1. UNDERSTANDING THE
IMPACT OF FAIRTRADE
IDS Business and Development seminar
13 November 2012
Sally Smith, Independent Research Consultant
sallyesmith@yahoo.com

2. What is Fairtrade?
“Fairtrade is an alternative approach to
conventional trade and is based on a
partnership between producers and
consumers. Fairtrade offers producers a
better deal and improved terms of trade.
This allows them the opportunity to
improve their lives and plan for their
future. Fairtrade offers consumers a
powerful way to reduce poverty through
their every day shopping.”
Fairtrade International website

3. How does Fairtrade work?
 Set of standards which establish the „rules‟ for fair
trading practices and engagement in Fairtrade, and
3rd party verification of compliance
 Standards for supply chain businesses trading in Fairtrade-
labelled products (incl. min. price & Premium)
 Standards for Small Producer Organisations and
Employers and Workers (e.g. democratic
organisation, accountability, respect for labour rights &
environment)
 Strategies which enable engagement in Fairtrade
 Building markets
 Technical and financial support for producers/workers
 Networks and alliances
 Facilitating civil society action around trade justice

4. Why is it important to measure impact in
Fairtrade?
Learning &
Accountability
Improvement
 to producers &workers  Internally in Fairtrade:
 Are aims & objectives
 to consumers being achieved?
 to businesses which invest  In what situations do
positive/negative impacts
 to funders occur?
 How can Fairtrade be
improved?
 Externally with the
development community
 How to maximise the
impact of sustainability
standards and trade-for-aid
in development?

5. What are the challenges of measuring
impact?
 Scale & diversity of Fairtrade producers
 905 certified
producer
organisations
 > 1.1 million
farmers and
workers
 63 countries
 17 product
categories
Source: Fairtrade International Monitoring Report 2011

6. What are the challenges of measuring
impact?
 Capturing the range of impacts
Regional/
 Economic impacts, e.g.
National  Income levels & stability
development
 Access to finance
 Asset ownership
Communities
 Social impacts, e.g.
Producer /  Self-confidence, self-
Worker esteem
Organisations
 Health, education
 Gender equality
Producers/
Workers &  Environmental
Households impacts, e.g.
 Biodiversity
 Natural resource capacity

7. What are the challenges of measuring
impact?
 Establishing the role of Fairtrade in bringing about
change
 Understanding how and why change has occurred
 Ensuring reliable and credible findings, at reasonable
Before cost
– After
comparison with control
group
Source:
http://impact.zewo.ch/en/impact

8. What are the challenges of measuring
impact?
 Maximising utility for producers and workers
 Committing to transparency and improvement
Internal &
external Learning
communicati cycle
on

9. Example of challenges in practice
 Center for Evaluation (CEval), Saarland University, commissioned to
assess the impact of Fairtrade in rigorous way
 As baseline data were not available and a longitudinal study was not
possible, CEval used a quasi-experimental design: comparing
Treatment Groups (TGs) with matched Control Groups (CGs) at a
single point in time (i.e. differences attributed to Fairtrade)
 TGs = 6 FT producer organisations, covering 6 sectors and 4 countries
 Was not possible to find CGs which matched TGs on all criteria (e.g.
same type of organisation, levels of support, markets); access to non-
Fairtrade producers challenging, especially plantations
 Matching needs to be done at level of villages (e.g. type of
infrastructure) and individuals (e.g. amount of land) as well as
organisations – resource intensive
 Data/results from different sectors/countries could not always be
compared as contextual factors which determined results differed

10. Using the mass of evidence to understand
Fairtrade impact
 Nelson, V. and Pound, B. (2008) Fairtrade impact
Meta- assessment: A literature review. NRI, University of
analyse Greenwich: Chatham
Meta-analysis of 38 studies
s
 Vagneron, I. And Roquigny, S. (2010) What do we really
know about the impact of Fairtrade? A Synthesis.
PFCE: Paris
Meta-analysis of 77 studies
Sector  Smith, S. (2010) Fairtrade bananas: A global
studies assessment of impact. IDS: Sussex
Sector study across 4 countries
 Nelson, V. and Smith, S. (2011) Fairtrade cotton:
Assessing impact in Mali, Senegal, Cameroon and
India. NRI: Chatham
Gender Sector study across 4 countries
review  Smith, S. (2011). Review of the literature on Gender
and Fairtrade. Commissioned by Fairtrade

11. What do we know about Fairtrade impact for Small
Producers?
 Fairtrade can bring higher incomes and/or greater
income security
 Impact on income depends on: prevailing market prices
vs. Fairtrade minimum price; scale of production and
sales on Fairtrade markets; financial situation of
producer organisation
 Farmers with low volumes, or who don‟t sell much on Fairtrade
markets, unlikely to escape poverty through Fairtrade alone
 Farmers with higher volumes/sales more able to save and invest
– Fairtrade supports sustainable development
 Fairtrade can improve productivity and quality through
market requirements, price incentives and Premium
investments

12. In Mali, Senegal and Cameroon, Fairtrade increased the prices
farmers received for cotton by between 22% and 70% from 2004-
2007. However, this effect was stalled in 2008-2009 when market
growth did not keep up with supply.

13. What do we know about Fairtrade impact for Small
Producers?
 Fairtrade can help strengthen Small Producer Organisations
(SPOs) in various ways:
 Greater access to working and investment capital, & high value
markets
 Stronger, more resilient businesses – essential for impacts to be
scaled up and sustained
 More democratic, transparent and inclusive organisations –
essential for ensuring Fairtrade benefits reach producers (and
empowerment)
 Scale and scope of impact depends on context, including
market structures and trading relationships
 Support (organisational, technical, financial) from
NGOs, buyers and/ or Fairtrade organisations is critical to
outcomes

14. “[Fairtrade buyer] Twin is very historical in the establishment of
Gumutindo... Without Twin the conversion to Fairtrade and quality
would have been difficult... When we made a loss and thought we
would go out of business, Twin rescued us with a loan of
$100,000.”
Nimrod Wambette, Chair of Gumutindo Coffee
Cooperative, Uganda

15. Use of the Fairtrade Premium by Small Producer
Organisations
• Average Fairtrade
Premium earned by
SPOs in 2009-10:
€80,000 (€47 per
farmer)
• Improving
production &
processing at farmer
level: 30%
• Investments in
developing SPO
business: 24%
• Investments in
education, health, c
ommunity
development: 14%
Source: Fairtrade International Monitoring Report

16. What do we know about Fairtrade impact for
workers?
 Relatively few studies to date – cannot generalise
 In cases studied, Fairtrade standards and auditing have
improved working conditions
 Formalisation of employment and access to legislated entitlements
 New/improved employment policies and practices (e.g. sexual
harassment, health and safety, on-farm housing)
 Income may increase through access to national minimum
wages and wage-related benefits, but wages often below
„living wage‟ levels
 Workers Committees to promote and defend workers‟
interests – some achievements but limited by lack of
knowledge, bargaining power and external linkages (to trade
unions and other networks)

17. Use of the Fairtrade Premium by Workers
• Average Fairtrade
Premium earned by
Hired Labour
settings in 2009-10:
€80,000 (€100 per
worker)
• Investments in
education, health, c
ommunity
development: 61%
• Direct support to
workers: 22%
• Premium greatly
appreciated by
workers but not
always managed
well; benefits may
not be distributed Source: Fairtrade International Monitoring Report

18. “I was a casual worker and my dream was to come and work
here, because of the benefits workers receive, the different
way of working, provision of working equipment, and
compliance with the law.”

19. What do we know about Fairtrade gender
impacts?
 Fairtrade can bring economic opportunities for women
producers, increased involvement in SPOs, benefits from Premium
use  material and strategic gains
 Women workers often still in lower paid, less skilled
employment, but Fairtrade may formalise work and lead to gender-
sensitive employment practices
 Typically Fairtrade raises awareness of gender issues and rights but
limited impact on gender roles and responsibilities within
households, organisations, communities – not challenging power
structures and entrenched inequalities
 Fairtrade gender impacts mediated via organisations – level of
gender awareness in producer and worker organisations greatly

20. In Mali, Senegal and Cameroon, Fairtrade has enabled women to be
paid directly for their cotton for the first time. For some women this has
given them greater influence within their households, but others report
that men still control all household income and take decisions

21. How and why does Fairtrade bring about
change?
ESTABLISHIN ENABLING
G RULES ENGAGEMEN
FOR T IN
FAIRTRADE FAIRTRADE
MONITORING, EVALUATION &
SETTING PROVIDING FORMING
STANDARDS SUPPORT NETWORKS
&
• Business &
LEARNING
ALLIANCES
Development
• Production ADVOCACY
& SUPPORT
• Trade FOR CIVIL
BUILDING SOCIETY
VERIFYING
MARKETS ACTION
STANDARDS

22. What is being done to better monitor and
learn about Fairtrade impacts in future?
 Fairtrade International is developing a global impact
assessment system based around a theory of change agreed
by stakeholders
 Theory of change will help establish key areas of change that
Fairtrade needs to track
 System will involve a range of research activities at different
scales to meet information needs in a cost-effective way (e.g.
ongoing M&E at a global level; limited number of longitudinal
studies started each year; occasional thematic research, etc.)
 Key to success = effective systems for, and commitment
to, learning

23. “Change is the end result of all true learning.”
Leo Buscaglia