The Challenges of Fair Trade

The Challenges of Fair Trade Historically, coffee cultivation had brought a positive influence in developing countries to alleviate rural poverty. Paige (1997) and Williams (1994) also claimed that coffee cultivation had enabled households to develop their land holdings in sustainable, high return activity, and gainfully employ their family labor (as cited in Barham, Gitter, Lewis & Weber, 2011, p. 116). However, the global coffee market has fallen into crisis in recent years. A research conducted by Murray, Raynold and Taylor (2003), with a large decline in the coffee employment, many rural households have been forced to abandon traditional farming and adopt new livelihoods. Meanwhile, small scale but growing number of coffee farmers have participated in Fair Trade to try to survive such crisis. But, according to the research published recently, Fair Trade coffee may not only fail to bring the rural poor better life, it may impoverish them. This claim is supported by unbalanced price premium, limited Fair Trade coffee market and lack of Fair Trade knowledge by households. The higher sale price in Fair Trade coffee comparing to the conventional coffee is claimed to be the most direct benefit to individual rural farmers who participate in Fair Trade. As indicated by Barham et al. (2010), Fair Trade coffee growers receive an average US $344 in net cash income per hectare compared with US $192 for conventional growers (p. 120). Yet such premium price provided by the Fair Trade does not cover the cost to produce certified coffee for rural farmers. Weber (2011) states that if the coffee growers want to sell their products through Fair Trade, first they have to be certified (p.109). Fair Trade Foundation requires coffee growers to pay high certification fees which the majority of Third World farmers are too poor to afford. In such cases, these growers are likely try to receive Fair Trade certification through cooperatives, but are required to share their net profit

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