Where Does the Fairtrade Money Go? How Much Consumers Pay Extra for Fairtrade Coffee and How This Value Is Split along the Value Chain

Helene Naegele

No 1783, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: Fairtrade certification aims at transferring wealth from the consumer to the farmer; however, coffee passes through many hands before reaching final consumers. Bringing together retail, wholesale, and stock market data, this study estimates how much more consumers are paying for Fairtrade-certified coffee in US supermarkets and finds estimates around $1 per lb. I then assess how this price premium is split between the different stages of the value chain: most of the premium goes to the roaster's profit margin, while the retailer surprisingly makes smaller absolute profits on Fairtrade-certified coffee, compared to conventional coffee. The coffee farmer receives about a fifth of the price premium paid by the consumer, but it is unclear how much of this (quantity-dependent) benefit goes toward the payment of (quantity-independent) license fees.

Keywords: Coffee; Fairtrade; Price premium; Value chain; Voluntary sustainability standards (search for similar items in EconPapers)
JEL-codes: L15 L31 L66 O13 Q01 (search for similar items in EconPapers)
Pages: 30 p.
Date: 2019
New Economics Papers: this item is included in nep-hme and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.diw.de/documents/publikationen/73/diw_01.c.612213.de/dp1783.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp1783

Access Statistics for this paper

More papers in Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Bibliothek ().