Four lesser-known facts about fair trade

Four lesser-known facts about fair trade

Small cocoa trees at a cocoa nursery in Ghana

Tea, cocoa and sugar are enjoyed every day by millions of people around the world – often with little thought given to their origins and the people working to produce them. Those with a vague understanding of fair trade see the common sense behind giving farmers a fair price for their produce – but what about the hidden impacts that are less obvious?
 

There are 500 million smallholder farmers worldwide. Around 1.5 billion people live in households whose main income comes from small-scale farming, and many of them are living in extreme poverty. The highest incidence of workers living with their families below the poverty line is associated with employment in agriculture.

Fairtrade status guarantees the producers of everyday commodities like tea, cocoa and sugar a fair price for their crop. The protection Fairtrade offers is valuable: without it, the income of smallholder producers may be solely dependent on fluctuating market prices and the bargaining power of big buyers.

Most people with a vague understanding of fair trade see the common sense behind giving farmers a fair price for their produce – but there are some hidden impacts that are less obvious.

1. Fair trade buys clean drinking water, footbridges and other infrastructure

Fairtrade guarantees workers a fair price for their crops and protects against market exploitation. Whilst true, this description of Fairtrade tells only half the story.

On top of a fair price for each sack of cocoa beans, tea leaves or bananas a Fairtrade-certified farmer harvests, they also are paid a Fairtrade Premium.

This additional funding can be spent by farming communities in any manner of their choosing. Many choose to reinvest in production, thus increasing the likelihood of bigger, better quality harvests in future – and more income.

The funding can also be spent on other needs – schoolbooks, buildings, even medium scale infrastructure projects.

Investing Fairtrade premiums in the most efficient manner to benefit the community is a challenge though. Outside guidance can be invaluable – particularly for communities with little experience of project management.

VSO volunteers were able to work with members of the Msuwadzi Association of tea growers in Malawi to oversee the management of funds and provide practical coaching in a wide range of areas including grant applications, project management and record-keeping.

With VSO’s support, Msuwadzi Association farmers invested their premiums in fertilizer, equipment and projects that resulted in record harvests. Premiums from the partnership with Satemwa Tea Estate were further used to develop the community with the construction of a new borehole and footbridge and even in invest in new desks for the local schoolhouse.

2. Maintaining Fairtrade status can be a heavy burden on small scale farmers

Fairtrade certification can be a great support to farmers – but can also bring with it a burden.

Fairtrade funds need to be managed well. In order to maintain certification, smallholder farmers need proper accounting and bookkeeping systems.

If they want to make the most of Fairtrade premiums they will probably require project management, administration and other business skills.

For many farmers with little or no “business” experience, these demands can be bewildering.

This is exactly the problem VSO encountered when it first began work with the 300 tea growers in Northern Malawi who make up the Msuwadzi Association.

The co-operative was formed as a way of helping build financial stability following mistreatment from the government and commercial tea estates. As a united body, Msuwadzi found a good partner in the family-run Satemwa Tea Estate.

Satemwa became Fairtrade-certified in 2009; good news for growers of Msuwadzi you might think.

There was only one problem – 95% of them were unable to read or write. Fairtrade was as much a challenge as an opportunity to the farmers. Unsatisfactory bookkeeping would put them at risk of losing their buyer, whose factory could now only process Fairtrade tea leaves.

VSO intervention through volunteers with management experience gave the Association coaching to manage these challenges and a framework to be able to handle maintaining certification afterwards.

3. Corporations getting involved in fairer trade schemes are not (just) seeking good PR – they urgently need to invest in community development as a way of securing their supply chains

More than 800,000 farmers in Ghana rely on cocoa for the majority of their income, which is estimated at just $0.42 per day. Almost all of them are smallholder farmers – 85% of the world’s cocoa is produced in this way.

VSO’s work in Ghana through the Cocoa Life project in partnership with confectionery giant Mondelēz International is based on Fairtrade principles – but goes far beyond them by aiding investment in community and infrastructure projects.

Since 2008 we have worked with 74 cocoa-farming communities, and the positive results are not limited only to welcome rises in household incomes and fair wages for all workers.

The five pillars of Cocoa Life ensure far broader benefits – investment in farming, community, environment, youth and livelihoods.

Though the work has a long way to go, the benefits of Cocoa Life’s ‘Fairtrade plus’ approach to communities are clear. You might, however, wonder why a corporation like Mondelēz would willingly pay more for raw ingredients than it might have to.

In fact, initiatives like these are a fantastic opportunity for businesses to build a closer connection to their supply chains. If communities that produce cocoa are living in poverty, the result is poor and unreliable yields.

World cocoa yields are dropping as a result of land degradation and a recent report predicts the cocoa industry could suffer severe shortages in the coming years. Farmers who cannot make a decent living from cocoa production are understandably switching to more lucrative crops.

But by supporting communities in a holistic way, beyond the requirements of Fairtrade principles alone, companies like Mondelēz can ensure there are more cocoa farmers, earning a better income from their product and therefore a more stable and secure supply chain exists.

4. Investments in small-scale agriculture are investments in women

In Africa, it has been estimated that 80% of people working in smallholder agriculture are women. In Ghana, women play a crucial role in cocoa production and it is through them that VSO and Mondelēz International have found the most direct and effective route to helping develop communities.

As part of the Cocoa Life programme, Women’s Extension Volunteers like Esther Wudzi have been trained and coached to become mentors in their communities. They pass on practical training in farming techniques to increase cocoa yields, as well as information on health, nutrition and hygiene.

Esther, who is based in Adiembra, West Akim, organised a programme on the importance of sending children to school – now there are far fewer children to be seen working during school hours.

The gender focus of Cocoa Life also extends to supporting women with setting up micro-credit and savings schemes and training on how to develop mixed sources of income to reduce reliance on cocoa production.

Supporting fairer trade makes sense for consumers, corporations, growers – and VSO

One of VSO’s main areas of focus is working to ensure that everybody has access to a reliable source of food and income, whatever their place of birth or status in society.

This ‘Secure Livelihoods’ strand of work clearly overlaps with the ideals behind Fair Trade – that those working to produce commodities should receive a fair price for them, in conditions that allow them to live in safety and health.

VSO is delighted to support initiatives that offer something for everyone. Fairtrade means that you know that the work that went into your daily cup of tea or sweet chocolate treat has been fairly recognised – and could mean even bigger things for workers’ families and wider communities.

Volunteer with VSO

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