Griffiths (2010, 2011), [1] a mainstream agricultural economist, point outs that it is never considered possible to extrapolate from case studies to show that all such firms are profitable etc. The design of Fairtrade creates methodological problems which make meaningful impact studies very difficult or impossible (Griffiths 2011) [2] For example: While most aid projects would have meticulous accounting of all aspects, Fairtrade does not monitor most of the expenditure, nor what reaches individual farmers. Most social projects do not aim to produce economic benefits, and there is difficulty in identification and measurement of social benefits. There have been almost no baseline studies, comparing the before and after Fairtrade situation. Fairtrade recruits mainly relatively well-off and skilled farmers, meaning that control groups are necessary and, generally, before and after studies of all groups are needed. Meaningful samples are difficult, expensive, and may be impossible. Fairtrade cooperatives may get assistance from a dozen organizations – government departments, donor countries, aid agencies and NGOs – so it is not possible to determine which is responsible for any change in impact. Price comparisons are technically very difficult. Comparing incomes and measuring the increases in production cost from meeting Fairtrade standards are difficult and may be prohibitively expensive. Fairtrade harms some Fairtrade farmers and some non-Fairtrade farmers , so these must be included in the study. Apparent changes may be artefacts, created by changes in the world prices of different qualities, and changes in exchange rates. Griffiths questions how many impact studies address these issues.
Michigan State University assistant professor Daniel Jaffee conducted a four year study, of the impact of fair trade on Michiza cooperative coffee producers, in Oaxaca, Mexico. Jaffee's findings, published in the 2007 book "Brewing Justice: Fair Trade Coffee, Sustainability and Survival", provide a nuanced view of fair trade: "Fair trade's higher prices increase gross household income - although, because most fair trade coffee is also certified organic, producers have higher costs of production as well. Participation in fair trade reduces households' debt and enhances their economic options, affording them the possibility of better feeding and educating their children. Fair trade affords peasant farmers partial protection from some of the worst aspects of commodity crises and in many cases allows them the breathing room needed to engage in more sustainable agricultural practices. Furthermore, the extra capital from fair trade can generate important economic ripple effects within communities, providing additional employment even for nonparticipating families. However, fair trade is not a panacea, and it does not bring the majority of participants out of poverty. (...) Demand for fair trade products must increase dramatically in order to augment the economic benefits for such small farmer families and allow the system to include many more producers of coffee and other commodities around the world."[3]
In 2002, Loraine Ronchi of the Poverty Research Unit at the University of Sussex studied the impact of fair trade on the Coocafe cooperative in Costa Rica. Ronchi found that fair trade strengthened producer organizations and concluded that "in light of the coffee crisis of the early 1990s, fair trade can be said to have accomplished its goal of improving the returns to small producers and positively affecting their quality of life and the health of the organisations that represent them locally, nationally and beyond".[4]
In 2003, the Fair Trade Research Group at Colorado State University conducted seven case studies of Latin American Fairtrade coffee producers (UCIRI, CEPCO, Majomut, Las Colinas & El Sincuyo La Selva, Tzotzilotic and La Voz) and concluded that Fair Trade has "in a short time greatly improved the well-being of small-scale coffee farmers and their families"[5] The various case studies most notably found that producers had under Fair Trade greater access to credit and external development funding.[6] The studies also found that Fair Trade producers had, compared to conventional coffee producers, greater access to training and enhanced ability to improve the quality of their coffee.[7] Families of Fair Trade producers were also said to be more stable and children had better access to education than in families growing conventional coffee.[8]
A case study of Bolivian coffee Fair Trade producers published by Nicolas Eberhart for French NGO Agronomes et Vétérinaires sans frontières in 2005 concluded that Fair Trade certification has had in the Yungas a positive impact on local coffee prices, thus economically benefiting all coffee producers (Fairtrade certified or not). Fair Trade was also said to have strengthened producer organizations and increased their political influence.[9]
A comparative case study conducted with small-scale coffee farmer cooperatives selling into both conventional and certified organic / Fair Trade markets in northern Nicaragua demonstrated that sales to Fair Trade can reduce small-scale farmers' livelihood vulnerability when coffee commodity prices were low (Bacon, 2005). Changing governance structures, corporate concentration, oversupply, interchangeable commodity grade beans, and low farm gate prices characterized the crisis in conventional coffee markets. In contrast, certified Fair Trade and organic are two types of specialty coffee trade and production that are potentially useful for wider sustainable community development processes. A participatory action research team surveyed 228 farmers to measure the impact of sales to organic and Fair Trade markets. The results suggest that participation in organic and Fair Trade networks reduces farmers’ livelihood vulnerability and can contribute to bottom-up empowerment processes. However, significant challenges remain in efforts to increase positive impacts and maintain fair trade's core values as Fair Trade enters the mainstream.[10]
An econometric analysis conducted by Becchetti and Costantino (2006) verified the impact of Fair Trade affiliation on monetary and non monetary measures of well-being on a sample of Kenyan farmers. The researchers compared a control sample group of farmers to Fair trade certified groups and Meru herbs farmers. Becchetti and Costantino documented the following: during the same period, Fair trade farmers were more successful in diversifying their production, experienced a significant drop in child mortality, improvements in terms of monthly household food consumption, greater satisfaction in terms of prices obtained for their crop, living conditions etc. Methodological problems such as the relative contribution of Fair Trade and Meru herbs farmers, control sample bias, Fair trade and Meru Herb selection biases are discussed and addressed showing that ex ante selection of Meru members contributes to explain some but not all the results of the study.[11]
In a study commissioned by the Swiss State Secretariat for Economic Affairs (SECO), Sandra Imhof and Andrew Lee (2007) assessed the potential of Fair Trade to reduce poverty and prevent conflicts. Based on an interdisciplinary approach (economics, development studies and political science) and a case study in the Yungas region of Bolivia, they suggest four effects. Firstly, they found that Fair Trade, through its poverty-reducing impact, may have a positive influence on conflict prevention by contributing to a reverse of horizontal inequalities biased against indigenous people in Bolivia. Secondly, by providing competition at the level of the intermediaries, Fair Trade has the potential to reduce poverty amongst non-Fair Trade producers. Thirdly, by enabling capacity-building, Fair Trade has a poverty-reducing impact. Through regular training in relevant topics such as organic production, management and financial issues etc., producers have the opportunity to constantly acquire new skills, which in turn allow them to improve the quality of their coffee ("learning centre"). Fourthly, by having influenced trends in the non-Fair Trade market, Fair Trade may have indirectly reduced poverty. Nevertheless, both authors stress the need to test these hypotheses in different markets and conflict environments before making any policy prescriptions.[12]
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