformative development pathway.
So why is everyone freaking out at the $1 million dollar finding – even if that finding misrepresents the actual findings of the report? Because it brutally rips the Fairtrade band-aid off the global economy, and strips away any feeling of “doing our part” from those who purchase Fairtrade products. But of course, those of us who purchase Fairtrade products were never doing our part. If anything, we were allowing the shiny idea of better incomes and prices to obscure the structural problems that would always limit the impact of Fairtrade in the lives of the poor.
Hi Ed,
Thanks for linking to our post, but I have a feeling you might not have taken in our main point:
I agree that wages might not be the only outcome of interest here, and that even a well-identified wage result would not have been sufficient to say Fairtrade “works.”
Let’s see that aside for a moment and pretend we really only care about wages: this study just can’t tell us what the wage effects were – it wasn’t set up that way. FT could be having enormous positive effects in local wages, or no effect, but we will never know because we don’t even observe wages at baseline. Massive improvements in the a FT certified areas might have been masked by pre-existing differences. End of story.
So yes, you can still make your point that we’d never expect FT to make a difference in the lives of the poor, but you can’t use this study as an example to support that argument, at least within the host of outcomes the report focuses on.
Matt:
Thanks for this clarification – and apologies for my taking of other’s claims at face value in the post. Of course, my point was that the shouting about wages was irrelevant in the larger scheme of Fairtrade and structural inequality. I will edit the post to better reflect your points here.
In all the hullabaloo about the SOAS claim that Fairtrade certified farms pay relatively low wages, most commentators take the
wage rates presented by SOAS for different forms and scales of production as valid and representative. The design of the study is claimed to be ‘robust’ but in 50 years of designing experiments and peer-reviewing other’s designs, I cannot recall a poorer design. The study lacked replication in terms of producers and was imbalanced due to lack of large scale certified producers for coffee and tea. These weaknesses severely constrain the statistical verification of effects of certification and scale of production. Neither the main report nor the appendices indicate how differences between the selected certified and non-certified producer (note that there appears to be only one per country and product) were calculated. The numbers of workers questioned far exceeds the the numbers used in calculating wage differences but no explanation is given. Without producer replication, we can never know how typical the results are of wage rates in Ethiopia or Uganda. The SOAS study is valuable in focussing on the need for fair-trade organisations to ensure that benefits trickle down to seasonal workers and showing how this can be done. However, it needs a larger, wider, balanced and truly ‘robust study design to test whether Fairtrade certification is currently failing in this regard.
Neville Suttle