10 Jun 2022

A New Study Found Fairtrade Boosts Farmer Resilience and Sustainability. We Spoke to the Researchers to Learn More.

Peru Banana producers 2021 APBOSMAM FARMERS Docuseries 3
Bananas sorted and labeled for export in Peru
© Ángela Ponce / Fairtrade / Fairpicture

In times of global crisis, farmers and workers who are Fairtrade certified benefit from stronger cooperatives, and more robust and sustainable farming households, specifically in the areas of economic resilience, social wellbeing, environmental sustainability, and good governance. That’s according to a new study jointly released today by Fairtrade Germany, Fairtrade Austria, and Mainlevel Consulting.

The report, titled Assessing the Impact of Fairtrade on Poverty Reduction and Economic Resilience through Rural Development, explores how Fairtrade certification and programmes positively impact certified farmers and their communities when compared to non-Fairtrade farmers. Researchers have visited the same producer organizations three separate times over the past decade, gaining valuable insights into the changing conditions and perspectives of Fairtrade banana and coffee farmers in Peru, and cocoa farmers in Ghana. In the most recent study, the researchers also identified significant challenges, warning that increasing existential stressors related to climate change, COVID-19, and pricing risk undermining the gains Fairtrade farmers have achieved and threaten their livelihoods.

“In times of crisis, it becomes evident that Fairtrade enhances farmers’ economic resilience and supports them in continuing their profession in challenging times,” said Tatjana Mauthofer, researcher at Mainlevel Consulting and co-author of the study. “The study shows that the two Fairtrade mechanisms – the Minimum Price and the Premium - represent a crucial safety net for farmers, their small-scale producer organizations (SPOs) and eventually, also their communities.”

Fairtrade International caught up with the study coauthors, Mainlevel Consulting’s Tatjana Mauthofer and Millie Santos, to dive deeper into the report’s findings and learn more about Fairtrade’s successes in ensuring the decent livelihoods of farmers

Fairtrade International: This report often finds that the Fairtrade certified cooperatives outperform non-Fairtrade counterparts in many areas related to sustainability and resilience, which is true for the two preceding studies as well. In the four main areas that this study looked at – economic resilience, social wellbeing, good governance of farmer cooperatives, and environmental integrity – where did you see the biggest advantages for Fairtrade farmers?

Tatjana Mauthofer: Over the years, the series of studies have illustrated that Fairtrade farmers have been exposed to substantial challenges caused by external events and conditions: we have seen natural disasters, like the El Niñophenomena, hitting banana farmers in Northern Peru, the occurrence of plant diseases and pests, like La Roya, affecting coffee farmers in the Peruvian Amazon, distortions in the world market, impacting Ghanian cocoa producer, and very recently, the COVID-19 pandemic – presenting a challenge for the global community as a whole. One of the key advantages of Fairtrade is that it provides an opportunity to build up resilient SPOs and communities. The studies show that the two Fairtrade mechanisms – the Minimum Price and the Premium - represent a crucial safety net for farmers, their small producer organizations and eventually, also their communities. In times of crisis, it becomes evident that Fairtrade enhances farmers’ economic resilience and supports them in continuing their profession in challenging times. At the same time, we cannot neglect the grim reality that farmers’ gains and resilience in recent years have been jeopardized by three major threats: climate change, the COVID-19 pandemic, and prices paid for agricultural produce that are too low to cover rising costs of farming and daily life.

As you say, the study especially highlights Fairtrade’s contribution to economic resilience such as better prices and stronger safety nets. What are some examples of how the cooperatives in the study have been adversely affected by COVID-19, climate change and rising costs?

Millie Santos: The COVID-19 crisis has led to challenges and economic burden worldwide, adversely affecting actors along the three value chain settings [Peruvian bananas and coffee, and Ghanaian cocoa]. Study findings reveal that, at producer level, market instability, lower sales levels due to import restrictions as well as rising production costs and, above all, scarce and more expensive labour costs, led to negative income effects. Eventually, the global pandemic increased the risk for farmers’ own health and led to increasing and unexpected expenditures for health and hygiene measures. The study also revealed that, for the coffee case, members of the cooperative’s management passed away due to Covid-19. In addition, a very concerning finding is that food insecurity, especially among non-Fairtrade coffee and cocoa farmers, appears to be on the rise, considering the current increase in cost of living and production that negative affect final disposable income.

Similarly, climate change was identified as a great threat given existing negative impacts on production, and hence on income and livelihood of farmers. Climate change-induced crises such as La Roya [fungal disease also known as ‘coffee rust’] and unpredictable hot and wet periods negatively affect product quality and productivity levels, leading to the increased socio-economic vulnerability of producers. To this end, product and income diversification were identified as mechanisms for farmers and their SPOs to decrease dependencies on the cultivation of banana, coffee, and cocoa.

In addition to the global pandemic and climate change, the study highlights a common challenge of rapidly rising costs for living and farming and a flat, or even downward, trend in prices farmers actually receive – at least, that is the case for banana farmers. This clearly has a direct impact on farmers’ economic resilience. How do you see the relationship between economic resilience and the other three areas you looked at? For instance, good governance seems to have a close link to economic resilience – what did you observe with the cooperatives in this study?

Tatjana Mauthofer: Farmers across the three settings, as well as their cooperatives, are highly price sensitive. While coffee and cocoa farmers have seen rising prices in recent years, banana farmers have faced price stagnation due to the competitive pressure from large buyers and retailers. The study confirms that the global price pressure on banana is severely felt by SPOs in Northern Peru. At the time of the study, the prices received for bananas barely covered – or were not quite covering – the production costs for many of the interviewed producers. The situation appears to have deteriorated in times of COVID-19 with farm input transport, labour and living costs on the rise.

To improve economic resilience, market positioning and sales relations are key and, indeed, the strongest banana SPO examined received a substantially higher average price than non-certified SPOs or organizations that had only recently been certified.

Economic stability highly interlinks with other sustainability dimensions. Farmers with comparably better financial means perceive improved social wellbeing and uplift themselves and their communities. At the same time, solid governance structures lead to more professional business operations, improved stability in terms of member size and, thus, contribute to economic resilience. Vice versa, in certified and non-certified cooperatives that struggle with making ends meet in a situation of global competition, democratic processes become observably weak with cooperatives dissolving themselves or losing their certifications.

Diversification comes through repeatedly in the study as an important aspect of economic resilience, as it protects against global price fluctuations and negative climate change-related impacts on a single crop, and it can improve food security. The producers in the study are at varying stages of this process, with up to 25 percent of the cocoa farmers already engaged in diversification activities, whereas a much smaller percentage of the banana and coffee farmers have diversified so far. What’s your explanation for this, and what were some promising examples from the study that may be worth replicating?

Millie Santos: Study findings identify product and income diversification as a central mechanism to reduce vulnerability of farmers and their SPOs. For the case of cocoa, estimates reveal that about 20-25 percent of their farmers engage in some additional income activities. For example, trainings on yam production and rice cultivation were organized by cooperative in collaboration with international donors or NGOs to foster income diversification particularly for women. In the banana setting, despite the notable effects of a changing climate, product diversification is rarely practiced as producers are, for the most part, exclusively dedicated to banana production. Bananas grow and ripen through the year and, as a result, diversification can be very costly, requiring additional knowhow and extra labour force. In the case of coffee, the Fairtrade cooperative examined initiated support measures such as beekeeping, fish farming as well as providing small loans to farmers to engage in livestock activities or other subsistence crops as a means of diversifying income sources.

Good practices worth replicating were identified in the Sankofa project in Ghana, aiming at integrating the production of cocoa, timber, biomass and fruit trees, yam and other associated crops to simultaneously enhance income, food security and nutrition. Following a similar strategy, the Fairtrade certified coffee SPO examined in Peru supports a research project on fish reproduction to understand the potential of fish farming as a new source of income with additional positive side effects on improved nutrition.

Fairtrade is not just system of values; it’s also a call to action. Your report makes some recommendations on how cooperatives – and also, importantly, the companies that rely on them as well as Fairtrade producer networks – can counteract the recent drawbacks. Can you explain what you see as the most significant ofthose recommendations and how they can have an impact?

Tatjana Mauthofer: Given the broad scope of the study, our findings allow us to derive conclusions across all four sustainability dimensions. However, the call to action to mitigate and adapt to climate change has emerged as a cross-cutting theme, affecting social, economic and environmental sustainability. The study, along with other research, found thorough evidence that climate change increasingly and negatively impacts banana, coffee and cocoa producers and substantially increases their vulnerability.

All actors along the supply chain, who have a continued business interest in sourcing agricultural products, should urgently expand their responsibility and support cooperatives and producers in implementing climate change adaptation measures.

The research establishes that Fairtrade plays a pivotal role to mobilize actors and funds and to raise awareness on the effects of climate change at the beginning of the value chain. It is, thus, recommended that Fairtrade continues its strong stance to support the implementation of climate change adaptation projects and to create awareness at both retailer and consumer level. Also, SPOs and Fairtrade producer networks can play a key role in equipping their farmers for a different future – the study recommends that they proactively support product and income diversification of their members to reduce vulnerability, enhance their resilience and ensure that they continue their farming activities even in times of crisis.