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Human Trafficking Center

Is Fairtrade Coffee the Answer?


Jan 2015



By Seth Daire, HTC associate

(This post is the second in a series on forced labor in the coffee supply chain and Fairtrade coffee. Read the first blog post here.)

A woman walks into a coffee shop in the United States and asks the barista, “Do you have Fairtrade coffee?” The barista responds, “We don’t, but our coffee is…” She looks at him skeptically as he continues his explanation.

Fairtrade certification for coffee is one response to the situation of vulnerable smallholder farmers. There’s evidence that Fairtrade does some good, but because of the way Fairtrade is marketed, it is sometimes seen as the only way to improve the lives of farmers, eschewing other effective routes. Many wrongly assume Fairtrade improves the lives of workers, when in fact it does little to address the labor conditions for coffee farmworkers, partially because most coffee laborers work on large farms.

How does the certification work? Fairtrade sets a price floor per pound and adds a social premium meant to be invested in local development projects that benefit the farming community. It vets the trade process and gives cooperatives access to markets and requires importers to establish long-term purchasing agreements. However, while the price floor provides a safety net, Fairtrade prices are still low compared to the retail prices charged in the United States. Also, money given to cooperatives must be dispersed to individual farms, thus diluting the amount.

The Fairtrade minimum and premium have shifted since 1997. The current official Fairtrade pricing is as follows:

  • Producer organizations are paid a floor price of USD 1.40 per pound for Fairtrade certified washed Arabica and USD 1.35 for unwashed Arabica, or the market price, if higher.
  • For Fairtrade certified organic coffee an extra minimum differential of USD 30 cents per pound is applied.
  • A Fairtrade Premium of US 20 cents (with USD 5 cents earmarked for productivity and quality improvements) per pound is added to the purchase price.

Fairtrade International (FLO) requires strict labor standards based on International Labor Organization (ILO) Conventions. These include no forced labor or child labor. Workers are encouraged to submit confidential labor complaints to FLO directly. FLO’s standards also include process criteria to encourage development, such as increasing salaries and benefits.

Certification requires an onsite audit by an official certifier. It can last several days and may involve conversations with farmers and laborers. Follow-up audits include two official visits within three years and possible unannounced visits. It’s unclear how well certifiers are trained to identify forced labor, how much of an effort they make to find it, and whether any Fairtrade certifiers have ever found indicators of forced labor within a coffee cooperative. Unless evidence can be presented, how do we know whether Fairtrade certification actually prevents forced labor?

Is Fairtrade Effective?

Fairtrade was not initially designed to improve labor standards, but to give small landowning farmers access to markets via cooperatives rather than having to rely on intermediaries. However, Fairtrade has improved its focus on workers over the last few years, such as setting living wage benchmarks and supporting collective bargaining.

In reality, though, how effective is the Fairtrade certification at improving the lives of farmers and laborers? In a 2002 survey, 40 percent of Maya farmers in Guatemala gave high prices as the primary benefit of a Fairtrade cooperative, but 83 percent named an even higher price as ideal. Many stated their earnings enabled them to support their families but not get ahead. A 2014 study in Uganda found Fairtrade farmers were better off than those with organic or UTZ certifications.

A 2012 study in Peru found that Fairtrade did not show a significant effect on household income for farmers. In 2014, the University of London’s SOAS did the most in-depth study of laborers within Fairtrade cooperative farms to date, specifically focusing on Uganda and Ethiopia. They determined that manual agricultural wage laborers did not have better wages or working conditions on Fairtrade farms. Ethiopian Fairtrade workers were the worst off, earning 60 percent below the median wage compared to five percent for non-Fairtrade laborers.

While Fairtrade certification is a well-meaning and sometimes helpful means to assist poor smallholder coffee farmers, it is inadequate as an answer to poverty. It is also insufficient to prevent situations of forced labor. It’s best to see Fairtrade certification as one supplemental means of helping smallholder farmers and not as the only legitimate response to the problems within global trade.

While there are some quality standards for commodity and Fairtrade coffee beans, those standards do not lead to the level of quality required by many in the specialty coffee industry. Helping the farmers raise the intrinsic value of their coffees so they can charge more for it is one way to help. Roasters like Intelligentsia Coffee trade more directly with their producers, visit farms themselves, and pay farmers above Fairtrade prices for their Direct Trade coffees. Most of the coffee imported and sold to roasters by Coffee Shrub isn’t certified, but they are a trusted source who also has relationships with farmers.

Fairtrade is raising awareness that how we do business matters. The concepts promoted by the movement—such as transparency, relationships, and fair prices—are part of what make up ethical, sustainable business practices. However, consumers need to be aware that the problems of wages and forced labor can’t be solved with a label.

*The views and opinions expressed in this blog do not necessarily reflect the position of the HTC.

Photo: via Creative Commons


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2 Responses to “Is Fairtrade Coffee the Answer?”

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