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Agriculture: Fairtrade is no silver bullet

By Joan Nimarkoh in Accra
Posted on Thursday, 13 November 2014 14:33

Prosper Tamakloe has worked as a farmer on a Fairtrade banana plantation in the Volta Region for 18 years and admits that he can get higher wages working for a non-Fairtrade company.

it does not seem that KK cocoa farming households are escaping poverty or moving up a wealth ladder

“I am happy to work on a Fairtrade plantation since my children have had the chance to further their education. My eldest son has already received his fees to go to senior secondary school,” he tells The Africa Report.

Prosper earns around $45 a month, $10 less than some producers on the neighbouring private farm. Prosper says that non-Fairtrade firms can have lower running costs that allow them to channel more into wages.

Fairtrade plantations can have higher costs because they have to spend to maintain their certification.

Fairtrade certification works like this: in addition to the minimum guaranteed price that Fairtrade offers, it provides a premium that is used for projects chosen by the community of farmers, be it drinking water wells, building schools or investment in production.

The Fairtrade label – managed by the United Kingdom-based Fairtrade Foundation – has long been part of the trade justice debate for poor farmers across the globe but has lately been attracting more criticism.

From cotton to cocoa, Africa’s farmers and rural labourers have actively engaged in various Fairtrade schemes with promises of significantly higher returns than trading on the open market.

However, research from London’s School of Oriental and African Studies published in May found evidence that Fairtrade labourers were often worse off that those working elsewhere and that social welfare services paid for by Fairtrade premiums were not universally accessible to the beneficiary communities.

Ghana’s Kuapa Kokoo (KK) – a cocoa farmers’ cooperative – has been engaged in the Fairtrade market since 1995.

A 2013 report on the Fairtrade cocoa trade in Ghana that covered the period 2009 to 2013 and was financed by Britain’s Department for International Development found “the impacts are limited, and it does not seem that KK cocoa farming households are escaping poverty or moving up a wealth ladder as a result of Fairtrade certification.”

It blamed structural problems in the cocoa industry, the fact that the Fairtrade-guaranteed minimum price was lower than the government’s minimum price and problems of transparency and accountability for the lack of benefit to individual farmers.

When the market offers a price higher than the Fairtrade minimum, Fairtrade producers earn the market price.

KK was established in 1993 as a response to market liberalisation and represents more than 85,000 farmers.

The cooperative currently supplies about 40% of its members’ produce onto the Fairtrade market via the Ghana Cocoa Board (Cocobod).

The Fairtrade premium, in contrast to its guaranteed price, now stands at ¢4 ($1.11) a bag above what farmers would otherwise receive from Cocobod, which is ¢212 per 64kg bag.

KK points to the schools being built in Fairtrade areas as one of the benefits of the Fairtrade premium, and the educational investments are restricted to members of producer organisations that represent farmers on Fairtrade farms.

Wages remain low

In general, Ghana’s agricultural workers face difficult conditions marked by low wages and few opportunities for social protection or insurance provision.

When Fairtrade pays more than the traditional market for other crops, the increase is usually modest, says Edward Kareweh, deputy general secretary of the Ghana Agricultural Workers’ Union (GAWU), the leading trade union for agriculture.

He says that Fairtrade typically offers farmers an income only marginally above the minimum wage.

Ghana is a leading supplier to Fairtrade cocoa markets – KK represented more than a quarter of the global Fairtrade cocoa market in the 2008/2009 season – and is one of the largest overall cocoa producers in the world.

From 2009 to 2013 the Ghanaian cooperative sold an average of just 7% of its production on the Fairtrade market, according to the DfID-financed report.

After the 2008/2009 season, KK’s Fairtrade production rose rapidly, increasing from 6,750tn in that season to 29,175tn in the 2011/2012 harvest – but Fairtrade still accounted for just 3.3% of Ghana’s 878,524tn production.

The UK’s Cadbury company made a commitment in 2009 to purchase from Fairtrade sources, significantly increasing KK’s market share.

Fairtrade also signed a new deal in January 2014 with German, Japanese and Swiss companies to expand its international reach.

KK cites competition from other African markets as one of the reasons for its small share of the Fairtrade market prior to 2013.

Despite Fairtrade’s limited contribution to fighting poverty, KK’s managers remain optimistic about
the future of Fairtrade cocoa.

“As long as Fairtrade can continue to pay above the government price, we are happy continue working with them. The issue is whether we get an adequate share of the market,” says Francis Frimpong, the cooperative’s communications officer.

Frimpong says that KK is considering opportunities with other international companies outside of Fairtrade as part of its long-term business strategy.

Negotiation hurdles

The potential for Fairtrade to make a difference to farmers is evident in the Northern and Brong Ahafo regions, where the shea nut sector is experiencing high demand.

Small-scale labourers,the majority of whom are women, earn a meagre income on the free market.

One kilo of unprocessed shea nut is sold for only ¢2 in local markets.

Less than 5% of shea nut workers have the opportunity to sell their produce to companies that purchase Fairtrade goods such as The Body Shop.

Oxfam Ghana says that more needs to be done to build the capacity of women labourers to negotiate collectively a fairer market price and take advantage of potentially lucrative export markets.

Prospects for equitable trade measures lie in the capacity of producers to negotiate better conditions and wider access to markets.

Strengthening producer organisations can provide a buffer against the vagaries of the global market, although low rural literacy and organisational capacity, limited experience in market negotiation and policy preference towards big agribusiness mean that Fairtrade producers face many obstacles.

GAWU’s Kareweh says there has been some disappointment in the lack of impact Fairtrade has had on working conditions, which remain similar to those on private farms.

He says there is a lack of partnership between Fairtrade outfits and agricultural labour unions at a policy and strategic level.

Their interaction has been ad hoc, he adds. This can have an impact on Fairtrade producers’ ability to influence regulation around working conditions, which would be difficult to enact without policy support. ●

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