For be specified. Nevertheless, a position will be
For many years, coffee has been one of the most globally traded commodity and is largely produced and depended on by more than twenty-five million small-scale farmers (Beyer, 2008). Moreover, coffee tremendously becomes yielded for an alternative trade market that provide fair prices for disempowered producers, improving their livelihood position with the use of financial benefits thereby encouraging sustainable development in their communities. This practice is generally called fair trade according to Lyon (2006, cited in Cleland, 2010). Where the farmer’s life is concerned, fair trade places numerous impacts because it also places qualifications or restrictions to farmers (Cleland, 2010). However, the focus is to analyse whether or not their lives becomes better with such system. Throughout the course of this paper, the extent to which coffee is produced for a fair trade market shall be discussed in respective to its brief history and its ethical standards and conditions. Subsequently, both sides of the argument shall be deliberated on, supported with evidence of the positive and negative impacts of fair trade coffee on farmers that shall be specified. Nevertheless, a position will be drawn to conclusion that is, the lives of coffee producers improves. To begin with, the idea of fair trade originated many centuries ago when people began to exchange goods with one another even before niche markets could shift to mainstream markets. In a much more global scale, fair trade started to become clear in the 1960s when most Western countries whose multinational corporations were criticised for further enriching the disadvantages of poorer nations and local producers (Haight, 2011). Coffee became one of the agricultural commodities of fair trade yet it is sensitive to fluctuations of temperature and rainfall, prone to shortages due to the geographical concentration of production which results to unpredictable and extreme changes in price (Beyer, 2008). Such instability of coffee production and prices were stabilized through the International Commodity Agreement (ICA) that was created and maintained by numerous governments from around the world. The ICA has set forth import and export regulations to the international market of the coffee industry which remains to be upheld up to this day and age by several countries that relies on coffee as a high proportion of their export revenue and generates foreign exchange earnings from it (Beyer, 2008). Thus, the closer integration of national economies in the globalization process (Stiglitz, 2002) has continued to play a big role in shaping the trade of such commodities become economically desirable in the global market. Given that the coffee industry is a part of the fair trade companies that provides consumers with more choices (i.e. types of coffee), it’s profits that would be able to pay their workers with sufficient or higher wages makes capitalist economies, of namely those in North America and Europe, operative (Beyer, 2008). The fair trade companies continued to run for many years through the standards certification system, asides from the restrictions included in the ICA (i.e. quotas), known as Fairtrade certification which “establishes a guaranteed minimum price which is greater than the world price of coffee” in order to prevent the coffee price imbalance back in 1989, as stated by Omidvar and Giannakas (2015, p.1). In other words, Fair Trade coffee production also attempts to stabilize market prices in order to provide a basic level of income for disadvantaged farmers (Berndt, 2007). Importantly, Fairtrade Labelling Organizations International (FLO) inspects and certifies the small-scale coffee producers to improve their livelihoods and their families in compliance with the Fairtrade standards (Utting-Chamorro, 2005 cited in Beyer, 2008) that encourages producers to set up cooperatives. Moreover, the conditions that coffee producers are required to meet, in summary to “Generic Fairtrade Standards” enumerated by FLO (2007 cited in Beyer, 2008), is that they must: cultivate a field smaller than 10 hectares, join or form cooperatives that are democratic, not use forced child labour, allow collective bargaining and free association, minimum health and safety standards, and fair and equal pay for work, ensure that progress is made toward environmental development. Thus, the aforementioned rules being introduced could suggest that fair trade is embedded with the idea of liberalism for it contains justice, equality, and safety for all producers. Over the past years, the fair trade coffee cooperatives has generated substantial changes while the number of coffee producing organizations that are being Fairtrade certified is growing steadily (Beyer, 2008). However, many criticizes fair trade due to the fact that its production and trade standards directly affect coffee growers in different aspects of their lives. Despite their noble objectives, Fair Trade movements have had limited success in improving coffee growers’ welfare. Some researchers pointed out that coffee growers did benefit from FLO while others pointed out that they have suffered from the drawbacks of the problems created. First, the income received by producers is based on the fixed price that is well above the international market for coffee which covers the costs of sustainable production. Clearly, the benefit of receiving extra income is substantial which greatly reflects on the producer’s livelihood especially those who from developing countries as stated by Dragusanu (2013). Meanwhile, Cafédirect, one of the fair trade coffee organizations, has successfully made their producer partners as direct beneficiaries as they have owned 89% of shares and at the same time hold two out of eight seats on their Board that allows them to contribute to the decisions that govern the business (Fairtrade Foundation, 2018). However, farmers did not fully capture the minimum price because cooperatives mediate their operations (Beyer, 2008). Some producers from Central America and Mexico still resort to selling some of their coffee to the conventional market when the demand for fair trade coffee is low since they heavily rely on the consumers and cooperatives for their income and resources (Mendez, et al. 2010). Although it may seem like a pitifully small portion of the Fairtrade minimum actually reaches the farmer, Ruben (2011) reported similar income growth from past studies that was aided by fair trade certification in Peru. Second, coffee growers are educated consistently on how to improve the quality of coffee through different kinds of farming methods in order to build on developments in their cooperatives (FLO, 2007 cited in Beyer, 2008). In addition, their families can also afford to send their children to school because of their improved standard of living. Moreover, coffee production affects not only the farmers themselves but also their families. However, a study by Kruger (2007 cited in Cleland, 2010) shows that the amount of time poorer children are pulled out of school to work increases as wealth in the coffee market increases in Brazil. Furthermore, the production of coffee in this region is affecting the amount of education the youth are receiving. In some cases, in Costa Rica, the structure of fair trade kept farmers untrained about the benefits of fair trade that led many of them to unwillingly pay the high cost of certification as explained by Sick (2008 cited in Cleland, 2010).Finally, the Fair Trade market provides longer partnerships and a more stable market. Moreover, small-scale farmers benefits from the stability and predictability that is being ensured on long-term contracts between the buyers and cooperatives through the Fairtrade minimum price. In Nicaragua, farmers have reported greater economic stability and security offered by Fairtrade prices (Valkila, 2014). Furthermore, Ronchi (2002, p.16 cited in Beyer, 2008) argues that “the sense of security offered through the guaranteed minimum prices causes long-term investments and calculated risks that can reduce the producer’s lives shifting to poverty”. However, farmers tended to reallocate their resources in times of price fluctuation problems in the fair trade market by sacrificing long-term interests (e.g. pulling their children out of school or migrating to the city) to meet short-term demands making their livelihood vulnerable based on the survey collected by Dammert (2015).Overall, coffee remains to be a desirable commodity by many countries which continues to be produced in the fair trade market largely by small-scale farmers who depends their lives on it. However, coffee producers and their families are affected by the standards developed by FLO by which was argued for many years because they ought to be the major beneficiaries of the system. In summary, the impacts specified was income, education, and job stability wherein both the advantages and disadvantages was discussed. Moreover, it can be said that the fair trade continues to improve the welfare of the coffee growers.