With reference to Figure 1 and Extract A, explain the likely impact of a Fairtrade scheme on agricultural communities.
| Category | Percentage |
|---|---|
| Constructing processing mills and cooperative infrastructure | 41% |
| Investing in tools, organic fertilisers, and training | 43% |
| Funding community social services (schools, clinics) | 14% |
| Other administrative costs | 2% |
The median annual income of coffee farmers in Ethiopia's southern highlands is just US1,800.ResearchsuggeststhatanannualaverageincomeofUS 1,800. Research suggests that an annual average income of US\,1,800.ResearchsuggeststhatanannualaverageincomeofUS4,500 is required for a household to achieve a decent standard of living. This economic vulnerability is especially severe for smallholders operating outside of organised trade schemes.
In recent years, global coffee benchmark prices plummeted by nearly 30%, exposing independent growers to extreme revenue risk. While multinational roasting companies and retail brands successfully maintained stable profits, primary growers bore the full brunt of price volatility.
Attempts to remedy this through agronomic training and higher yields have shown limited success. The average smallholder plot yields only 45% of its potential capacity due to a lack of access to high-quality seedlings, modern processing equipment, and fertilisers. However, agricultural economists warn that simply boosting production or diversifying into local staple crops is not a cure-all. Without structural mechanisms like the Fairtrade minimum price and premium, market price fluctuations will continue to undermine rural development.
