Is ethical trade contributing to the achievement of sustainable rural livelihoods? What are the strengths and weaknesses of ethical trade schemes (ETS)? Research by the Natural Resources Institute at the University of Greenwich the explores the actual and potential contribution ethical trade can make to the achievement of sustainable rural livelihoods, focusing on three types of ETS: forest certification, fair trade and organic agriculture.

The research outlines factors affecting the development of ETS, and the capital (natural, financial, human, social and physical) often required for participation in ETS. Common strategies adopted by ETS are discussed, such as a well-defined trading chain, strong producer-buyer relations, and the measurement of performance through auditing. Several strengths and weaknesses of ETS are highlighted. For participants, ETS are creating new livelihood opportunities, increasing income levels, and bringing considerable benefits in human and social capital development, enabling access to new markets and new sources of finance. However, there are negative impacts amongst those unable or unwilling to participate, and ETS are weak in targeting certain disadvantaged groups.

Ethical trade is making the Western public more developmentally conscious, and is generating a sense of involvement in international development. Ethical trade criteria, however, are often driven by western consumer concerns rather than producer opinion or priorities. Although many ETS value environmentally responsible production, this tends to be measured in terms of local level impact rather than broader production-related impact, such as energy use in transport and packaging.

The report concludes that the future impact of ethical trade will depend on increased efficiency, improved targeting of different social groups, increased developing country stakeholder involvement, commercial viability, increased western consumer awareness, and the adoption of sustainable marketing systems.

Further key findings include:

• ETS bring together diverse stakeholders in developing and developed countries, many of whom have not previously been involved in development, and encourages new partnerships, for example between producer and buyer, and between development agencies and the private sector.
• Producer-buyer relations are strongest when buyers provide access to credit, technical support and institution building, and operate transparent policies regarding prices and market conditions.
• Development organisations have become more market aware, and some have adopted a more holistic view of development.
• The economics of the ethical market are not properly understood and projections often emphasise the positive: ethical premiums may not last as mainstream markets adopt ethical criteria.
• ETS have been successful in remote areas and areas where there has been recent instability.

Policy implications include:

• development organisations should learn more about how trade is conducted
• the influence of western ethical values should be balanced with increased participation by developing country producers
• the viability of ethical buyers should be examined: many depend on subsidies, often in the form of development assistance
• for producers the long-term advantages of ETS compared to conventional export trade is likely to be in terms of assistance for developing human and social capital and improving natural resource management
• ethical trade’s future development depends greatly on ethical sourcing initiatives of mainstream retailers and importers
• ethical trade by itself is not an answer to sustainability but can be an important component in building sustainable rural livelihoods

Source(s):
'Ethical trade and sustainable rural livelihoods', by Mick Blowfield, Annabelle Malins, Bill Maynard and Valerie Nelson

Funded by: DFID, NRPAD

id21 Research Highlight: 16 May 2002

Further Information:
Mick Blowfield
C/o DAI
7250 Woodmont Avenue
Suite 200
MD 20814
USA

Tel: +1 301 718 8272
Fax: +1 301 718 8290
Contact the contributor: yjp60@dial.pipex.com

Other related links:
NRI focuses on sustainable development

'Richer or poorer? Achievements and challenges of ethical trade', Insights #36

'WTO vs ethical trade: mutually inclusive or miles apart?'

ETI promotes good practice in the implementation of codes of labour practice

Livelihoods Connect focuses on sustainable livelihoods to eliminate poverty

APRLP supports sharing of lessons in rural livelihoods