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Harvesting Hope

Can global certifications like Fairtrade help the agricultural poor reap the benefits of globalized trade?

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To help the agricultural poor, initiatives like Fairtrade need to focus on to local institutions

Correction appended below

Being a consumer today is a fraught enterprise. The marketplace is no longer simply a venue for satisfying individual preferences. It is now an arena for expressing social and political identity, and even a mechanism for addressing some of consumerism’s less desirable side effects—from environmental degradation to exploitative labor practices. But consumerism’s newfound potential has bred new anxieties. The world’s shoppers increasingly feel pressure to inform themselves about how the goods they buy are produced and to take action and create change.

Agriculture, which accounted for 35 percent of global employment in 2009 and 11 percent of the average total anthropogenic greenhouse gas emissions produced between 2001 and 2010, has been under particularly close scrutiny. News stories, books and films have increasingly drawn attention to cases of environmental and social exploitation in the global agricultural system, prompting consumers to contemplate the fairness and sustainability of the opaque industries that deliver so much of their food, fiber and fuel; to wonder whether they are unwittingly complicit in these abuses; and to cast about for the appropriate reaction.

They don’t have to cast very far. Almost daily, they are encouraged to shop better—often by the purveyors of the very goods that made them anxious in the first place—to vote with their forks and wallets, and to do right by the planet and the poor with their purchases.

A 2012 ad for Rainforest Alliance–certified products illustrates this imperative perfectly. The ad, which racked up over 5 million views on YouTube and nearly a dozen awards, assures viewers that they are good people—the kind that recycle, drive hybrid cars, always send Mother’s Day cards, and are wracked by guilt when they learn the facts about global deforestation. Yet, after illustrating the folly of moving to the rainforest to wage a revolutionary battle against the corporate forces behind this environmental calamity, the ad invites viewers to instead save the rainforests by buying Rainforest Alliance–certified products. By simply looking for the Alliance’s frog logo on everyday consumer products, viewers “don’t have to do the things [they] shouldn’t do anyway.”

Global certifications, like those offered by the Rainforest Alliance, promise anxious, choice-addled consumers an easy fix. These certifications claim to offer objective information about how commodities are produced, and whether industries are respecting basic standards, with the intention of functioning as a mechanism for consumers to advance social and environmental causes via the market. For the global companies adopting these certifications, they offer a way to “do well by doing good,” while inoculating themselves against human rights and environmental scandals that can destroy a brand’s reputation.

Players in the agrifood sector have developed a wide variety of these schemes. Multinational supermarket retailers, for example, have established the global Good Agricultural Practices (GLOBALG.A.P.) certification system to ensure that their suppliers meet a wide-ranging set of stringent quality, safety, environmental, and labor standards. Multistakeholder groups comprising agribusiness and global environmental NGOs have established roundtables to certify that the production processes for a growing number of globally traded commodities—including forest products, seafood, palm oil, soy, and sugar—meet social and environmental standards. The principles and standards established by the International Federation of Organic Agriculture Movements (IFOAM) are the basis for the global harmonization of international organic certification standards. Fairtrade International sets standards for determining whether products have been sourced from producer groups under fair conditions. Indeed, Fairtrade-certified buyers must pay a guaranteed minimum price for the commodities they purchase from Fairtrade farmers, in addition to paying a “social premium” to farmer organizations to support local economic and social development.

While supporters of attempts to introduce voluntary, market-driven regulations into the global agrifood economy argue that they promote market-driven environmental sustainability and social justice, critics argue that they are ultimately complicit in corporate greenwashing and fairwashing. Yet both camps have kept their focus on developments at the global level— global rules, global auditing and global markets. Their assumption is that the success or failure of initiatives like Fairtrade certification rests primarily on the representativeness or exclusiveness of their rules-making processes, the strength or weakness of their enforcement mechanisms, and the dynamism or sluggishness of global consumer demand for certified products.

While the global features—and consequences—of these schemes are clearly a meaningful subject for debate, the dispute over the utility of conscientious consumption and private certification as a means of addressing environmental and social issues has largely sidestepped both the impact of global certifications on local institutions and the role of these institutions in achieving social and environmental sustainability in agriculture. In part, this is because global certifications have developed in response to a perceived “governance gap.” Scholars use this term to describe the regulatory gap that emerged as production, trade and the operations of multinational companies began to transcend the borders within which sovereign governments could compel firms to respect national law. In response to this gap, social movements and consumers demanded social, environmental and product quality and safety standards for goods produced and traded overseas. These movements took aim not at governments but at the private sector, and progressively shifted from a strategy of confrontation to one of engagement, focusing on market-driven certification as a mechanism that played well with the profit motive of global corporations.

Touching Down

While conscientious consumerism is laudable, consumer action alone is not enough to bring about real change. Much of the change consumers wish to see depends on forces and institutions local to the highly varied terrain where global initiatives such as Fairtrade operate—the production sites that are the first link in today’s global value chains.

In our recently published book, Looking Behind the Label: Global Industries and the Conscientious Consumer, my collaborators and I demonstrate how global private regulation functions as an additional layer to existing and evolving national and local institutional structures that comprise diverse legal regimes, state organizations and business cultures. By revealing that certification outcomes are contingent on how private global regulations interact with and reshape the local institutional contexts in which they operate, this insight complicates the arguments made by supporters of private certifications and critics alike.

My own research on organic and fair-trade certification and small farmer development in Latin America suggests that farmer organizations have come to operate as important local mediators of the forces driving globalization in agriculture. Farmer associations and cooperatives support inclusive growth outcomes when they serve as effective brokers. This means finding the right balance between their roles as political representatives of their members and as suppliers for their clients. The former requires protecting the interests of farmers against those of more powerful groups, sometimes through explicitly political means such as protests and strikes. The latter requires imposing the demands of buyers onto farmers, and disciplining their economic production strategies.

This balance is not easy to strike, and farmer organizations must mediate tensions between the market competitiveness of their collective enterprise and the equity of the economic opportunities they offer their members. Farmer organizations navigate these tensions best when they act as effective brokers between farmers and a wide variety of public, private and nonprofit organizations that provide credit and technical assistance for agricultural development. Brokering of this sort expands the resources and autonomy farmers’ organizations can use to upgrade their members’ products and production methods. This includes providing extension services and disseminating improved production inputs and technologies. It also includes making investments in physical and human infrastructure that permit farmers to collectively earn profits from higher-value functions like processing and exporting within global value chains.

When evaluating certification initiatives, this means a major criterion should be the extent to which certifications foster the development of organizations that can play this brokering role and enhance the capacity of farmers to remain economically competitive and politically effective within a global economy. The pattern of agricultural certifications’ successes and failures uncovered by my research attests to this fact.

In Paraguay, for example, many small farmers face land dispossession and economic marginalization. As the country has integrated into the global economy, it has become the world’s fourth largest exporter of soybeans. A history of weak national agricultural development policies has left a legacy of technologically backward peasant agriculture and elite-dominated farmers’ organizations. In general, farmers’ organizations range from highly authoritarian and marginally representative to fragmented and ineffective.

Two efforts at private certification attempt to address this challenge: the Roundtable on Responsible Soy (RTRS) standards, which contain guidelines for engaging local communities and preventing “interference” in local productive systems; and Fairtrade certification, which creates a market for the sugarcane grown by small farmers and incentivizes them to join certified farmer associations and cooperatives.

The RTRS certification standards do nothing to promote small farmer organizations’ brokering capacities. Moreover, they take for granted the land concentration and capital-intensive modes of production that exclude small farmers from the benefits of globalization in Paraguay and only attempt to regulate the conflicts this generates. In contrast, Fairtrade not only generates economic opportunities for existing sugarcane farmer organizations; it provides resources for their institutional development.

Nevertheless, outcomes have varied for small farmers in the country’s sugar industry. In one example, I found that a small sugarcane farmers’ cooperative in the region of Arroyos y Esteros successfully moved into processing and exporting activities where the bulk of profit is concentrated within global value chains. In the region of Iturbe, however, farmers remained dependent on sugarcane farming and increasingly insecure market access via a local sugar mill. These divergent outcomes are largely the product of the different history of farmer organizations in each region. In Arroyos y Esteros, historical conditions produced farmer organizations with greater brokering capacities, which attracted Fairtrade buyers who were interested in further enhancing these capabilities. Meanwhile, in Iturbe, farmer organizations served primarily as agents of control and, even with Fairtrade support, were unable to channel farmers’ demands without destabilizing the local economy and undermining the supply chain.

Similarly, in the Dominican Republic, the creation of a small farmer cooperative, the Confederación Nacional de Cacaocultores Dominicanos (National Confederation of Dominican Cacao Producers—Conacado), with assistance from the Deutsche Gesellschaft für Technische Zusammenarbeit (German Agency for Technical Cooperation— GTZ), transformed the cocoa industry’s local competitive environment. Historically, the Dominican Republic had been a low-quality cocoa exporter and its farmers received a small share of depressed export prices. A GTZ-led initiative established conacado and equipped the cooperative with the infrastructure and management capacities to source, ferment and export high-quality cocoa beans. These capacities enabled it to connect on preferential terms with a growing set of buyers seeking high-quality cocoa, and to pay higher prices to its suppliers for raw cocoa. As conacado began to compete for suppliers and clients with traditional exporters, it spurred a process of nationwide quality upgrading that transformed the Dominican Republic into a premium-quality exporter. Dominican cocoa farmers are now among the best paid in the industry.

Finally, in northern Peru’s highly dynamic produce export industry, Fairtrade certification is playing a key role in a process of local institution-building that is helping spread the gains from this export boom to small farmers. The Peruvian government has been active in shaping and reshaping agricultural development in this region of Peru.

Land reform and corporatist agrarian policies incorporated peasant farmers into the national economy in the 1970s and created a national structure of small farmer cooperatives as a centerpiece of agrarian development. The disproportionate influence of elites in these cooperatives contributed to their failure and left a legacy of widespread mistrust of cooperatives among small farmers.

However, in Peru’s banana industry, the social premium of $1 per box of bananas paid to Fairtrade-certified farmer organizations provides a big incentive for farmers to join organizations they would otherwise mistrust, as well as funds for organizations to cover the administrative and infrastructure costs of building an effective organization. These organizations have rapidly expanded their membership in order to ramp up their export volumes as well as the amount of the Fairtrade premium they receive. In doing so, they have become vehicles for upgrading small farmers’ competitiveness within the new export-oriented agriculture that is transforming this region. These organizations manage GLOBALG.A.P. Organic and Fairtrade certifications for farmers, and provide services to enhance their members’ production and harvest efficiencies. Thus, external organic and Fairtrade demand is driving a re-composition of small farmer organizations and helping to consolidate their role as commercial intermediaries and representatives.

A Missing Policy Agenda

The underappreciated role of small farmer organizations in shaping agricultural development points to a larger lesson about the importance of local institutions in a global economy. The distribution of the gains from globalization depends in part on whether local institutions can adapt to their incorporation into global value chains in ways that promote equality. This means that even in an increasingly global economy, important policy levers for competitiveness and equitable development remain at the domestic level.

We should not ignore the domestic drivers of competitiveness and equity, which are relevant even as trade barriers fall worldwide. In navigating globalization, developing countries have devoted much energy to promoting global and bilateral trade agreements and to securing their interests in these agreements. They would be wise to devote resources to renewing and adapting national and local institutions to the needs that arise when production must be reoriented toward international, as opposed to national, markets.

The disappearance of whole sectors of the economy that generate employment and income for the poor, such as small-scale agriculture, is not inevitable. But transforming them into engines of growth that benefit the poor requires a new policy agenda focused on creating institutions capable of coordinating a process of local development that is compatible with the growth of the global market.

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Due to an editing editor, this article has been corrected to reflect that RTRS standards "prevent" interference in local systems.

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