Fair rewards for small farmers
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CTA. 1997. Fair rewards for small farmers . Spore 67. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/48618
Small-scale producers of cash crops traded on the international market, such as coffee, cocoa and tea, have always been farmore vulnerable to falling world prices than big producers. With no power to influence prices their families' livelihoods are...
Small-scale producers of cash crops traded on the international market, such as coffee, cocoa and tea, have always been far more vulnerable to falling world prices than big producers. With no power to influence prices their families' livelihoods are at risk. Fair trade organizations try to reduce those risks by ensuring that producers are rewarded 'fairly' for their produce. Fluctuating price levels can be disastrous for small-scale farmers. Their profit margins are usually too small to build up a buffer against sudden increases in input costs or lower output prices. When crop prices rise, it is the trader who takes the first and the largest cut of any extra margin. Buyers of agricultural products need a steady supply and consistent quality to feed into their factories or their retail outlets but, with such a vulnerable production sector, getting that consistency in supply is often difficult. Fair trade organizations claim to help producers in developing producers m developing countries by purchasing produce directly and selling it through a minimum of middlemen - to those consumers in developed countries who are willing to pay a premium for the privilege of being part of an ethical transaction. This premium is returned to the grower. Contracts between producer-cooperatives and fair trade organizations usually carry a number of commitments and conditions for both parties (see box). The problems experienced by small-scale producers in developing countries differ from product to product. Most coffee, for example, is grown by independent small farmers, who work on their own land. For these producers, support for local cooperatives which pool resources, and the guarantee of a fair price for their beans are more important than any other aspect of fair trade. Most tea, however, is grown on estates. The concerns for workers employed on tea plantations are fair wages and decent working and living conditions. Many of the textile and handicraft cooperatives provide work for those who might otherwise find it difficult to earn an income. Some of the employees are physically disabled; others are farmers who are now landless and have no alternative source of income; and many of the workers are women, who are heads of households, and thus are the sole income earners for their families. The oldest organization to trade directly and 'fairly' with producers in developing countries was established in 1959. There are now 50 fair trade organizations worldwide, and as the movement continues to grow rapidly across Europe, North America and Australasia, the demand is increasing for a wider variety of products that meet the criteria for fair trade. There is also an increasing awareness that remedying the trading system is a better way of helping than some of the more conventional forms of aid. It was on this basis that the Max Havelaar Foundation was established. In 1986 Mexican coffee farmers told the Dutch aid organization, Solidaridad, that there would be no need for development aid if they received a fair price for their coffee. The Foundation now grants the use of the Max Havelaar Quality Mark to manufacturers of coffee and cocoa products who comply with the conditions intended to ensure that producers get a fair deal. The success of the Quality Mark can be seen in the US$ 20 million that has already been paid directly to the producers from the fair-trade surcharge alone. A similar inittiative for a European fair-trade mark, known as Transfair, was established in 1993. In the UK, the Fairtrade Foundation has its own Quality Mark which recognizes and endorses fairly-traded products such as coffee, tea, cocoa and chocolate. Since the sale of the first Quality Mark product in 1994, over US$ 2 million has been directed back to farmers. Although it is commodities such as coffee. tea and cocoa that currently carry a Quality Mark, textiles and handicrafts are also sold by developing countries on a fair trade basis. They have already been available to consumers in industrialized countries for some years. An association of cocoa growers in Belize (and Togo) sells its members' produce at a guaranteed premium price for the manufacture of Green & Black's chocolate, which is marketed under the name of Maya Gold. Members say that fair trade has already made a difference in their villages: children are able to attend the school in town because parents can now afford the board and lodging, and money is available for medical and other emergencies. For the coffee farmers who supply the African and Latin American coffee beans for Britain's leading fairtrade coffee brand, Cafédirect, the higher prices they are paid reflects a rise in living standards. Moreover because the money can be paid in advance of harvest, the farmers do not have to take out loans with crippling interest rates. Consumer support for fair-trade products is growing. This has been demonstrated most recently by Cafédirect coffee, which is now available from many retail outlets in the UK in both ground and freeze-dried form and has achieved a 2.8% share of the UK's fiercely competitive freeze dried instant coffee market. The demand can only increase as the 'social market' develops, and those who have the good fortune to be more prosperous become more responsive to social and environmental needs. Fair-trade agreements should be but a first step towards a more equitable and less exploitative pattern of trade worldwide. Ultimately, it is the producer nations that must take responsibility for marketing their own brand image, seeking niche markets for products that con sumers want.