How Fair Trade Reduces Global Poverty

If you’re reading this, you have probably already decided that you’d like to help disadvantaged farmers and workers by purchasing products that are fair trade certified.  But you may also be wondering how those who produced the product will actually benefit from what you buy.  There is surprisingly little independent analysis of the benefits for disadvantaged producers and their communities, given that fair trade accounts for billions of dollars in annual sales.  Most studies have focused on the motivation of consumers rather than the actual benefits to the producers themselves.  Two recent studies published by researchers in Europe and the US show how fair trade helps fight global poverty.

For many consumers, the product most commonly associated with fair trade is coffee.  In 2009, the University of Nebraska released the results of a study it sponsored to evaluate the impacts of fair trade on coffee growers in Guatemala, Nicaragua, and Peru.  The study surveyed randomly selected coffee farmers in each country and compared their responses with non-fair trade farmers in the same countries to evaluate financial, educational, and health factors.  The study concluded that participation by farmers in fair trade cooperatives “positively and unequivocally affects income” as a result of the higher prices they receive for their coffee. (1)

In 2008, Italian researchers published the results of their studies on the effects of fair trade agriculture on a community of Kenyan farmers who had produced 10 different crops from 1991 – 2005.  The study established a control group which had used traditional sales channels and compared them with a group which had partnered with an Italian fair trade importer.  The farmers were surveyed to determine whether any financial or other benefits were experienced by the fair trade group.  The survey results showed a “remarkable difference” in favor of the fair trade group.  They reported higher income satisfaction, improved living conditions, and better nutritional quality of their own food consumption. (2)

Fair trade is not the single antidote to the cycle of global poverty.  Clearly, there are political, cultural, and macro-economic issues that are also at work.  However, these studies show that ethical purchasing coupled with fair trade practices can make a meaningful difference to disadvantaged farmers and workers in the developing world.

Sources:

(1) Arnould, Eric J.; Plastina, Alejandro; and Ball, Dwanye, “Does Fair Trade Deliver on Its Core Value Proposition? Effects on Income, Educational Attainment, and Health in Three Countries” (2009).Marketing Department Faculty Publications. Paper 12.

(2) L Becchetti, M Costantino, “The Effects of Fair Trade on Affiliated Producers: An Impact Analysis on Kenyan Farmers” (2008) World Development.

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