The Fairtrade Foundation has defended its certification system after a newspaper found that ethical coffee was being produced in Peru by labourers paid less than the minimum wage.

The Financial Times cast doubt on the Fairtrade process and raised questions about the initiative, which pays workers a fairer wage.

But Fairtrade Foundation executive director Harriet Lamb said the smallholder groups interviewed sold only 10% to 15% of their coffee on Fairtrade terms, meaning farmers remained heavily at the mercy of conventional markets.

"These farms were paying workers 25% above what they could get elsewhere, despite selling just 10% to 15% of their total crop on Fairtrade terms," she said.

"Rather than punish them, we work tirelessly to get more of the industry to offer smallholders a fair and sustainable price."

Marks and Spencer, which sells only Fairtrade coffee, said its own checks in Peru had not uncovered any wage irregularities.