Fair Trade: En vej ud af fattigdom?

Linette Breinholm

Student thesis: Master thesis

Abstract

Central America is characterized by poverty and inequality due to a historically long and unequal distribution of land and wealth, lack of infrastructure, lack of rights for the poor and frequent natural disasters. Most of the coffee farmers in Central America’s rural areas suffer from poverty and poor living conditions. This is due to low and fluctuating profits from the coffee production, constantly increasing consumption rates, debt and overproduction. Fair Trade aims to improve farmers’ conditions in the world’s poorest countries by starting a long-term development. Fair Trade helps farmers with a guaranteed minimum price for their products, training, bonus for local projects and help to access the global market and better cooperation with the international buyer. The purpose of this thesis is to clarify the Central American coffee farmers’ conditions and find out why they are poor as well as highlightning Fair Trades advantages, disadvantages, opportunities and constraints in order to find out what could usefully be addressed in the future of Fair Trades work to improve farmers’ conditions and include even more Central American coffee farmers in the scheme. Coffee farmers in Central America are the first and the smallest part of the coffee supply chain, where major international companies maintain the power and the profit on coffee. Peasants’ position in the supply chain has an impact on their opportunities and living conditions in general, therefore I have chosen to examine the issues, from a theoretical perspective of the Global Value Chain theory. The thesis is based on secondary data in the form of existing studies, field studies and other material dealing with the poor Central American coffee farmers’ conditions and Fair Trade’s work and opportunities. The thesis consists of both quantitative and qualitative data and seeks to provide a comprehensive and updated review of the issues around the coffee farmers’ conditions and Fair Trade’s future opportunities to improve these people’s living conditions. My main findings show that the greatest advantages of being a Fair Trade farmer are being part of cooperatives, where farmers are involved in a larger part of the production, transport and direct sales to the buyer. In addition, the farmers involved in Fair Trade benefit in form of a guaranteed minimum price for the coffee which has great importance in times of crisis, bonuses for various projects that have a significant impact on the local area as well as on the peasants options with improved infrastructure and education. Furthermore, these peasants have access to the alternative market, a better network and better cooperation with the buyer. But Fair Trade also has different disadvantages. The certification is costly and burdensome for the peasants and the guaranteed minimum wage has unfortunately not been able to keep up with the constantly increasing consumption rates. Many farmers do not know what it means to be in the Fair Trade corporation and even though the supply chain for Fair Trade coffee farmers are shorter than for regular coffee farmers in producing countries, the chain is still long and it is still multinational companies in the purchasing countries who maintain the influence, power and profit. There is even more parts in the chain in the countries of the north in terms of control and marketing. My conclusion on this thesis is that Fair Trade can not solve the overall problem of poverty in Central America but they can give farmers better conditions and help to get into the specialty market. As the demand for Fair Trade coffee is still relatively small, there are limits of how many farmers can participate in the Fair Trade system without causing worse conditions and lower benefits for the Fair Trade coffee farmers.

EducationsMA in International Business Communication (Intercultural Marketing), (Graduate Programme) Final Thesis
LanguageDanish
Publication date2012
Number of pages76