Tropentag, September 19 - 21, 2016 in Vienna, Austria "Solidarity in a competing world - fair use of resources"

Fairtrade Certification on Plantations: Household Welfare Implications for Hired Labour

Georg-August-Universität Göttingen, Dept. of Agricultural Economics and Rural Development, Germany

Abstract

About 500 million workers are employed on agricultural plantations world-wide. They are considered to be one of the most vulnerable groups in the global trade system. Recent developments such as the vertical integration of agri-food chains, access to international markets and rising consumer awareness have led to the increased adoption of sustainability standards, such as Fairtrade. While Fairtrade measures aim to ensure adequate employment conditions, collective action and fair wages its ultimate objective is to improve the socioeconomic well-being of workers' households and their communities. The question remains whether Fairtrade certification of large-scale plantations can contribute to decreasing workers' monetary and non-monetary poverty. This study therefore aims to assess whether Fairtrade can raise income levels of worker households and whether this may potentially lead to wealth accumulation and higher standards of living.
For our study we use original survey data from 325 plantation workers and their households in the Ghanaian pineapple export sector. Our respondents are workers from four Fairtrade certified companies and four Non-Fairtrade certified companies. To address the research questions, we apply regression analysis as well as matching approaches, controlling for company level scale of production and productivity levels. Our findings confirm that Fairtrade certification has a positive effect on household income through higher horticultural wage labor income. Further, households with workers employed on Fairtrade certified plantations are able to accumulate more assets. This may partly be due to higher horticultural wage labor income, but also other pathways, such as reduction of expenditure constraints for workers through company service provisions or loan availability. Our results further show that living standard indicators, in particular access to clean drinking water and electricity, are also positively correlated with Fairtrade certification. Given that both drinking water and electricity are predominantly provided on the village level, social projects financed by the Fairtrade premium could play a role in providing for these community-based services. Fairtrade companies may also use their bargaining power towards local governments to have for example electricity provided to villages surrounding their company grounds.

Keywords: Agricultural labourers, asset accumulation, fairtrade certification, household welfare, plantation agriculture, standard of living

Contact Address: Katharina Krumbiegel, Georg-August-Universität Göttingen, Dept. of Agricultural Economics and Rural Development, Heinrich-Düker-Weg 12, 37073 Göttingen, Germany, e-mail: katharina.krumbiegelagr.uni-goettingen.de