New Study Finds Fairtrade Certification Enhances Farmer Resilience and Sustainability but Major Threats Like Climate Change and COVID-19 Are Jeopardizing Decent Livelihoods

WASHINGTON, June 16, 2022 /3BL Media/ - Fairtrade America – part of Fairtrade International, the world’s most recognized label for social justice and sustainability – has announced the results of a decade-long study that found farmers who are part of Fairtrade certified Producer Organizations experience better economic resilience, social wellbeing, environmental sustainability and governance of their cooperatives than farmers not in Fairtrade certified organizations, particularly in times of global crisis.

The Assessing the Impact of Fairtrade on Poverty Reduction and Economic Resilience through Rural Development study, implemented by Mainlevel Consulting, reveals that Fairtrade Standards, Fairtrade pricing and producer support programs positively impact certified farmers and their communities. While the findings outline encouraging evidence of Fairtrade’s benefits, the study also presents the grim reality that farmers’ gains - especially in regards to incomes and farm investments - have been undercut in recent years due to the challenges of COVID-19, climate change, and increasing costs of production.

“In times of crisis, it becomes evident that Fairtrade enhances farmers’ economic resilience and supports them in continuing their profession,” said Tatjana Mauthofer, researcher at Mainlevel Consulting and co-author of the study.

Study Methodology

During this unique study, researchers evaluated specific Producer Organizations three times from 2012-2022, gaining valuable insights into the changing conditions and perspectives of Fairtrade farmers over time. The study specifically examined four areas of sustainability, including economic resilience, social wellbeing, good governance of farmer cooperatives and environmental integrity. The Fairtrade farmer cooperatives included in the research – a cocoa cooperative from Ghana, a coffee cooperative and three banana cooperatives from Peru – were analyzed alongside non-Fairtrade organizations of similar size and location to isolate the effects of Fairtrade partnership from other external factors.

Fairtrade: An ‘uptick’ in benefits

The study shows that Fairtrade’s foundational price mechanisms – the Minimum Price and the Premium - represent a crucial safety net for farmers, their cooperatives and eventually their communities. Additionally, the research pointed to improvements in farming households’ financial situations, such as increased earnings, ability to withstand periods of financial instability and boosted savings. In one specific instance, coffee farmer members of the Fairtrade certified La Florida cooperative in Peru reported earning incomes 50 percent higher than those of non-Fairtrade farmers.

In addition to the economic benefits of Fairtrade, the report shows that Fairtrade cooperatives enjoy stronger governance, with greater transparency and democratic decision-making. The researchers also note that good governance makes sustainability truly possible, as cooperatives make and carry out decisions in environmental, social and economic spheres.

Fairtrade farmers also registered a higher uptick in benefits across social wellbeing indicators, including gender equality and workplace safety and health, when compared with their non-Fairtrade counterparts. Fairtrade cocoa farmers, for instance, reported that women in their cooperative showed more confidence in speaking up and voicing their thoughts. Similar advantages were noted on health-related issues. Additionally, the more well-established banana cooperatives used their Fairtrade Premium funds to provide health services and training, including on COVID-19 safety measures.

A Fairer Call-to-Action

At the same time, researchers identified three significant challenges that risk undermining the gains Fairtrade farmers have achieved, including climate change, COVID-19 and prices too low to cover rising costs of farming and daily life.

The report outlines necessary actions to ensure sustainable livelihoods for farmers and a continued supply of some of Americans’ favorite goods - chocolate, coffee and bananas - for years to come. Specifically, the report calls for supply chain stakeholders to pay prices to farmers that support a living income; fund climate change adaptation measures; finance and support farmers in diversifying their incomes and modernizing and improving farm management; and measure and mitigate the disproportionate effect of COVID-19 on women and vulnerable populations.

“We believe that everyone deserves a decent standard of living. It’s only fair to pay a price that covers basic needs and supports an existence worthy of human dignity,” shared Peg Willingham, executive director of Fairtrade America. “This report is critical in helping Fairtrade certified farmers, brand partners and retailers understand the positive impact the Fairtrade system has and the real difference it makes in farmers’ lives. At the same time, it provides us with a call-to-action and urges companies and governments alike to drastically expand the commitments they are making or we will see farmers continue to slide backwards and potentially abandon farming altogether.”

Fairtrade America encourages actors all along the supply chain - from farmers, to importers and manufacturers, brands, retailers and consumers - to take three key steps to create a fair and sustainable future:

• Pay a fair price. Due to the unfair and unjust realities of the global food market, cocoa farmers in West Africa work an entire day for just $0.78 to $1.00.¹ That’s significantly below the international poverty line.² Fairtrade’s living income work contributed to Cote d'Ivoire and Ghana setting a Living Income Differential of $400 USD/tonne (as of October 2020) on top of the Fair Market Price and Fairtrade Premium, which increased in 2019. Cocoa farmers, however, expressed that this price increase is not enough to stay ahead of the increased costs and challenges from COVID-19.

Similarly, banana producers are also experiencing the economic burdens of these overlapping global crises. Some are even losing money on each banana sold. They are confronted with sharp and repeated price increases triggered by the escalating cost of fertilizers and the ongoing supply chain crisis, which has increased prices for packaging, pallets, inland freight, custom fees and more. While importers and retailers have increased the amount they are paying for bananas, it has not been enough. Without a fairer price that considers these increased production costs, the 800,000 families across Latin American and the Caribbean who rely on the industry for work will face financial impacts on their business and livelihoods that could be devastating. ​

Fairtrade has already taken actionable steps, including paying farmers an extra USD$1 per box of bananas in Fairtrade Premium and setting requirements that large scale banana farming operations pay their workers at least 70 percent of their country’s living wage benchmark. While those are steps in the right direction, the situation remains dire, and the Ministers of Agriculture from seven Latin American banana-producing countries recently released a joint statement sounding the alarm over the toll of unfair banana pricing on smallholder farmers, agricultural workers, rural communities and the environment.

• Support adaptive measures to combat climate change. While the world’s wealthiest 10% of people are responsible for 50% of global emissions,³ it is those earning the least in lower income countries who are being forced into extreme hardship by climate change. The report released last week reiterates that climate change is causing an increase in plant diseases and pests, as well as extreme weather events that destroy crops. These huge challenges, compounded by already low incomes and rising debts from COVID-19, mean farming communities are often unable to adapt to the widespread effects of a changing climate, let alone invest in clean energy and low-carbon farming methods.​

We all rely on farmers to produce the food we need to feed a growing global population; 80% of the world’s food comes from 608 million family farms, and more than a third of our food comes from farmers with less than 5 acres of land.⁴ Farming communities in climate-vulnerable countries have the knowledge and experience needed to protect the ecosystems we all rely on, and must be at the center of the solutions created. What they don't have are the resources to make those changes happen.

Fairtrade has created programs like the Climate Academy, which brings coffee farmers together to share skills and experiences that help prepare them for future climate-related challenges, and has also implemented campaigns to draw consumer, government and corporate awareness of the dire environmental needs farmers face. But there is more work to be done to ensure farmers are secure and resilient in the face of a changing climate.

• Measure and mitigate the impacts of COVID-19. As a result of COVID-19, sales have decreased for some producers, and costs have increased for things like fertilizer and transport. Programs like Fairtrade’s Producer Relief and Resilience Fund, and the temporary allowance for certified Producer Organizations to use their Fairtrade Premium more flexibly, have aided farmers in navigating this crisis. However, market instability, lower sales, rising production costs and, above all, scarce and more expensive labor, have all negatively affected farmer’s livelihoods. Additionally, the global pandemic increased the risk to farmers’ own health and led to increasing and unexpected expenditures for health and hygiene measures.

As the pandemic continues, all participants in the global supply chain must continue to consider the health, safety and sustainable livelihoods of farmers. ​

“While it’s encouraging that this study emphasizes how Fairtrade supports farmers and Producer Organizations in weathering these financial challenges, it warns that progress toward reducing poverty – as well as the goal of achieving living incomes – will be stalled, if not reversed, if farmers are not paid more,” continued Willingham.

Learn more about the study at Fairtrade-Impact-Report-2022.

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ABOUT FAIRTRADE AMERICA

Fairtrade America works to rebalance trade, making it a system rooted in partnership and mutual respect rather than exploitation. It's about businesses, shoppers, farmers and workers all partnering so we can all experience the benefits of trade. Fairtrade America is the US chapter of Fairtrade International, the original and global leader in fair trade certification with more than 30 years of experience working for fair trading practices in more than 30 countries across the globe. A non-profit 501(c)3 organization, Fairtrade America is the world's largest and most recognized fair trade system—part of a global movement for change. Learn more at fairtradeamerica.org, and by connecting with Fairtrade America on Facebook, Instagram and LinkedIn.

<sup>1. Source: https://www.weforum.org/agenda/2020/11/cocoa-chocolate-supply-chain-business-bar-africa-exports/
2. Source: https://datahelpdesk.worldbank.org/knowledgebase/articles/193308-there-are-multiple-international-poverty-lines-wh
3. Source: https://oi-files-d8-prod.s3.eu-west-2.amazonaws.com/s3fs-public/file_attachments/mb-extreme-carbon-inequality-021215-en.pdf
4. Source: https://bit.ly/FAO-2021-Report</sup>