Is Fair Trade Helping Workers?

FairWorld Project
September 19th 2019

By Anna Canning, Fair World Project

Fair Trade Helps Farmers, But Not Their Hired Workers.” That was the headline of a much-circulated article a few weeks ago. Like many headlines, there is a lot of nuance lost in the telling—and a kernel of truth.

The study in question, “Effects of Fairtrade on the livelihoods of poor rural workers,” inaccessible without academic or press credentials, looked at cocoa farmers in Cote d’Ivoire who were members of fair trade certified cooperatives and those who were not, a total of 500 cocoa farmers and 500 workers. In addition to distinguishing between the fair trade status of farmers and workers, the study also examined the conditions of workers who were directly employed by the cocoa co-ops and those who were employed by their farmer members. The study concluded that:

“For cooperative workers, Fairtrade standards seem to be a tool that is effective in increasing wages above the national minimum wage, improving job security and reducing poverty. Such effects are not observed for farm workers. Fairtrade is currently perceived as a suitable development tool to benefit smallholder farmers and rural communities more broadly. Our findings challenge the notion that Fairtrade benefits everyone participating in certified value chains, including the poorest participants. Our sample of farm workers includes landless migrants with low human, social and political capital.”

In short, the study concluded that, while fair trade is benefitting those closest to the institutions touched by fair trade, the benefits do not trickle down to the most marginalized workers in the system. The study goes on to conclude that Fairtrade and farmer cooperatives need to do better at ensuring that benefits are shared more equally by participants in fair trade value chains. “Failing to do so may potentially contribute to rising local inequality,” cautions the study authors.

That conclusion that Fairtrade, the certifier, can do better at worker protections on small-scale farms is warranted, and one that they have to some extent addressed in the recent updates to their standards. However, the conclusions of Eva-Marie Meemken and the other study authors also miss the mark. Better rules are not going to solve this problem.

Fair Trade Cocoa Farmers Face Dire Poverty

Cocoa farmers in Cote d’Ivoire face dire poverty. A 2018 study by Fairtrade International found that even among fair trade certified farmers, median household incomes were a mere $2707/year, with only 23% of cocoa farmers earning enough to put their households above the poverty line. While these farmers might be better off than the sample of workers described above, they are still in poverty.

Here’s who is not facing poverty: Big chocolate companies.

Corporate Consolidation Hurts Farmers & Workers

The year after the price of cocoa paid to farmers fell by a third, Cargill, buyer of 65% of Cote d’Ivoire’s cocoa production, reported net earnings of $3.1 billion dollars in 2018, up 9%. Similarly, Swiss-based Barry Callebaut, the world’s biggest supplier of chocolate and cocoa products, posted a 12% jump in profits to $288 million. Together with global trading company Olam, they control the majority of cocoa leaving the country.

These exporters and the big chocolate brands like Mars, Ferrero, Mondelez, Hershey, and Nestle have tremendous power. In the last month, in response to a continuing crisis of low prices, the governments of Cote d’Ivoire and Ghana came together to set a minimum price for cocoa from their countries, countries that together produce nearly 2/3 of the world’s cocoa. However, that agreement fell apart under pressure from the big cocoa buyers. That’s right, big buyers, who rake in profits off the chocolate trade, squelched a price increase for farmers—who currently capture just 6% of the value of a chocolate bar.

Poverty is a Problem of Power

There’s a joke that has made the internet rounds: A billionaire, and two workers are sitting at a table with 20 cookies. The identities of the workers vary, but the punchline remains the same: The billionaire takes 19 cookies and warns the worker, “Look out, the [other worker] is going to take your cookie away!” That’s a little how the analysis of this report feels. As multi-billion dollar companies impoverish farmers and workers and bully their governments, to point the finger at Fairtrade International and farmer cooperatives seems short-sighted, to say the least.

Reports like this have an insidious logic: They suggest that the problem of poverty is one of rules, not of power. They offer the false narrative that the problem is not the extractive global food system and the multinationals that profit off it, but one that can be solved by adding more compliance requirements. When workers, and farmers, can organize and build power, then they will stand to gain financially. Fair trade works insofar as it supports that objective. Yet there is no just standard nor meaningful set of rules that can put the onus of fair wages on a cocoa farmer earning just $0.78 per day.

Fair Trade is a Movement, not Marketing Copy

There’s a takeaway for those of us who advocate for fair trade in this report as well: be realistic. Too many ads for fair trade products make promises they can’t keep. Instead of pitching the promise that just one purchase can end poverty and bring empowerment, we need to get real. Fair trade can support the work of farmers who organize and can provide a roadmap for traders who want to work responsibly. But, within the context of an unjust global food system and economy that is built on extracting the maximum from farmers and workers, it can only do so much. Justice is not a thing that can be brought and delivered by any certifier or company. Justice requires supporting the organizing efforts of workers and of farmers to build power.

Merling Preza, one of the long-time leaders of the fair trade movement recently pointed out that buyers (and that is likely most of us reading this) keep expecting more and more from fair trade farmers in terms of compliance and higher standards, yet market prices are low and the actual volume of fair trade purchases remains small. For fair trade cocoa farmers, an average 67% of their crops fail to find a fair trade buyer and get sold on the conventional market. We can’t keep demanding more without making our own commitments to improve the system.

If we allow fair trade to become just another tool for Big Food companies to ensure compliance in their supply chains, we as a movement are shirking our own responsibility to build a better trading system.

Ending poverty is a good goal, but we are collectively kidding ourselves if we think that we’ll do it simply by looking for a label and spending a few more pennies. As a report by True Price and Fairtrade International showed, the causes of poverty among cocoa farmers are complex: low prices, small plots of land, large families, diminishing yields, and the growing climate crisis. Policy solutions are urgently needed. Yet consolidation in the food system means that a few big companies have outsized influence, not just on market prices but on policymakers, both in the U.S. and around the globe. Now is not the time to walk away from small-scale farmers and their institutions, nor to saddle them with still more unfunded requirements. Now is the time for concerted, multi-faceted strategic action. Even if it doesn’t make a good slogan or headline.

If all this made you hungry for some chocolate, see our list of Mission-Driven Brands—they’re the companies trying to work with farmers, not squeeze every drop from them: