Do farmers want to produce under Fairtrade conditions?

Global sales of most Fairtrade certified products continue to increase annually. But what about the farmer’s choice? Does he/she prefer producing for domestic markets, or is the advantage of complying to the Fairtrade standards bigger? A team of researchers from the University of Leuven (Belgium) have asked this question to rice farmers in Savalou, Benin, thus filling a gap in studies on Fairtrade.

Western consumers are increasingly buying Fairtrade certified products. They are concerned about the conditions under which food and agricultural commodities are produced, and whether farmers actually benefit from trade. Fairtrade provides a minimum selling price and a social premium to the farmers’ organisations, thereby ensuring long-term trading relationships and improving producers’ capacity. Next to these benefits, Fairtrade also entails requirements on production practices, such as a reduction in fertilizer and pesticides, and on working conditions, such as prohibition of child labour.

Farmers’ access to Fairtrade certification and its impact on their livelihoods have been investigated extensively. Some studies find positive effects while others find small or no effects. Access to Fairtrade contracts is often confined to better-off farmers, as the poorest farmers lack initial capital to apply for certification and are not able to comply with requirements. In addition, many studies have investigated how much Western consumers are willing to pay for Fairtrade products; they find that a significant share of consumers is prepared to pay a higher price.

However, there is one big gap in these studies. The question of whether farmers themselves actually want to produce under Fairtrade conditions has never been asked before. Do the benefits of Fairtrade certification outweigh the costs of requirements? Are there certain aspects of certification that can be adapted towards farmers’ preferences? It is surprising that these questions have not been studied yet, given that certification can become more effective if better knowledge about farmers’ marketing and contract preferences is available. Such insights are valuable to improve the efficiency of certification schemes and to ensure that they are tailored to farmers’ needs.

In our study looked at rice smallholder farmers in the Savalou region in Benin. More specifically, we investigated farmers’ willingness to accept Fairtrade requirements; which requirements form a barrier for adoption; and which benefits are valued by farmers. We compare farmers’ preferences for Fairtrade contracts and combined Fairtrade-Organic contracts (in which they export to the international market) with domestic contract schemes (in which they supply to the local market). The Savalou region is interesting because in 2010 rice farmers have received support from VECO in collaboration with Colruyt Group to set up a Fairtrade certified export chain. The main aim of this project was to give farmers a tangible target to improve the quality of their rice and the governance structure of their organisations. After three years, the export chain was stopped, mainly because European quality standards were met and the rice was able to compete with imported Asian rice. Moreover, the growth in sales volumes in Europe was lower than expected, which made the cost structure not sustainable in the long run.

What did our study conclude? We find that the majority of farmers in Savalou prefer to sell their rice under a contract (via local enterprises) compared to selling it independently on the market. Supplying under a domestic contract scheme to the local market is more attractive than exporting under a Fairtrade contract to the international market, because the local rice value chain involves fewer requirements on farmers’ production practices. At current market prices, farmers are also willing to accept Fairtrade that includes fertiliser and child labour restrictions alongside a social premium. However, they are not willing to accept a combined Fairtrade-Organic contract that completely prohibits chemical input use. To accept this, farmers require significantly higher monetary compensation.

Our findings imply that African food markets are becoming more attractive for smallholder farmers than export markets. Rice contract-farming might be effective to better link farmers to domestic urban markets and upgrade domestic rice value chains in the interest of food security. The findings on Fairtrade-Organic certification imply that a rather large price premium is necessary for farmers to accept organic standards and to make these contracts self-enforcing. This means that adding organic requirements might undermine the adoption and expansion of Fairtrade.

These implications are of course specific for the rice farmers in Savalou. For crops like coffee and cocoa that are less consumed in the local market but rather destined for the international market, Fairtrade might still be a promising avenue for farmers.