A disturbing discovery about Fair Trade

Way back in May, while working on my article about organic food for Money Crashers, I noticed that they'd never actually done a piece on the site about Fair Trade. So I added that topic to my list of article ideas, and this month I finally got around to writing the article. In it, I discuss the goals of the Fair Trade movement, the various Fair Trade labels and what they mean, where to find various kinds of Fair Trade products, and how to buy Fair Trade on a budget. You can read about all that here: What Is Fair Trade and What Does It Mean? – Definition, Products & Facts

While working on this piece, I discovered something rather interesting. As I mentioned two years ago, I now buy all my coffee from IKEA because it's UTZ Certified—but I'd always sort of assumed that in doing so, I was making a kind of ecofrugal compromise. UTZ is often described as "Fair Trade light," so I figured its environmental and social standards weren't as stringent as "real" Fair Trade's—but since it's still a lot better than mainstream coffee, I considered it the best overall balance between cost and sustainability.

Well, it turns out I may have had it backwards. While researching Fair Trade standards, I came across a very troubling article in The Guardian, a left-leaning British newspaper. Researchers from the School of Oriental and African Studies (SOAS) at the University of London had spent four whole years investigating plantations in Ethiopia and Uganda, and they made a startling discovery: the workers in the areas dominated by Fair Trade collectives generally made less money and had worse working conditions than those where the main growers were big plantations run by big, evil international corporations. This was true even when they controlled for other factors, like the scale of production.

Furthermore, the researchers found that the community development projects funded by Fair Trade premiums—things like schools and medical clinics—often weren't available to the poorest workers. One cooperative had installed new toilets, but they were only for the use of the co-op's senior managers. Another had built a medical clinic, but the families of the cooperative's former workers couldn't use it without paying a fee. And one used the Fair Trade premiums to improve its schools, not by cutting fees so more students could afford to go there, but by building new housing for the teachers, who were already far wealthier than its workers. As a result, the school fees remain out of most workers' reach.

Still more disturbing was the Fairtrade Foundation's response to the SOAS report. They began by saying they "welcomed" the research and would use it to improve their work—but they followed that up by saying the whole thing was fundamentally flawed and shouldn't be taken seriously. They also claimed that "many independent academic studies" showed their Fair Trade model actually does improve the lives of the poor, so this report, which found otherwise, simply couldn't be right. In other words, rather than expressing their concerns about the report's findings and pledging to root out the problems it exposed, they basically said, "Nuh-uh!"

SOAS itself released a response to the Fairtrade Foundation, pointing out several problems with the accusations it made:

1. The Fairtrade Foundation claims that SOAS "failed to find Fairtrade certified farms for half its research sites...making a balanced comparison between Fairtrade and non-Fairtrade systems impossible." SOAS points out that they did not "fail to find" anything; the whole point of their research was to compare areas dominated by Fairtrade production with areas that weren't. That doesn't "make a balanced comparison impossible"; it's the very thing that makes it possible.
2. Fairtrade says the SOAS comparisons were "distorted," because they looked both at large plantations and at small grower collectives. SOAS explains that, first of all, they controlled for size and still found that Fairtrade has no benefit; and second, what matters to consumers is whether the workers are better off or worse, and they were generally better off on the big farms because they paid more, had better working conditions, and provided more days of work. (As a side note, this mades the decision of Fair Trade USA to split off from Fairtrade International in 2011 so that it could apply its certification to large plantations as well as small collectives—widely lambasted at the time by Fair Trade groups such as Equal Exchange and the Fair World Project—seem not only reasonable, but constructive.)
3. Fairtrade claims that other studies show their model does work. SOAS points out that their own study is "by far the most rigorous study of the impact of Fairtrade on workers to date," and the other studies Fairtrade refers to were mostly their own work. In one case, they looked at three producer organizations and talked to a grand total of four workers—in the presence of their manager. In another study, the researchers refused to go beyond a four-hour drive from Nairobi because they didn't want to spend a night outside the capital. And in a third, which involved "3,750 interviews across six products in just 30 days," the researchers themselves remarked on how little they had managed to learn. And finally, SOAS notes, while Fairtrade claims its studies prove the Fairtrade model improves the lives of workers, most "independent reviews of impact studies" find little to no evidence that it does.

So in short, the most extensive study of Fair Trade (or rather, the Fairtrade International model) finds that it doesn't help workers, and may actually harm them. Under the circumstances, I think my decision to go with UTZ-certified coffee—which, unlike Fairtrade, focuses largely on "better farming methods" to improve yields, and hence raise incomes—may actually be the best possible choice.