What do we really know about the impact of fair trade?

By Vagneron, I. and S. Roquigny,
January 2011
CIRAD - La Recherche Agronomique Pour Le Développment



Through this work, the French Platform for Fair Trade (PFCE) wanted a comprehensive overview of existing studies on the impacts of fair trade, i.e. one that presented some straightforward results, without hiding the many methodological issues encountered nor the great richness and variety of topics covered by the studies. For the PFCE, this work has methodological implications (better target coming impact studies) and pragmatic implications (improve the fair trade). The analysis focuses on 77 studies carried out between 1998 and 2009. All of the studies explicitly aimed at assessing the impact of fair trade on producers in the South. Studies devoted to the impact of fair trade in developed countries (on Alternative Trade Organizations, consumers, etc.) were outside the scope of this study. This literature survey was pegged to a multi-criteria database in which the main characteristics of each study are stored: country, sector, product, other certifications, type of effect described and analyzed, etc.). The first result of this work is that impact studies of fair trade are geographically and sectorally concentrated: 74% of the studies focus on Latin America and the West Indies, and 92% on food products. The flags hip products of these studies are respectively: coffee (47% of all studies), bananas (13%), and cocoa. Only 4% of all impact studies considered focused on handicraft. In terms of methodology, despite some common features (most studies are in the field of economics and work at a micro-economic level, most analyses assess the impact of fair trade on the producers and/or their organizations), the approaches are both quite heterogeneous (participant observation, econometric studies, etc. ) and quite secretive concerning their methodology. Two main frameworks for analysis were developed recently: the methodology developed by AVSF/FLO/MH (Eberhart, 2007) and quantitative impact assessment methods based on statistics (Ruben et al., 2008). While the former are mainly founded on qualitative and static approaches, the later aim at assessing the impact of fair trade over time. Since 2006, the criteria taken used to measure the impacts of fair trade are increasingly diversified and original: there is a growing interest relating to plantations, the fate of wage workers on fair trade farms/plantations, women, the spill-over effects of fair trade, etc.) The most documented impacts of fair trade (those that are mentioned by over half of the studies of our sample) are the impacts in terms of: producer prices and producer incomes and the ability of organizations to offer their members an improved access to the market, as well as to technical and social services. Conversely, still very little is known about the impacts of fair trade on: the most vulnerable groups (women, wage workers); the environment; the legitimacy of producer organizations and the development of their institutional networks; or various spillover effects. The most positive impacts of fair trade are high price differentials and higher and more secure incomes. More mitigated or controversial impacts were found concerning: the economic situation of women, the governance of producer organizations, and the positive externalities of fair trade in terms of rural migration. The lack of a clear picture may come from the fact that these criteria are still little studied. Finally, one unexpected effect was the impact that fair trade may sometimes have on inequality: by supporting a group of beneficiaries, fair trade may sometimes become a source of conflicts, or exacerbate existing inequalities at the micro-level (between men and women, between farmers and wage workers, between temporary and permanent workers, etc.), the community level (horizontal inequalities), or within a value chain (vertical relationship). One of the main recommendations of this report is to redirect future impact studies on under-represented target populations in order to better take into account existing local tensions.

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