Study reveals Fairtrade-certified organisations fared better through the pandemic

A new report published by Fairtrade International has confirmed that access to better prices, credit, and financial stability significantly increased the resilience of Fairtrade-certified organisations amid the COVID-19 pandemic, enabling them to better withstand the global crisis and reduce its impact on their farmer members and workers.

The study, titled Fairtrade certification and producer resilience in times of crises and conducted by Scio Network and Athena Infonomics, examined the experiences of Fairtrade and non-Fairtrade coffee, banana and flower producers in Indonesia, Peru, and Kenya, finding that households belonging to Fairtrade-certified producer organisations were 12% less likely to report “a high or very high impact” from COVID-19, as compared to non-Fairtrade households.

“Our research shows that Fairtrade certification increased the social well-being of households by up to 20%, as opposed to no or alternative certification,” said Manuela Günther, lead on monitoring and impact evaluation at Scio Network and the study’s research manager. “Households related to Fairtrade certified producer organisations also had a higher economic resilience, which helped them to better weather the impact of COVID-19 and will contribute to greater resilience in the face of future crises as well.

In preparing the study, the researchers developed a resilience index based on the United Nations Food and Agriculture Organization (FAO), which includes four criteria, covering social wellbeing, economic resilience, good governance, and environmental integrity. Households from Fairtrade certified producers scored 9% higher on the overall index than non-certified counterparts (64% compared to 55%). On the dimension of social wellbeing – which includes elements such as food and nutrition security and children’s school attendance – Fairtrade certified producers scored 18% higher. Economic resilience – which includes financial literacy, bookkeeping, insurance, and savings – received a score of 6% higher. Good governance and environmental integrity scores, on the other hand, were more similar between Fairtrade and non-Fairtrade households.

“Although good governance and environmental integrity are very important in their own right, during the pandemic we found that aspects of social wellbeing, such as income diversification and food and nutrition security, and economic resilience, meaning access to credit for producer organisations and savings among households, were associated with a lower impact from COVID-19,” noted Bilal Afroz, senior consultant at Athena Infonomics and co-author of the report.

“Our study is one of the first to examine the key elements that empowered some producer organisations and farmer and worker households to get through the most intense period of COVID-19 in better shape than others,” Mr. Afroz added.

In analysing different product supply chains, Kenyan flower workers’ households belonging to Fairtrade producer organisations scored the highest with a resilience score of 70%, followed by Indonesian coffee farming households (67%), and Peruvian banana farming households (53%). In each case, these scores are higher than those of the non-Fairtrade counterparts, with the greatest difference between certified and non-certified farmers observed in coffee farmers. Fairtrade certified households in coffee value chains, in fact, score a full 13% points higher in the resilience metrics, compared to non-Fairtrade households.

The study also identifies key factors that relieved some of the burden of the pandemic on Fairtrade-certified organisations and households, including whether an organisation had pre-existing financial sustainability and access to credit; whether it received support from Fairtrade’s €15 million COVID-19 Relief and Resilience Fund; and whether it delivered income diversification and food security initiatives for its members and workers.

The report, commissioned by Fairtrade International through funding from the German Ministry for Economic Development Cooperation (BMZ) and the Swiss State Secretariat for Economic Affairs (SECO), echoes the findings from a similar Fairtrade study released in June 2022 on producer resilience. Key findings are being discussed at a virtual panel event on 18 October.

“We know that with climate change and current global political and economic instability, farmers and workers will face increasing challenges in the near future,” said Dr. Arisbe Mendoza, director of global impact at Fairtrade International. “That’s why we call on all actors to ensure that farmers continue to receive emergency cash contributions to tackle urgent health and safety needs and losses and damages, fairer prices through long-term trade relationships so they can build financial stability, and access to credit and income so that they are empowered to invest in a more sustainable and diverse mix of income streams.”

“The conclusions from this report are clear,” Dr. Mendoza added. “And we urge everyone – from companies and governments to civil society actors and beyond – to read this report, understand its lessons and apply them immediately, so that agricultural households and communities can strengthen their resilience to face the expected growth in shocks and stresses set to come.”

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