Ethical trade can be used to describe any trading relationship where social and environmental criteria are used, in addition to the purely economic, to measure performance. What impact has fair trade practice had on rural livelihoods in Uganda? What is needed to sustain such projects?

A study looks at what contribution ethical trading schemes can make to the achievement of sustainable rural livelihoods. As one component of this study, the Natural Resources Institute looked at the case of organic cotton exports from northern Uganda by the organisation Farmers Fair Trade (Uganda) – FFT(U) – a subsidiary of the Dutch company, African Farmers Trade Associates.

The Lango Organic Cotton Project was established in 1994 and the FFT(U) became involved as buyer in 1996. The scheme differs from other fair trade operations in that it does not give farmers a fair trade premium, but relies on price premiums arising from the organic status of the product. There are no financial criteria for joining the scheme and farmers are free to sell their crops elsewhere if they so choose.

The project has been successful in increasing the number of participating farmers and expanding organic production, which now accounts for 8 per cent of cotton production in the district. The rapid expansion of the scheme has been driven by demand from farmers, who see real benefits in participating. The only form of credit offered to participating farmers is the supply of seeds, the cost of which is deducted from the price paid for their cotton. Careful monitoring ensures that internationally recognised organic standards are maintained, and this represents a significant overhead for the programme. However, there is no such external certification programme for the fair trade aspects of the scheme, and little baseline data exists to facilitate the monitoring of its impact.

Research findings include:

• The organic cotton scheme has injected cash into the rural economy and large numbers of households have benefited. Most benefits have resulted from the organic premium, rather than the fair trade scheme.
• There is an absence of systems for monitoring the social impact. In many ways the trading operations of FFT(U) are indistinguishable from those of any other commercial trading venture.
• The scheme is having a beneficial impact on the environment by preventing the spread of agrochemical usage.
• Participating farmers show a limited understanding of the principles of organic agriculture as an approach to sustainable production.
• The project’s sustainability and the vulnerability of farmers has been affected by institutional weaknesses along the trading chain.
• The scheme has had a positive impact on the regeneration of pre-existing institutions. However, not all traditional institutions operate in the farmers’ best interests.

Policy implications arising from this case study include:

• Due to the cost of organic certification, external assistance may be necessary during the early years of such a scheme.
• Sources of impartial advice are needed for producer groups wishing to identify suitable trading partners.
• Capacity building of community level institutions is important for the sustainability of such projects.
• Development programmes can help protect against potential negative impacts such as the marginalisation of women or the prioritising of cash crops over food production.

Source(s):
‘Ethical Trade and Sustainable Rural Livelihoods – Case Studies: Farmers Fair Trade (Uganda) Ltd, Organic Cotton Trade Case Study’, Natural Resources Institute, University of Greenwich, by A. Malins and V. Nelson, 1998

Funded by: Department for International Development, UK

id21 Research Highlight: 24 February 2003

Further Information:
Valerie Nelson
Natural Resources Institute
University of Greenwich
Central Avenue
Chatham Maritime
Chatham, Kent ME4 4TB
UK

Tel: +44 (0)1634 880088
Fax: +44 (0)1634 883706
Contact the contributor: v.j.nelson@gre.ac.uk

Natural Resources Institute, University of Greenwich, UK

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