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Fair Trade: Overview, Impact, Challenges
♦ What is the poverty profile of the target group?
♦ How viable are the existing institutional models for fair trade compared with the
possible alternatives?
In practice this methodology proved difficult to apply mainly because of a lack of data
and within the resource constraints of the case study. A further reason was the
difficulty of drawing a distinction between the FT and mainstream marketing chains
at the farmer and farmer organisation level, since only a small proportion of the sales
of producer organisations took place on FT terms.
The key features of the organisations focused on in the case studies were the
following. The Ghana cocoa case study concentrated on Kuapa Kokoo Limited
(KKL) which was formed in 1993 and became a cooperative in 1996 as Kuapa Kokoo
Union (KKU). In 1999 KKU had 462 member societies, representing more than
30,000 farmers. Technical assistance was provided by TWIN and other FT
organisations with DFID support to assist in building KKU’s capacity. Kuapa Kokoo
is the only source of FT cocoa in Ghana, the only major cocoa producer cooperative,
and has generally provided almost two-thirds of the international supply of FT
labelled cocoa. Initially FT sales amounted to up to 15% of KKU’s total sales.
However, FT sales have been stagnant (between 300 and 600 tonnes per year) while
KKU’s total sales have grown to around 18,000 tonnes. FT sales currently account for
around 2% of KKU sales. Only a small proportion of the price premium on fairly
traded cocoa sourced from Kuapa Kokoo has been paid out to farmers. The majority
is paid into the Kuapa Kokoo Farmers' Trust which is used to fund community
development projects.
The Tanzania study focused on cooperative unions supplying FT coffee. In contrast
to the Ghana case, the Tanzanian cooperatives were long-established organisations
that had played a pivotal role under the state controlled marketing system. They have
faced increasingly intense competition from private trade as the market has been
liberalised. FT organisations have been buying coffee from Tanzania via parastatals
since the 1970s. Since direct purchase became possible in the early 1990s, a range of
European, North American and Japanese FT organisations have bought coffee from
four Tanzanian cooperatives.
The main conclusions of the case studies about the impact of the FT initiatives
examined are:
♦ The quantities of product designated as FT (i.e. attracting the price premium) were
modest and represented only a small fraction of the total quantity sold by the
producer organisation, although FT cocoa did provide an initially important
market for Kuapa Kokoo. It was therefore not meaningful to separate at the
producer level the impacts of the FT and non-FT aspects of the producer
organisation’s activities. The only difference at the farmer level was the payment
of the premium and this was not passed on to producers so it had no impact on
production incentives.
♦ In each case, the effectiveness of producer control and the transparency of
management for the cooperatives and cooperative unions will be a key issue
for the future operation of the marketing system. The money from the price