An analysis of the impact of fair trade: a case study of tea producers in the central province of Sri Lanka

This thesis investigates the impact of fair trade on tea producers in the Central Province of Sri Lanka. A comparison study is undertaken between fair and conventional trade farmers to investigate the monetary and non-monetary benefits of fair trade involvement. The study of 7 villages in the Central Province, incorporates 40 fair trade tea producers, who are members of a cooperative, and 40 conventional trade tea producers selling to a local buyer. Undertaken in July 2009, the research analyses quantitative and qualitative data gathered by means of questionnaires and interviews, to examine the different experiences of the two types of producers in terms of monetary and non-monetary benefits. Monetary benefits examined include factors such as improved income, income sufficiency, secondary income activities, pre-finance measures and excess money. Non-monetary benefits examined include education gains, household development and labour hours on tea production. The results are compared with other impact studies with similarities and differences analysed. The empirical results presented suggest that there are no significant differences in tea income between the two groups. However, fair trade producers work fewer hours in tea production and are more likely to report both an improved and excess income. Furthermore, the fair trade producers report improved spending on food and savings and have a more diversified crop. The results are due to the increased productivity, the provision of loans and saving schemes and the increased time available to work on secondary income generating activities either on or off the farm resulting in an overall improvement in living standards. This study contributes to the existing literature on whether and how fair trade is able to improve the well-being of small producers by offering new insights into the importance of cooperative management, working hours, productivity improvement, effective savings schemes and pre-finance arrangements. These findings are considered important to the success of the cooperative and hence to fair trade producers extracting the full benefits of fair trade and as such they are recommended as focus areas for fair trade. New data is included from tea producers in the Central Province of Sri Lanka, a new region for in-depth study and a new context, as the majority of existing studies focus on coffee and banana production