Fair trade impact studies

Any intervention in an economic system has knock-on impacts throughout that system: some significant, many small; some costs, some benefits; some people benefit, others are harmed. Impact evaluation like cost-benefit analysis aims to identify costs and benefits throughout the system, then quantify them, so that people do not make unwarranted claims of impact and so that informed decisions can be made. There have been very few attempts at impact studies of Fairtrade. There are very few studies that examine any of the costs identified by critics of Fairtrade in the Fair trade debate, and fewer still that attempt to quantify them. There are few mentions in the literature of the biggest financial costs and benefits, the extra price paid by consumers and the extra profit made by companies in rich countries, and fewer attempts to quantify these. A small number of studies show that in some cases 90% to 99.5% of the extra money paid by consumers is kept as extra profit by firms in rich countries but cannot show that this is typical: the conclusion is rather that secretiveness prevents impact analysis of the full Fairtrade system. There are few studies that attempt to meet the requirements of a meaningful impact study, which is particularly difficult with Third World agriculture.

Impact studies require study of the counterfactual, using control groups to ensure that an impact is the result of the intervention being studied, which is often impossible and always difficult with Fairtrade because of the way that Fairtrade is organized, notably because the Fairtrade farmers and cooperatives are selected from the richer and more efficient, and because the non-Fairtrade farmers may be harmed by Fairtrade. These problems arise with both case studies and more general surveys, and are particularly intractable when the appropriate control group is in another country. There have been virtually no base period studies, to determine the position before a cooperative joined Fairtrade, so it is seldom possible to claim that the farmers in a cooperative are better off or have more self esteem because of Fairtrade, rather than because Fairtrade selects efficient cooperatives with educated, efficient, well-off farmers. The possibility that all groups of farmers have increased incomes because of higher world prices, changed exchange rates etc. is seldom addressed.

There are a lot of case studies of Fairtrade cooperatives which do not attempt to be impact studies, but are, rather, examinations of how parts of a single cooperative operate, a separate area of study. They do not address impacts outside the cooperative, costs to non-Fairtrade farmers and consumers, or benefits to firms in rich countries, for instance. Few analyse how much extra money is received by the cooperatives, what it is spent on, how much is taken by managers of cooperatives and how much reaches the farmers. Few discuss the costs identified in the Fair trade debate. However, as most of the extra money paid by consumers is taken by firms in rich countries or is spent on added costs incurred in meeting Fairtrade standards, it is seldom possible to identify direct financial benefit to farmers, and the studies concentrate on non-money benefits, like improvement in self-esteem. Quantifying these is difficult. There is seldom an attempt to measure these non-money benefits in control groups of local non-Fairtrade farmers, the extent to which non-Fairtrade farmers lose self-esteem, etc. because they are excluded from Fairtrade, for instance, and there are none attempting to measure any effects on non-Fairtrade farmers in other, poorer, countries. It may be asked whether there are other non-money costs or benefits that might be included in the studies which would give answers less favourable to Fairtrade. Even if twenty or thirty studies which met the criteria could be identified, it would not be possible to generalize from them. The studies are not of randomly selected cooperatives: they are concentrated on better known, more successful and well established ones. There are few which examine the problems of cooperatives introducing Fairtrade or of the least successful quartile.