When Fairtrade certification launched more than two decades ago, our objective was to ensure that producers received a fair price for their produce, one that covered the average cost of sustainable production.

We have made significant progress towards this goal over the past twenty years, but our ambition has progressed too. Fairtrade now aims to move beyond ensuring fairer prices for Fairtrade commodities sold under Fairtrade terms. We now seek to make a step-change in our impact by enabling Fairtrade-certified producer organisations to secure the revenues they need for workers to be paid a living wage and for farmers to earn a living income.

In order to achieve these ambitious objectives, we are building a greater understanding of how Fairtrade can help producers improve their businesses, and what factors influence their capacity to earn living incomes and wages. Based on the research we are undertaking, we are building strategies, devising interventions and developing partnerships in order to benefit producers around the world.

By conducting income baseline studies and comparing them with living income benchmarks, Fairtrade can objectively define the price levels needed to bridge the gap. Our Theory of Change is a holistic response to the needs of workers and producers and includes implementing practices to optimise yields and cost efficiency; sustainable pricing for Fairtrade products; and increasing global sales so more farmers can sell a higher percentage of their products under Fairtrade terms. Without an increase in market demand producers can find themselves selling only small proportions of their produce under the Fairtrade label, while receiving much lower prices for their non-Fairtrade produce. Consequently it can be challenging for smallholder producers to support their families while still trying to invest in their farms or to pay a living wage to their workers.

Towards A Living Income for Farmers

One of Fairtrade’s major ambitions is to see small-scale farmers earning sufficient income for a dignified and sustainable standard of living for their families. In the past year Fairtrade has been developing a strategic framework for living income based on research findings, data analysis and consultation with Small Producer Organisations (SPOs) themselves.

As part of this work Fairtrade, in partnership with True Price, successfully completed a first pilot study to assess Fairtrade coffee farmers’ income. The report, which was published in June 2017, is one of the most detailed studies into coffee farmer income to date. Covering farmers in Rwanda, Tanzania, Uganda, Kenya, India, Indonesia and Vietnam, the research sheds light on how much coffee farmers earn, and Fairtrade’s potential impact on their household income.

This pilot study and others that are underway will inform our Living Income Strategy, which will include a calculation model to determine living income reference prices, along with an implementation roadmap. What is evident from the findings to date is that the price is just one of the factors that contribute to a living income, along with market access, volume sales and yield improvements – for example – and that all factors need to be addressed together. Other activities in the Living Income Strategy will include sustainable price setting, market development, yield and farm efficiency improvements, crop diversification, and organisational strengthening.

Towards A Living Wage for Workers

Landless workers are generally the most vulnerable actors in global supply chains. Employed by farm or factory owners who can themselves struggle to make ends meet, hired workers’ pay is often far from a living wage that would enable them to comfortably satisfy their needs and additionally save a small amount for emergencies.

In our work to develop living wage benchmarks, Fairtrade International has been applying the Anker methodology, a rigorous method endorsed by the Global Living Wage Coalition and Fairtrade’s Standard Committee, to ensure the application of best practice. Accordingly, consultants trained in using the methodology are being commissioned to calculate living wages for regions where Fairtrade has certified hired labour organisations.

So far, the first ten benchmarks have been finalised and a further four are in progress – as is further research (i.e., studies completed by Ergon Associates and True Cost). The data collected offers a strong empirical basis to develop a range of interventions for wage improvement in origins of Fairtrade products.

We are now working to create a direct link between Fairtrade sales levels and improved wages and incomes. Ideally, the Living Wage benchmarks will be reached, but – as a minimum – we expect wages to at least improve in proportion to the volume of sales on Fairtrade farms and plantations.

Fairtrade International is committed to delivering tangible benefits for workers. This will include the revision of the Fairtrade standards where necessary, the rollout of training programmes and the initiation of dialogue with employers, unions and consumers. Indeed, given our wide network of stakeholder relationships, we believe we are well placed to exercise the leadership required to progress this programme and deliver the necessary outcomes.

More information on Fairtrade’s work on living wages as well as all the benchmarks can be found on the Fairtrade International website.

What's next?

  • Establish living income and productivity benchmarks
  • Extend the pilot study on the assessment of coffee producer household income to other regions (particularly Latin America) and other products
  • Grow and develop partnerships with private actors, governmental agencies and trade unions to implement living income and living wage interventions
  • Carry out Living Wage pilots to test value transfer mechanisms

Improving wages for Eastern African Flower Workers +