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Assessing the potential of fair trade for poverty reduction and conflict prevention:
A case study of Bolivian coffee producers


Sandra Imhof and Andrew Lee

June 2007

SARPN acknowledges Eldis as a source of this document: www.eldis.org
[Download complete version - 175Kb ~ 1 min (24 pages)]     [ Share with a friend  ]

Introduction

Fair Trade is a well-known concept that intends to improve the livelihoods of small-scale producers in developing countries. Market growth in Fair Trade has been very impressive since the 1990s and European markets have shown steady expansion in Fair Trade products, albeit with demand for certain products seemingly stagnating.

Switzerland is a major market for many Fair Trade products. On a per-capita basis, it commands the highest market share in the world while Fair Trade coffee has a market share of 6%, the second highest in the world behind the United Kingdom.1 For many years, the Swiss State Secretariat for Economic Affairs (seco) has been promoting and supporting the Fair Trade concept. By implementing its strategy of enabling producers in developing countries to enter market niches, it has led from the front by promoting production quality as well as high social and environmental standards. In seco’s own words, Fair Trade has been a success story as a result of its impressive growth rates (seco 2005).

Fair Trade principles are increasingly being mainstreamed into the coffee market controlled by the private sector, because consumer demand for coffee produced under socially and environmentally friendly conditions has been rising steadily in recent years. Multinational corporations such as Starbucks and Nestlй increasingly market fairly traded coffee. Although they have preferred to develop their own labels and initiatives instead of using established Fair Trade channels, this is doubtlessly an interesting development.2

This study will address the central question of whether Fair Trade – and in particular Fair Trade coffee – has the potential to be used as a comprehensive tool for poverty reduction. More specifically, it will:

  • assess the impact of Fair Trade on small-scale coffee producers in Bolivia
  • analyse the impact of Fair Trade on producers not participating in Fair Trade
  • explore the Fair Trade-conflict nexus by hypothesising a potential positive impact of Fair Trade on conflict prevention.
This document is a shortened version of the original. After this brief introduction, Chapter 2 provides background information: it first gives a working definition of Fair Trade, then briefly presents the characteristics of the international and local coffee market and finally highlights important economic indicators for Bolivia. Chapter 3 then presents the underlying theoretical framework; firstly, on Fair Trade’s impact on income distribution and secondly, on Fair Trade’s potential for poverty reduction and, as a result thereof, on conflict prevention. Chapter 4 then summarises the main results from the analysis in the field while Chapter 5 offers some concluding thoughts.


Footnotes:
  1. http://www.fairtrade.net/fileadmin/user_upload/content/FairTradeinEurope2005.pdf
  2. While these labels do not seem different at first sight, it would be interesting to assess their effectiveness and differences as well as their impact on consumers. This however will not be the major focus of this study. The Common Code for the Coffee Community (4C) is one such example where standards are very similar to the ones developed by FLO, ‘covering 30 social, environmental and economic principles in the green coffee supply chain’ (http://www.sustainable-coffee.net)


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