Fairtrade 2.0

Background and Objective

Many agricultural products are exported as raw materials from African countries; with the result, that processing and thus the major value-added processes take place outside the producing African country. This is particularly true for products that are predominantly grown by smallholder farmers, such as coffee, cocoa, and cotton. Smallholder farmers in these developing countries are mostly challenged to get a reasonable benefit from their participation in the global value chains due to the volatile nature of coffee price and unsustainable farming practices. Different stakeholders have developed some sustainability initiatives in order to address these issues. by.

Sustainability has been a source of increasing concern for the international consumer society, farmers and leaders in the agriculture and food industry, politics, and academics. This is particularly prevalent in the case of agricultural products, like coffee which is mainly produced in developing countries and supplied to developed countries for further value addition and final consumption. Sustainability in the agri-food sector means producing, processing and supplying food in a way that ensures that all resources used in the food production can be use in the same way by future generations. This includes the labor as well. Farmers can organize themselves and participate in a system that benefits everyone equally. Achieving such outcomes among the value chain actors entails a compressive and inclusive approach targeting various stakeholders including farmers, agricultural commodity traders, processors, retailers, consumers, politicians, and other segments of the society involved in the agri-food system.

Voluntary sustainability standards (VSS) is a set of certification compliance that has been implemented to ensure compliance of specific sustainability goals in the agri-food system covering social, economic and environmental aspects. Different VSS can have different focuses on sustainability outcomes. Fairtrade for example primarily aims to (i) ensure that producers receive prices that cover their average cost of sustainable production, (ii), provide an additional Premium (for projects that enhance social, economic and environmental development), (iii), enable pre-financing for producers who require it, and (iv), facilitate long-term trading partnerships.

These sustainability strategies are often led by non-governmental organizations (NGOs) and private firms. While there has been a genuine uncertainty about the effectiveness of VSS such as Fairtrade or Organic, new innovative technology-based value chain coordination business models are becoming alternative channels to deliver agricultural commodities to the end consumers. The operators of blockchain-based value chains claim to be a better choice to ensure radical impact (social, economic and ecological) transparency across their value chains by shifting the value added to the country of origin/production. In Ethiopia, such initiative has been as well implemented.

Coffee in Ethiopia has a great social, cultural and livelihoods importance for the majority of Ethiopian population and to the national economy as well. Unlike many other coffee producing countries, Ethiopians also consumers around 50% of the own-produced coffee. Coffee beans are tied to complex and strong socio-cultural settings. According to FAO numbers, the country contributes around 5% of the total world coffee production. Besides its cultural importance, coffee has been a significant source of export earnings to the country accounting for nearly a quarter of foreign exchange earnings. All this makes coffee an economic and political priority. On top of that, about 25% of the population in Ethiopia depends on coffee-based livelihoods in one way or another: production, processing, distribution and export of coffee.

One of the prominent research questions in the study of global value chains has been the homogeneous distribution of wealth across the multiple actors involved in the value chain (from national to international level). The broader concept falls under the question of “to what extent does a particular value chain structure ensures the progress towards attaining sustainability outcomes in the three different aspects social, economic, and ecological?”.

Approach

The research project targets the Ethiopian coffee value chain in a broader perspective, particularly targeting following entities:

• Primary actors of the Ethiopian coffee value chain – such as smallholder coffee producers, producer organizations/farmer cooperatives, cooperative unions coffee processing companies (primarily companies that process the coffee at the country of production and export to the international market through new tech-based supply chain coordination platforms)
• Coffee value chain supporting institutions from the public sector, CSO/NGOs and development partners (bilateral/multi-lateral organizations).
• Institutions enabling and controlling the value chain governance structure
• Other stakeholders such as consumers in the importing country