What Fairtrade Isn’t: The Farming Industry in the Global South

Learning about Fairtrade starts with understanding what it seeks to change – that is, the features of the global economic landscape that leave citizens of the Global South living in poverty while rich nations benefit from their labour. The agriculture sector employs many throughout the world and is notorious for low wages and poor working conditions. 

Farming is a source of livelihood for many in the Global South. Though the percentage of those working in agriculture has declined, it dominates the labour force in several regions:

Region1991 2013
World44.5% 31.3%
Development Economies & EU 6.93.6
Central & SE Europe (non-EU) & CIS28.817.7
East Asia56.830.3
South-East Asia & the Pacific58.9 39.3
South Asia62.146.3
Latin America & the Caribbean24.714.8
Middle East24.514.3
North Africa34.928.0
Sub-Saharan Africa65.962.0
Source: ILO, “Key indicators of the labour market” Geneva, 2014

However, agriculture also hosts the lion’s share of the global poor. For example, while minimum wage laws exist throughout Sub-Saharan Africa, where most people work in agriculture, farmers are either exempted from this wage floor or are on a lower schedule than industrial workers. Even for the farm workers lucky enough to have legislated a minimum wage, compliance is very low, since an average 58% of all wage workers earn below the minimum wage legislated to them. Without a stable wage floor, farm workers are vulnerable to the crop price fluctuations inherent to the agriculture sector. 

This graph shows the percentage of workers earning below their legal minimum wages. For example, whereas 20% of workers in Mali earn below the minimum wage, this number is 60% in South Africa and 80% in Tanzania. Sub-Saharan Africa is exceptionally non-compliant, but these figures give a sense of the best stability many waged workers can expect throughout the Global South: 

https://lh6.googleusercontent.com/9Zi_ONv7rIFG7gey5o6tDqSHPNaR5AcQbcwd_EYJS9vTlHaJEE5h1gzB-OCcsS2adcSaoz-U0VPuf3G6oyRcP8N6LoZxGHjCrTyZomfBJzgBuNo6-bOY1h4t5mIGxklRZBwAVFD2

(Bhorat et al., 2017)

This second graph shows how far below legal minimum wages workers are paid:

https://lh4.googleusercontent.com/1ShA7ZXXXb8EzX8Jlgdi2JxQS3aCU6Zr1xlTAB6HjQ8VF9cdxhqrbqAVrd4gQEd5g18-B8HzzFVZl6Rm7aI5ZlYTnsRAG97axazwmeEA8NJ69tqPoc9FACvMleM2rDf7DM3-CLwF

Throughout Asia, agricultural workers are among those with the lowest income, with wages for women standing at a fraction of men’s. Despite increases in rural wages throughout the 2000s, this has barely allowed the typical rural households to escape $2/day poverty. While wages have continued to increase in China, India, and Bangladesh, in Thailand, Vietnam, and parts of the Philippines they have slowed. 


The Fairtrade Difference:

Fairtrade is not a silver bullet for solving global poverty. Reforms to international trade, more unionization, and enhanced national labour laws must be key parts of any long-term sustainable solution. Yet there is clear evidence that, from an ethical consumer’s perspective, Fairtrade is the way to go. And the more demand grows for Fairtrade certified products, the better.

Smallholder producers and farm workers growing Fairtrade certified crops generally enjoy higher incomes than their non-certified counterparts. This of course depends greatly on the region and sector, but Fairtrade cooperatives and plantation workers growing coffee and rice at the very least have benefitted from modest gains and more stable incomes. The Fairtrade Minimum Price has successfully provided higher incomes and a ‘safety net’ for farmers of most crops during market downturns, when commodity prices for non-certified farmers plummet. 

Some studies contend that income gains from Fairtrade certification are mostly enjoyed by already skilled workers. Even if this is true the structural advantages of Fairtrade for all certified farm workers are noteworthy. These include more stable income over time, longer term contracts, improved access to credit, and better national representation, producer confidence, and worker empowerment. 

Advantages of the Fairtrade Premium – the extra amount provided to certified producers – have been most notable. Fairtrade farms and plantation labourers receiving the premium were found to have more assets and better access to credit, while using the money to issue payments to farmers and invest in their operations, community infrastructure, training, education for their children, utilities, or healthcare.

The use of Worker Committees on certified plantations has led to more negotiating power and, at the very least, ensured compliance with national labour laws and parity with unionized workspaces. Fairtrade farmers in the flower sector have been able to escape the notoriously exploitative and discriminatory practices of that industry, securing improved health and safety conditions, overtime, and better paid leave rules. 

The ability for Fairtrade to benefit farmers more than conventional trade is clear. Challenges remain, not least with ensuring that hired seasonal labourers on smallholder farms share in these gains. Meta-analyses of Fairtrade point out that income gains, even for certified farms, are tempered by an inability to sell their full yield as Fairtrade and thus needing to sell products at market prices, which may be very low. The solution begins with increasing demand for Fairtrade among consumers. If we and our friends and family support Fairtrade products, slowly increasing the market share of certified goods, we can help empower farmers across the Global South.

Studies:

Natural Resources Institute (NRI). “The Last Ten Years: A Comprehensive Review of the Literature on the Impact of Fairtrade.” University of Greenwich: 2009. http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.619.6440&rep=rep1&type=pdf

Overseas Development Institute (ODI). “The Impact of Fairtrade: A Review of Research Evidence, 2009-2015.” London, UK: 2017. https://www.fairtrade.net/library/the-impact-of-fairtrade-a-review-of-research-evidence-2009-2015

Laboratoire Interdisciplinaire Sciences Innovations Sociétés (LSIS). “Participatory Analysis of the Use and Impact of the Fairtrade Premium.” Paris, France: 2019. https://files.fairtrade.net/publications/2019_LISIS_UseImpactFairtradePremium.pdf

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