Is Fairtrade a potential alternative solution to poverty alleviation for small-scale producers and their communities based on the principle of trade not aid?
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Is Fairtrade a potential alternative solution to poverty alleviation for small-scale producers and their communities based on the principle of trade not aid? This is a look into Fairtrade as a model and how it is currently working in the Swaziland sugar industry. This is currently a pilot test in Swaziland and the initiative was undertaken by the Swaziland Sugar Association (SSA).
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Is Fairtrade a potential alternative solution to poverty alleviation for small-scale producers and their communities based on the principle of trade not aid?
- 1. Marisa da Silva marisa@infanta.co.za 7 November 2013
- 2. Trade NOT aid According to Johannesen and Wilhite (2010): ◦ Fairtrade is a market- based approach to social and environmental development for producers through the use of standards and a price floor Producers Consumers
- 4. Holistic View ◦ Primary: Fairtrade conferences and conducting semi- structured interviews ◦ Secondary: Impact Studies, Case Studies and existing journals Used Yin for case study guidelines Case studies are designed to bring out the details ◦ Multiple data ◦ Practical implications Single Case study
- 6. Sugar = substantial contributor to the GDP of Swaziland Commencement in 2008 but only certified in 2012 Why Fairtrade is needed in the sugar sector? Price volatility Climate change Competition
- 7. The Two Main Economic Benefits of Fairtrade 1.Guarenteed Fairtrade Minimum Price Aims to ensure that producers can cover their average costs of sustainable production Acts as a safety net
- 8. The Two Main Economic Benefits of Fairtrade 1.Guarenteed Fairtrade Minimum Price
- 9. The Two Main Economic Benefits of Fairtrade 1.Guarenteed Fairtrade Minimum Price Agreement Reforms Volatile Industries Sell Premium Products NO Minimum Price
- 10. Premium was used primarily to cover the costs of certification 3 conditions Social Socio- Economic Environmental 2. Premium Benefit
- 11. According to Fairtrade Labelling Organisation (2013): A price that covers the cost of production A social premium Contracts that allow long-term production planning Long-term trade relations Environmental standards promoting best agricultural practice A democratic decision-making Forced labour and child labour are prohibited. 3. Standards and Certifications Producer organisations are paid a Fairtrade Premium of $60 per tonne
- 12. Fundamental Element Producers have an equal say Democratic decision-making 4. Empowerment
- 13. More ethical decision-making Greater transparency between producers and consumers Create awareness 1. Marketing and Strategy
- 14. Selling into conventional markets Consumer guarantee ◦ Quality Brand mark is crucial 2. Mainstreaming
- 15. Supply Demand 55000 tonnes 10000 tonnes 2. Mainstreaming initiative with a risk of ◦ Co-option ◦ Dilution ◦ “fair-washing” 3. Higher input costs to adhere to certification requirements 4. Low level of education 1.
- 16. 1.231 million people ◦ 40% of Swazis live below the poverty line First year of certification, Swazilands sales of 10000 tonnes generated an annual premium of US $600 000. With the balance of 45000 tonnes of Fairtrade sugar being sold with a premium of US $60 into Fairtrade markets, ◦ this would have the result of US $2.7 million/year being available to the Fairtrade producers.
- 17. 1.231 million people ◦ 40% of Swazis live below the poverty line First year of certification, Swazilands sales of 10000 tonnes generated an annual premium of US $600 000. With the balance of 45000 tonnes of Fairtrade sugar being sold with a premium of US $60 into Fairtrade markets, ◦ this would have the result of US $2.7 million/year being available to the Fairtrade producers. Empowerment Better Working Conditions Premiums Relationships
- 18. 1.231 million people ◦ 40% of Swazis live below the poverty line First year of certification, Swazilands sales of 10000 tonnes generated an annual premium of US $600 000. With the balance of 45000 tonnes of Fairtrade sugar being sold with a premium of US $60 into Fairtrade markets, ◦ this would have the result of US $2.7 million/year being available to the Fairtrade producers. Empowerment Better Working Conditions Premiums Relationships What started with humble beginnings in assisting a few small farmers may well be one of the major answers in upliftment of communities and the alleviation of poverty