Updated: May 2
By ‘Mantsebeng Suzan Maepe (MSc Student, University of Bath)
The fairtrade initiative was born out of the critical need to promote ethical standards in both consumption patterns as well as production under an increasingly unequal global trade and economic market economy. Fairtrade has popularised over the last 30 years. In this piece, we explore the Malawian’s tea and coffee production to test whether or not socially responsible consumption is truly translated into ethical production and can in turn lead to reduced income inequalities. Tea and coffee are increasing global market commodities, and grew from $101.04 billion in 2021 to $110.6 billion in 2022.[1 ]. In Malawi, coffee, sugarcane, tobacco and tea trade accounts for 90% of its exports.
Socially, the fairtrade agreement encourages ethical production means through ensuring that smallholder organizations adhere to rigorous organisational standards. These can sometimes translate to democratic structures that are already? in place, administrative systems, inclusion and participation of the farmers in key decision making. Transparency, for instance, as one of the key ethical principle practices, is required when agreeing to the fairtrade agreement. Transparency encourages accountability in smallholder organizations such as Satemwa and Kasinthula Cane Growers. The Malawian small holder farmers have established different committees to assist in achieving these organisational standards. . These may vary from an audit committee, a revolving fund committee, a community development fund committee of even a field monitoring committee. For example the Satemwa association’s premium funds are managed by a committee or body made up of workers’ representatives. To ensure transparency, the representatives are selected through an election process. The joint body are ￼
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Satemwa tea estates, are found in the Southern part of Malawi in Mulanje and Thyolo district.
The fairtrade premiums are set at US $0.50/kg tea, and $0.20/lb coffee meaning.... Meanwhile, the market prices for the commodities, are at around $2.60/kg tea, and $2/lb coffee. Currently the tea premium is around an extra fifth on top of the market price, and the coffee premium about a tenth. During the Covid-19 pandemic, the market price for coffee was $1.04, while the fairtrade minimum purchase price was $1.40. This implies that the in the midst of fluctuations in the global coffee at the time, the producers within the fairtrade agreement were not as severely impacted as their non-fairtrade counterparts.
In addition, the fairtrade minimum price, allows the producer to cover the costs of sustainable production. In Malawi, long term contracts between the producers and their buyers help small holder farmers to plan and invest in sustainable production, such as the Sukambizi Association Trust tea producers who have a 5-year contract with Lujeri Tea Estates. These long-term contracts as well as pre-financing in some cases, also acts as a safety net during unforeseeable economic downturns such as recessions and the COVID-19 pandemic. Therefore, Fairtrade can have a beneficial and sustainable impact in local trade as it promotes more social and equitable ways of production.
Not only has fairtrade benefitted its participants socially and economically, but also environmentally. Its environmental standards promote friendly farming practices that encourage good land use, maintenance of soil fertility and water resources and minimization of agrochemicals. Through the fairtrade agreement, more farmers are switching to renewable energy sources and are investing in integrated pest management. Malawi has protected the Thyolo and Mulanje mountains, which are subject to de-forestation and encroachment. Local smallholders and a local conservation trust work closely to reduce deforestation and reverse encroachment in the area. In the Kasinthula area, which was characterised by declining soil fertility and a lack of mature trees, 30% of the premium proceeds were used to establish tree nurseries and plant new trees. Fairtrade, therefore helps to promote climate resilient agriculture and protect the environment and biodiversity through its standards and programmes. The fairtrade climate standard addresses the imbalances in the carbon market and helps to ensure that a fair financial return to the producers exists.
Despite gaining praise over the acclaimed benefits, fairtrade is not devoid of weaknesses. Arguably the biggest criticism levelled against fairtrade is how it violates the free market. By setting a price floor above the market price, fairtrade essentially may be seen as contributing to the very principle it advocates for:; fairness. Critics of fairtrade contend that it does not protect the long term interests of the farmers but focuses more on the short term. It achieves this by disincentivising Southern producers to diversify away from low value products into higher return activities. This has been evident in countries like Malawi where agriculture contributes 35% of the GDP and tobacco, tea and sugarcane have been the main agricultural exports since the late 1870s. For a country like Malawi, which ranks among the poorest countries in the world, the heavy reliance on agriculture, which employs over 80% of its population can be detrimental to its economic growth and development. Another worry is that the guaranteed minimum price to producers will not promote quality improvement from the producers.
Research has also countered the benefits of fairtrade to the producers, indicating that contradictions exists between expected outcomes and empirical impact for specific producers and their organizations. Findings of studies in fairtrade production in Nicaragua, assert that when fair trade focuses on small scale producers, the impacts fail to reach the poorest sector of the population such as the coffee plantation workers. The income and working conditions of the workers were also found to not have improved, calling some to question the effectiveness of the fairtrade principles to be actualised. The high certification and audit costs of Fairtrade also limit the number of players within the sector leading to exclusion of some producers. Poor small scale farmers who are not part of cooperatives and lack resources to participate are excluded.
While the literature indicates reasonable evidence that fairtrade is a great catalyst for promoting ethical production, it has also highlighted the weaknesses that still remain a challenge with making fairtrade ethical and fair, especially on the producers’ side. With demand for fair trade products expected to grow as buyers become more aware and knowledgeable, it is recommended that fairtrade undergo a systems change to address some of its existing limitations.
With Special thanks to Dr Aidan Barlow, (SPS, UoBath) for reviewing this work.
Citations  https://www.thebusinessresearchcompany.com/report/coffee-and-tea-global-market-report  https://files.fairtrade.net/publications/2011_TakingRoot_FairtradeInMalawi.pdf  https://www.fairtrade.org.uk/farmers-and-workers/tea/satemwa-tea-estates-ltd-malawi/  https://www.ethicalconsumer.org/food-drink/tea-coffee-certification-schemes https://www.fairtrade.org.uk/Buying-Fairtrade/Coffee/  https://files.fairtrade.net/publications/2011_TakingRoot_FairtradeInMalawi.pdf  https://www.fairtrade.net/issue/climate-change  Fairtrade governance and diversification: The experience of the national smallholder farmers’ association of Malawi  Does Fairtrade make a difference; The case of small coffee producers in Nicaragua  Fairtrade coffee in Nicaragua and Tanzania: a comparison