Medium 9781786393050

Fair Trade and Organic Agriculture: A Winning Combination?

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The markets for organic and fair trade certified commodities are growing rapidly, with environmentally sound and more equitable certification systems likely to offer benefits for both small-scale farmers and society at large. Despite much debate about their contribution to sustainability, there has been little scientific analysis, so it is vital to assess if it is technically and economically feasible to meet growing consumer demands regarding food safety, quality and ethics through smallholder and marginal producers. Overall, there is a need to explore the potential of these certification systems as emerging areas in research and development cooperation.Ì_This book is an important read for researchers and students in agricultural and development economics, and it is also a useful resource for policy makers and practitioners involved in organic and fair trade agriculture.

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1: An Overview of Organic Agriculture and Fair Trade Systems

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An Overview of Organic Agriculture and Fair Trade Systems

Priyanka Parvathi* and Hermann Waibel

Institute of Development and Agricultural Economics,

Leibniz University Hannover, Germany

1.1 Introduction

Since the Brundtland Commission coined the term

‘sustainable development’ in its report Our Common Future (Brundtland Commission, 1987), this approach has increasingly gained global prominence. The concept relating to agriculture and rural development has been at the heart of many discussions among supporters and sceptics of sustainability. In this context, eco-friendly and ethical aspects of production like organic agriculture and fair trade have been discussed. Also global awareness concerning economic development, social equity and environmental protection has grown considerably.

In international agricultural debates, certification systems like Fair Trade and organic farming are considered as serving niche markets.

Fair Trade certification is used as a unique selling proposition in markets like coffee, banana, cocoa, mango and traditional handicrafts. Organic certification is more centred on high-value markets like cotton, tea, coffee and spices. In recent years, organic fruit and vegetables have also captured consumer interest in the developed nations. Though extensive agricultural debates on these subjects are lacking, both these certification systems provide a possibility for agriculture

 

2: Organic and Fairtrade Markets at a Glance

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Organic and Fairtrade Markets at a Glance

Julia Lernoud and Helga Willer*

Department of Extension, Training and Communication, Research

Institute of Organic Agriculture (FiBL), Frick, Switzerland

2.1 Introduction

In this chapter, an overview of the global organic and Fairtrade market is presented(1). The data shown here were collected by the Research Institute of Organic Agriculture (Forschungsinstitut für biologischen Landbau (FiBL)) in the framework of its surveys on organic agriculture and Voluntary Sustainability Standards (VSS). The organic data are published annually in the statistical yearbook The World of Organic Agriculture (Willer and Lernoud, 2017)(2) by FiBL together with

­IFOAM – Organics International. The results of the

VSS survey are published in the report The State of Sustainable Markets (Lernoud et al., 2017)(3) produced in cooperation with the International

Trade Centre (ITC) and the International Institute for Sustainable Development (IISD). These efforts are supported by the Swiss State Secretariat for Economic Affairs (SECO). The Fairtrade

 

3: Organic and Fairtrade Production Worldwide

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Organic and Fairtrade Production

Worldwide

Julia Lernoud and Helga Willer*

Department of Extension, Training and Communication,

Research Institute of Organic Agriculture (FiBL), Frick, Switzerland

3.1 Introduction

In this chapter, data on certified organic agriculture and Fairtrade International certified agriculture are presented. For the organic data, the

­results of the 2016 global organic survey, carried out by the Research Institute of Organic Agriculture (FiBL), are used (Willer and Lernoud, 2016).

For Fairtrade, the data as published by Fairtrade

International are shown (Fairtrade International,

2015).(1) Unless otherwise stated, the source of the data is the above-mentioned publications from

FiBL and Fairtrade International. For this chapter, we focus on Africa, Asia and Latin America. However, an overview of the global picture of the organic and the Fairtrade sector is also provided.

For the retail sales, 2015 data were available and were used in this chapter. However, for the other indicators covered in this chapter

 

4: Evolution of Producer Organizations in Fair Trade Coffee Certification

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Evolution of Producer Organizations in Fair Trade Coffee Certification

Rene T. Capote-Fuentes1*, Ulrike Grote2, Lee Byers3 and Till Stellmacher4

Coffee, Global Product Management, Fairtrade International, Bonn, Germany;

2

Institute for Environmental Economics and World Trade, Leibniz University

Hannover, Germany; 3Coffee and Tea, Global Product Management,

Fairtrade International, Bonn, Germany; 4Center for Development Research (ZEF),

University of Bonn, Germany

1

4.1 Introduction

Fair Trade is well known as an international certification system in the context of the global

Fair Trade movement. Fairtrade International has the vision of a world in which all small producers and workers can enjoy secure and sustainable livelihoods (Raynolds and Bennett, 2015;

Fairtrade International, 2016a). One of its best-­ known features in product categories such as coffee has to do with providing stable prices to producer organizations of small-scale farmers in developing countries by guaranteeing a minimum price in case the world market price falls below a certain sustainable level. In addition, it provides a price premium that aims to support investments in producers’ businesses, livelihoods and communities. The international Fair Trade certification system established its global office in Bonn,

 

5: Methodological Toolbox

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Methodological Toolbox

Hermann Waibel and Priyanka Parvathi*

Institute of Development and Agricultural Economics, Leibniz University

Hannover, Germany

5.1 Introduction

Rigorous scientific studies on organic and Fair

Trade agriculture can be undertaken with standard economic methodologies such as adoption studies, impact assessment, cost–benefit analysis and environmental economic analysis. However, organic and Fair Trade agriculture is expected to have effects that cannot be fully captured by standard economic analysis that is focused on economic efficiency criteria. Organic products address the health and environmental concerns of consumers and therefore environmental sustainability and health economics should be

­incorporated in the analysis. Fair Trade incorporates a pro-poor social premium in the price of their products and so distributional aspects with regards to wealth and access to resources should be included in the study. Methods that go beyond neoclassic welfare analysis, like assessment of indicators for ecological and social sustainability, poverty reduction and long-term wealth effects, are necessary tools that complement

 

6: Consumer Behaviour in the Organic and Fair Trade Food Market in Europe

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Consumer Behaviour in the Organic and Fair Trade Food Market in Europe

Katrin Zander1*, Rosa Schleenbecker2 and Ulrich Hamm2

Thünen Institute of Market Analysis, Federal Research Institute for Rural Areas,

Forestry and Fisheries, Braunschweig, Germany; 2Department of Agricultural and

Food Marketing, University of Kassel, Germany

1

6.1 Introduction

The production of organic and Fair Trade products is usually aligned with higher production costs, which have to be covered somewhere in the supply chain. From earlier research it is well known that in Western markets consumer segments exist that are willing to ask for organic and Fair Trade products even if they are more expensive (Krystallis et al., 2006; Urena et al.,

2008; Corsi and Novelli, 2011; Liljenstolpe, 2011;

­Zander et al., 2013; Rödiger and Hamm, 2015).

Organic production and Fair Trade are process qualities that are not verifiable by consumers, either before or after purchase and consumption.

 

7: Multiple Certifications and Consumer Purchase Decisions: a Case Study of Willingness to Pay for Coffee in Germany

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Multiple Certifications and Consumer

Purchase Decisions: a Case Study of

Willingness to Pay for Coffee in Germany

Arnab K. Basu1*, Ulrike Grote2, Robert Hicks3 and Till Stellmacher4

Charles H. Dyson School of Applied Economics and Management, Cornell

University, Ithaca, New York, USA; 2Institute for Environmental Economics and World Trade, Leibniz University Hannover, Germany; 3Department of

Economics, College of William and Mary, Williamsburg, Virginia, USA;

4

Center for Development Research (ZEF), University of Bonn, Germany

1

7.1 Introduction

Coffee produced in developing countries is sold under a variety of labels in the consumer markets of developed countries, the most prominent being

Fair Trade. In addition to Fair Trade coffee, labels such as ‘Organic’, ‘Shade Grown’ and ‘Wild Grown’ coffee are also becoming popular amongst consumers in developed countries (Ponte, 2002).

­Labelling of coffee (as well as a variety of other products) under the Fair Trade umbrella aims to target two issues simultaneously: (i) to provide an income guarantee that acts as an insurance mechanism for poor farmers in developing countries who undertake production in a socially (for instance, no child labour in production) and

 

8: Consumers’ Information Search and Preferences for Fair Trade Coffee: a Case Study from Germany

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Consumers’ Information Search and Preferences for Fair Trade Coffee: a Case Study from Germany

Rosa Schleenbecker1*, Katrin Zander2 and Ulrich Hamm1

Department of Agricultural and Food Marketing, University of Kassel, Germany;

2

Thünen Institute of Market Analysis, Federal Research Institute for Rural Areas,

Forestry and Fisheries, Braunschweig, Germany

1

8.1 Introduction

The aim of this case study is to analyse

­consumers’ preferences as reflected in their information search when shopping for Fair Trade products. Information and its credibility play a crucial role since Fair Trade and organic products are, as described in Chapter 6, so-called credence goods (e.g. Padel and Foster, 2005; Janssen and Hamm, 2012). Information provided by food suppliers has to match consumers’ information needs in order to reduce the feeling of an information overload (Hwang and Lin, 1999; Verbeke,

2005). Knowing about consumers’ knowledge, motives and information search behaviour gives marketers the basis for designing effective communication measures.

 

9: Gender-equality Chocolate: a Missing Market?

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Gender-equality Chocolate: a Missing Market?

Casey Goldvale1* and Romane Viennet2

Georgetown University, Washington, DC, USA; 2Cornell University, Ithaca,

New York and Sciences Po Paris, France

1

9.1 Introduction

Since the institutionalization of the Fair Trade movement, a body of literature has grown to evaluate the certification programme’s success.

Recently, the literature has become so well explored that academics and non-governmental organizations (NGOs) alike have begun delving deeper into the supply side of value chains, finding which specific tenets of the Fair Trade social justice principles are being met and which are left unaddressed (Greig, 2006; Boersma, 2009;

Bacon, 2010; Valkila et al., 2010). However, from meta-analysis of the existing literature, researchers have not handled ethical consumption with the level of nuanced critique applied to Fair Trade production (Stolle et  al., 2005; Andorfer and

Liebe, 2012).

 

10: Fair Trade Certification on Plantations: Household Wealth and Welfare Implications for Hired Labour

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Fair Trade Certification on Plantations:

Household Wealth and Welfare

Implications for Hired Labour

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Katharina Krumbiegel* and Meike Wollni

University of Goettingen, Department of Agricultural Economics and Rural Development, Germany

10.1 Introduction

10.1.1  Fair Trade certified plantation agriculture

About 1.3 billion workers are employed in the agricultural sector worldwide, of which about

500 million work as casual, temporary or permanent workers on plantations. Hired labour on plantations or in factories are considered one of the most vulnerable groups in the global trade system. They are often exposed to discrimination, difficult working conditions, low wages and lack of bargaining opportunities. In recent years, however, consumers have become increasingly aware of unfavourable employment conditions in the food producing industry. This awareness has been mirrored by the rise of private food and sustainability standards, such as Fair Trade.

 

11: Assessing the Benefits of Organic and Fair Trade Production for Small-scale Farmers in Asia

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Assessing the Benefits of Organic and Fair Trade Production for Small-scale

Farmers in Asia

Yuhui Qiao*

College of Resources and Environmental Sciences, China Agricultural University,

Beijing, China

Organic agriculture and Fair Trade have the

­potential to provide improved livelihood opportunities, increased income and social benefits for small-scale farmers. The combination has thus become a popular strategy to reduce poverty in many developing countries. Cases of small-scale farmers who have both organic and Fair Trade certification in Asia will be analysed and summarized in this chapter.

11.1  Combination and

­ omplementarity of Organic and

C

Fair Trade Production: from Theory to Practice

Small-scale farmers in developing countries of

Asia, Latin America and Africa produce many bulk agricultural commodities. Most of them depend on agriculture as their main income

­ source, but sometimes they are faced with problems of low productivity, low prices received for their products and degradation of agroecological conditions. The majority of farmers in poverty worldwide depend on this sector for their livelihood; roughly 730 million are employed in agriculture in Asia, mostly as informal workers

 

12: The Impact of Certification on Material Input Costs in India

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The Impact of Certification on Material Input Costs in India

Priyanka Parvathi* and Hermann Waibel

Institute of Development and Agricultural Economics, Leibniz University

Hannover, Germany

12.1 Introduction

There has been an upsurge in the growth of organic and Fair Trade markets as elaborated in

Chapters 2 and 3. Also, these systems have resulted in positive impacts on rural smallholder producer livelihoods as discussed in many studies (e.g. Bacon, 2005; Kleemann and Abdulai,

2013; Parvathi and Waibel, 2015b). However, organic farming is widely criticized for low yields

(de Ponti et al., 2012).

Organic yields are largely reliant on quantity and quality of inputs like manure. The availability and economic accessibility of non-chemical inputs are vital for maintaining and increasing yields in organic agriculture (Brunelle et al., 2015).

While these non-chemical inputs are perceived to be cheaper (Seufert et al., 2012), nevertheless studies have pointed out that they can also be expensive, constraining especially organic smallholder farmers from using them adequately and efficiently (e.g. Valkila, 2009; Beuchelt and Zeller,

 

13: Dovetailing Fair Trade and Organic Agro-certifications in Latin America: How the Twins Can Meet?

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Dovetailing Fair Trade and Organic Agro-certifications in Latin

America: How the Twins Can Meet?

Ricardo Fort1* and Ruerd Ruben2

GRADE Group for the Analysis of Development, Lima, Peru;

2

Wageningen Economic Research, Wageningen University and

Research Centre, The Netherlands

1

13.1 Introduction

This chapter provides a concise overview of the historical evolution and recent trends in Fair

Trade (FT) and organic certifications for producer organizations in Latin America. Since major certified agro-commodities – starting with coffee and bananas – are produced and marketed from

Latin American (and some Caribbean) countries, important lessons can be drawn with respect to the potential impact for smallholder farmers and the required modifications of fair and sustainable/organic value chains that are required in order to adapt to strongly modifying production and trade conditions.

We start by outlining an FT theory of change and identifying the additional mechanisms by which organic certification can alter or complement its effects on farmers’ welfare. Particular attention is given to direct impact channels (raising incomes through guaranteed minimum prices) and indirect impact channels

 

14: Certifying Coffee Cooperatives in Ethiopia, India and Nicaragua: How Far Do Small-scale Coffee Producers Benefit?

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Certifying Coffee Cooperatives in Ethiopia, India and Nicaragua: How Far

Do Small-scale Coffee Producers Benefit?

Pradyot Ranjan Jena1,2*, Ulrike Grote2 and Till Stellmacher3

School of Management, National Institute of Technology, Karnataka, India; 2Institute for Environmental Economics and World Trade, Leibniz University Hannover,

Germany; 3Center for Development Research (ZEF), University of Bonn, Germany

1

14.1 Introduction

Certification in general and coffee certification in particular are fuelled by consumer sensibility and awareness of what products they are buying and about the circumstances under which these products have been produced, processed and marketed. Increasingly consumers are willing to pay higher prices for products that meet certain required attributes. This movement has paved the way for bigger market shares of certified coffee in the major consuming countries and also created new opportunities for smallholder coffee producers in many developing countries to reap socio-economic benefits by participating in certified marketing channels.

 

15: The Relevance of Reliability, Reputation and Respect for Producer-level Benefits of Organic and Fair Trade Certification for Smallholders

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The Relevance of Reliability,

Reputation and Respect for Producer-level

Benefits of Organic and Fair Trade

Certification for Smallholders

Linda Kleemann*

Research Area Poverty Reduction, Equity and Development, Kiel Institute for the World Economy

15.1 Introduction

Access to international agricultural markets is often linked to certification requirements.

For horticultural products, certification with

GlobalGAP is a market entry condition for conventional food and organic or Fair Trade certification is required for the high-value organic food markets. Retailers normally require that their suppliers adhere to one or more such standards

(Henson et al., 2011). The literature shows that this can be seen both as an entry barrier for smallholders (Schuster and Maertens, 2013) and as an agent for change and innovation (Warning and Key, 2002; Maertens and Swinnen, 2009;

Miyata et al., 2009; ITC, 2011; Bellemare, 2012;

 

16: The Way Forward

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The Way Forward

Priyanka Parvathi1*, Ulrike Grote2 and Hermann Waibel1

Institute of Development and Agricultural Economics, Leibniz University

­Hannover, Germany; 2Institute for Environmental Economics and World Trade,

Leibniz University Hannover, Germany

1

Fair Trade and organic markets have both steadily grown in recent decades but are they considered and perceived as a winning combination? This book has presented case studies on consumers and producers of both Fair Trade and organic products. Some major outcomes and suggestions derive from these case studies but the way forward is also determined by further research needs which will have to be addressed in the f­ uture.

16.1 Consumers

The most prominent question is whether consumers’ demand for double certified products will increase in future. So far, a growing share of products is certified according to both Fair Trade and organic standards. In the period 2011–2014, around 35% of the global Fair Trade c­ ertified production volume was also certified ­organic. Various reasons apply why consumers opt for these goods, which are subsumed as ‘ethical products’ and which usually are more expensive. Purchase reasons have been found to be both ­hedonic/ egoistic ones, such as taste, health, GMO-free, as well as altruistic reasons such as social and

 

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