The Economics of Fair Trade Coffee: For Whose Benefit?

This book is intended for all readers interested in a critical assessment of fair trade. How much does fair trade contribute to development? Does consumer awareness make any difference at all? Or are supermarkets selling fair trade coffee just clean-washing their reputation in the fair trade business? These are some of the key questions examined in this book. I start by providing a short description of the coffee market and some of its major trends. I then turn to the origin and structure of the fair trade movement. The pricing scheme of Fairtrade Labelling Organizations International (FLO) is compared to those of other private labeling initiatives. The last part examines benefits generated for participants on the supply and demand side. Revenues accruing to coffee producers in the South and fair trade organizations in the Western world are estimated. Finally, an original empirical strategy is proposed to see whether consumer awareness is making any difference and/or if supermarkets are clean-washing their reputation in the fair trade business. Data from 13 European countries is used in two different econometric models (OLS and treatment regression model).