Sugar is the key ingredient in a variety of food and drinks that we love (in moderation, of course!). While the market for sugar is growing, smallholder farmers still need a lot of support in order to earn a sustainable living and secure their futures.
What challenges are smallholder sugar cane farmers facing?
Sugar cane makes up almost 80% of sugar production around the globe, cultivated in developing countries by millions of smallholder farmers and plantation workers. Sugar cane is usually grown in the tropics, can reach heights of 20 feet and looks similar to bamboo. The other 20% of the globe’s sugar is produced from sugar beet—a root vegetable, typically grown in northern countries.
Smallholder sugar farmers have little influence in the complex global sugar industry. Trade laws have made it hard for these farmers to reach the profitable North American and European markets. Because of this, they have to compete in markets with strong local sugar production.
Smallholder sugar farmers find it very difficult to receive sustainable prices for their sugar to cover the costs of production. Many find themselves stuck in a cycle of debt, with little money to invest back into their farms. They are unable to buy fertilizer or new equipment and cannot afford transport. Not just the individual farmers are suffering—their communities are also affected, with limited access to education or support to overcome market challenges.
In 2017, the European Union (EU) is set to change their agricultural policies and no longer enforce sugar quotas from developing countries nor provide payments equal to those of sugar beet produced in the EU. This change could mean the end of the EU as a market for developing countries since domestically grown EU beet sugar prices will fall. It is not yet clear how this policy change would affect the sugar market in the United States.
How has Fairtrade helped sugar farmers?
Fairtrade sugar was launched in the United States in 2005, to help struggling smallholder sugar farmers improve their position in the global market. By becoming Fairtrade certified, and working closer with local sugar mills and processors, smallholder sugar cane farmers are able to increase their standing in international sugar markets, improve their business skills and increase their production capacity to become competitive players. There are currently 100 Fairtrade sugar cane farmer cooperatives — with 62,200 farmers — in 19 countries including Belize, Paraguay Malawi, India, and Fiji.
Unlike other products, the Fairtrade Standards for sugar does not include a Minimum Price function. In 2009, stakeholders reviewed the Standards and highlighted difficulties in setting a price for a sector that has so many differences in supply chain structure, government regulation and trade laws.
It was found that smallholder farmers would derive greater benefit from being able to negotiate with their local traders, instead of through the minimum price function. The Fairtrade Premium is therefore the main economic benefit for farmers, providing them with $60 per metric ton of Fairtrade sugar (or $80 per metric ton if the sugar is also certified organic) on top of their agreed sale price.
In 2012-13, Fairtrade sugar producers benefitted from $10.85 million in Fairtrade Premium payments. Of this, around 25% was invested by farmers’ organizations to improving facilities and infrastructure for crop storage, production and processing, and around 23% was paid directly to sugar farmers to increase their incomes.
Fairtrade’s work with smallholder sugar farmers is having significant positive impact. Fairtrade sugar farmers in Malawi, for example, have used the Fairtrade Premium to benefit their community, through building schools, clean water facilities and bringing electricity to villages. The premium has also provided household items and maize to farmers’ families.
In 2010, Belizean farmers suffered from a disastrous crop. Through the Fairtrade Premium, they introduced a cane quality program and, despite threats from hurricanes and insects, their productivity increased by 30%, with a subsequent 42% boost in their sale price. Watch this video about Fairtrade sugar farmers in Belize.
Fairtrade has also helped farmers to band together to lead change, like those of the Manduvira sugar cane cooperative in Paraguay. In 2014, these farmers opened a first-of-its-kind producer owned mill. Funds from the Fairtrade Premium, the Fairtrade Access Fund (a fund providing long-term loans to smallholder farmer organizations) and international and national loans contributed to the $15 million project, which has created local jobs and eliminated factory rental and travel costs.
So, what next?
We have seen growth of Fairtrade sugar sales in the US, with smallholder sugar farmers and their families feeling the positive effects across the globe. But challenges still exist, with reviews of international sugar trade laws in the near future, making it even more vital for shoppers to choose Fairtrade sugar, showing their support for farmers.
As it stands, Fairtrade sugar represents only 1% of global sugar cane production. There are still millions of smallholder cane farmers who could benefit from the Fairtrade system, and those who are already certified need to sell more on Fairtrade terms to be able to continue having positive impact on their trade and communities.