Where does the Fair Trade money go? How much consumers pay extra for Fair Trade coffee and how this value is split along the value chain

Helene Naegele

World Development, 2020, vol. 133, issue C

Abstract: Fair Trade 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 Fair Trade-certified coffee in US supermarkets and finds estimates around $1.50 per lb. The study then assesses 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 Fair Trade-certified coffee, compared to conventional coffee. In the period studied in this study, the coffee farmer receives about a sixth of the price premium paid by the consumer.

Keywords: Coffee; Fair trade; 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)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305750X20301327
Full text for ScienceDirect subscribers only

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:eee:wdevel:v:133:y:2020:i:c:s0305750x20301327

DOI: 10.1016/j.worlddev.2020.105006

Access Statistics for this article

World Development is currently edited by O. T. Coomes

More articles in World Development from Elsevier
Bibliographic data for series maintained by Catherine Liu ().