A Case Study of “Fair Trade” Rwandan Coffee

My wife is working with the Institute of International Agriculture at Michigan state on a project helping to develop the Burundi high-end coffee export sector. The precedent to this project was something similar called PEARL, which had much success in improving the welfare of small-scale Rwanda farmers. According to The Center for Global Education:

…PEARL, having identified Rwanda as having great potential in the speciality coffee market, concentrated on building the infrastructure and knowledge necessary to improve quality, particularly in the construction of a coffee washing station in Maraba. Abahuzamugambi became the first Fairtrade-certified co-operative in Rwanda in 2002.

Interviews with members of the co-operative held in October 2003 and July 2006 confirm that they have received substantial economic benefits from the co-operative. As well as the substantially higher price paid, these include the provision of healthcare and local banking facilities, improved diet and employment by the co-operative for some (the co-operative employs 48 staff). All the interviewees’ school-age children attended school, and most spoke of improved living conditions such as new or renovated houses, new clothes and recently purchased land and livestock which they attributed to the increased income supplied by the co-operative.

While this co-operative has improved the lives of these rural communities, stringent Fairtrade certification rules have also appeared to have shut some small farmers out. The article continues on to say:

These positive outcomes however are tempered by the fact that Fairtrade rules unintentionally mean that the co-operative has recently been faced with the choice between excluding the poorest of the poor and exiting the Fairtrade system. Some interviewees at Maraba reported that they were forced into pre-selling coffee to other local buyers, at a lower price, in order to address short-term cash-flow problems. They simply could not afford to wait until the co-operative paid them at harvest time, and either could not access credit to see them through, or could not afford interest on loans. Other coffee farmers were too poor to join the co-operative, which charges a membership fee, or did not have sufficient land to produce enough coffee to meet the minimum requirements of the co-operative. The co-operative’s response was to allow the poorer farmers to sell their coffee to it without holding full membership. But this transgresses Fairtrade standards of accountability and transparency, and as a consequence, the co-operative was warned that it faced having its Fairtrade certification revoked. The rules set by the Fairtrade Labelling Organisation, the international certification agency responsible for awarding Fairtrade certified status, which were designed to ensure that trade really is socially beneficial, were having the opposite effect. As Bihogo Etienne, the Director of the Rwandan Smallholders Speciality Coffee Company, which has taken up PEARL’s role commented in July 2006, there seems to be a fundamental incompatibility between the Fairtrade concept of trade, which is still based firmly in the Western traditions of rule-based accountability and notions of universality, and African trading systems which are traditionally more contingent on circumstance, making them more flexible and accommodating of individual relationships.