ValueMap Project – Mapping the Value of Fairtrade: Understanding business and market engagement in the banana, cocoa and coffee value chains
« Fairtrade to the third world – that is poppycock – but that is not what it is about. It should be about quality, about competetiveness. So, I must say that I would like to see Fairtrade finished. I would like to see it go away, even though we benefit so much from it. I would like to see it, through the natural course of business, disappear. And that we be competitive because we are naturally fair: we treat our workers well, we look after the environment, we don’t put oil or fuel in the rivers. And that’s what I would like to see, and we don’t really have to pay for that. » – Tea producer in Tanzania
A 2019 segment on the BBC’s World Business Report [where A. Loconto was interviewed] echoed these sentiments as they questioned the effectiveness of product certification schemes, specifically Fairtrade International (FI) and Rainforest Alliance (UTZ certified) in the coffee and cocoa sectors. The point of contention revolved around two interconnected issues that certification schemes like Fairtrade International are trying to resolve: the sharing of costs and benefits of Fairtrade certification along supply chains from producers to consumers and the type of business models that are used to do this. A counterpoint to this question that journalists usually pose is: can’t consumers just pay more?
This question suggests that consumers have significant choice and power in their consumption practices. We know from the consumer literature that it is more complex than this (Starr, 2009; Chessel and Dubuisson-Quellier, 2018). While consumer demand does shape the growth of markets, consumers can only purchase the products that are made available to them by retailers, brands and traders who are responsible for linking distant producers and consumers. Understanding how the FI system influences these two aspects of trading relations is an important impact pathway outlined in the FI Theory of Change (ToC) and is the object of study in this project.
Fairtrade’s commitments are formalized in a set of rules, known as Fairtrade standards and tools. On the production side, standards for small-scale producer organizations, for hired labor or for contract production are applicable. On the market side, it is the Trader Standard that defines the FI rules: companies and producers trading Fairtrade products must meet this standard. Revised in 2015, it includes “requirements and voluntary best practices to ensure that Fairtrade products are traded in fair and sustainable ways that contribute to producer empowerment” such as traceability, contracts, price and Fairtrade premium, access to finance, labor and environmental criteria. Indeed, Fairtrade standard setting is a constant balancing act to satisfy the ‘interests of buyers in the North’ and a ‘consumers’ guarantee’ as well as providing benefits for producers (Reinecke, 2010; Tallontire, 2009).
In the past, researchers have claimed that licensing terms for the traders are too generous (Fridell, 2007). Critical criteria have since been increased and a further revision is planned. Nonetheless, there is a high heterogeneity of strategies and engagement among businesses (Bezençon and Blili, 2009), different business models operating simultaneously (Tallontire, 2009), with some actors not conveying the transformative message of Fairtrade through their engagement. Concerns over the mainstreaming of Fairtrade and the weakening of the foundational principles through higher business engagement and unprecedented growth in certified market share (de Bakker et al., 2019) suggest that it is time to better understand the influence of Fairtrade on trade, business models and market engagements.
To date, the majority of impact studies have focused on producers in the Global South and the impact that elements of the FI system (mainly FI Standards for small-scale producer organizations and minimum prices) have on their livelihoods (Nelson and Pound, 2009; Parvathi and Waibel, 2013; Le Mare, 2008; Oya et al., 2018; Nelson, 2017; Becchetti et al., 2015; Dammert and Mohan, 2015). Generally speaking, there are more positive effects than negative effects, but system change to fairer trading practices has yet to be seen. This is linked to the nature of markets in the Global North and the supply chains that source them (few buyers: oligopsony, buyer-driven value chains). There have been only a few studies that have explored the impacts of standards on different actors along supply chains (e.g., ITC, 2011; Valkila et al., 2010; Roquigny et al., 2008; Carimentrand, 2008). Thus, there is a crucial need to better understand the impact of Fairtrade on the supply chain actors in the Global North, i.e., the impact on traders’ practices in terms of the forms and types of engagements with the Fairtrade system.
To this end, FI in collaboration with six National Fairtrade Organizations and with EU financial support, financed this project in order to explore:
What impact does Fairtrade have on the businesses and the market in the Global North and traders along the supply chain (the latter mainly via the Trader Standard) and how can Fairtrade maximize demand and positive producer impact through its supply chain and business engagement?
The specific objectives of the project are to understand:
- What impact are Fairtrade’s engagements with businesses having on business behavior?
- What are the advantages or expectations of the engagement with Fairtrade from a business perspective?
- What are the biggest market opportunities and risks for Fairtrade?
- What factors influence Fairtrade market growth most?
Qualitative research was undertaken in 2020 and 2021 to explore these questions through analysis of the markets for Fairtrade bananas, cocoa and coffee in six European Countries (Czech Republic, Finland, France, Germany, Poland and the United Kingdom). We conducted four types of interviews for this study: 1) expert interviews with 13 consumer studies experts; 2) interviews and focus groups with Fairtrade stakeholders (16 certifiers, 9 FTI employees, 12 NFO employees; 3) interviews with 45 Fairtrade certified traders in each country; and 4) interviews with 56 commercial actors during banana and cocoa sector trade fairs. We further We conducted quantitative and qualitative analysis of the full database of 932 certified companies for these three products in the six countries.
The landscape of Fairtrade certified traders and licensees are analysed through a business model typology (of four domains of interaction: consumption, production, business and standards). This multi-method triangulated and interactionist approach reveals business behaviour, business’ expectations from Fairtrade, market opportunities and risks and market dynamics at country and sector levels. Conclusions are then drawn about what impact Fairtrade has on businesses and the markets for Fairtrade. Recommendations for how Fairtrade can maximize demand and positive producer impact were also developed and will be shared with Fairtrade stakeholders in 2021-2022.
 BBC World Service. How effective are product certification schemes? BBC World Business Report (with Tamasin Ford), Wednesday, 7 August 2019, 16:32 GMT. https://www.bbc.co.uk/sounds/play/w172wx8rjl52rcy
Durée : 2 ans
Date début – date fin : 2019 – 2022
Coût total : 80.000 EUR
Financeur : Fairtrade International and the European Commission
Personnes du LISIS impliquées : Allison Loconto (PI), Alejandra Jimenez, Camille Cleuzou
Partenaires extérieurs : University of Lucerne (CH), University of Portsmouth (UK), CIRAD (UMR Innovation)