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324. Measuring fairness in trading relationships

2012-12-06 Comments Off on 324. Measuring fairness in trading relationships

When our CAFE Livelihoods project in Mexico and Central America ended in 2011, several people asked me what I considered the signature successes of the project.  I was sitting on three years of data from 4,633 farms tracking changes in productivity, income, coffee quality, access to infrastructure, etc.  But instead of citing these data, I found myself telling stories. One of the ones I told the most was the story of the Las Cruces cooperative in El Salvador, which dramatically improved the quality of its trading relationships thanks to the facilitation of the project.  As I reflected on the story and our work with coffee farmers more broadly, I began to wonder whether fostering new and more equitable trading relationships might be among the most important contributions CRS can make to improve the livelihoods of smallholder farmers.  Our projects tend to last just 3-5 years.  But what if we can help farmers build fair trading relationships that last 10-20 years or even more?

As I moved to South America to lead our Borderlands Coffee Project, I was determined to find a way to measure changes in the quality of farmers’ trading relationships with the same kind of rigor that we have historically measured core quantitative indicators like changes in productivity and income.  With the project team and our friends from CIAT, we began working on a trading relationship index that would score the quality of the trading relationships farmers in our project had with other coffee chain actors.  We were delighted to learn that someone had beaten us to it.

Four someones, more precisely: the Kent Business School, international development agency Oxfam, the consumer goods conglomerate Unilever and the policy research institute iied (International Institute for Environment and Development).


Together, these four organization designed a methodology and survey tools to measure the perception of fairness among actors all along the supply chain, from smallholders to the retail distributors.  The surveys are designed around five cardinal principles of sustainable trading relationships:

  • Fair and transparent governance
  • Chain-wide collaboration
  • Inclusive innovation
  • Equitable access to inputs
  • Chain-wide measurement of outcomes

They also manage to measure five elements of fairness:

  • Distributive justice — who gets what along the chain
  • Procedural justice — who decides
  • Informational justice — how information is traded and used
  • Inter-personal justice — fairness in communications
  • Commitment — how willing chain actors are to improve relationships


The methodology involves a series of surveys at each link in the chain.  The process starts on the farm, and then moves to traders, exporters, importers, etc. all the way down the line to retail distribution.  There are two surveys used — a longer one for farmers, and shorter one for all the other actors in the chain.  Why?  Because smallholder farmers are generally the most vulnerable members of a supply chain, most likely to be the victims of unfair practices given power dynamics in which authority tends to skew away from the farm and toward the marketplace.  The farm-level survey includes additional questions on farmer identity, for example, to help identify chain biases based on sex or age.

Responses can be scored and analyzed by trading principle (governance, inclusion, etc.), by dimension of fairness (distributive, informational, etc.), by link in the chain (farmers, trader, etc.), by farmer type (women, men, etc.) and by looking at the chain as a whole.


The tool is designed to help supply chain actors improve the quality of their trading relationships.  It can serve as an early warning system, highlighting inconsistencies in the way different actors are perceiving fairness.  If the survey shows that farmers have very different ideas about the fairness of the distribution of value than a roaster, for example, a roaster might proactively intervene to get to the bottom of the perception gap and try to address it.  The tool can also help identify and address sources of exclusion by picking up on differences in perceptions of fairness among different kinds of suppliers.  If women producers have systematically different perceptions of fairness in the exchange of information, it may be a sign that chain governance is biased in ways that chain actors weren’t aware.

In the context of the Borderlands coffee project in which CRS will apply the tool for the first time, we see three real sources of value.  The first is the one mentioned above: the project will try to facilitate new and improved trading relationships between participating farmers and other chain actors, and we see this tool as an important instrument in managing those relationships in ways that are inclusive.  If the use of the survey helps to surface concerns about fairness in a particular supply chain, we will be positioned to work together with supply chain actors to help them address the issues that arise.

The second is the one I mentioned at the outset — measuring with more rigor the contributions the project makes to improving supply chain relationships.  We want to be able to use data — not just stories — to explain project impacts to our donor or anyone else who might ask.

And finally, we see another source of potential value in applying this tool at origin — comparing fairness scores across supply chains and across business models.  Supply chain actors seeking greater sustainability in trading relationships would benefit from knowing that a particular supply chain or a particular trading model consistently produces higher rates of “customer satisfaction” among their supply chain partners than another.