Guaranteed Minimum Price Contracts for Some, an Insurance for Others?

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Guaranteed Minimum Price Contracts for Some, an Insurance for Others?

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Chambolle, C.
Poret, S.

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Abstract

This paper analyzes the impact of guaranteed minimum price contracts between sub-groups of farmers and a fair trade manufacturer on the spot market price. We focus on the fair trade concept in the coffee supply chain as an example. We analyze a three level vertical chain gathering perfectly competitive farmers upstream who offer their raw product to manufacturers who then sell finished products to a downstream retailer. Without fair trade, all the raw product is sold on the spot market. When a sub-group of farmers benefit from a guaranteed minimum price contract offered by a fair trade certifier, we show that farmers outside of this fair trade agreement may also benefit from a higher spot market price in cases of a limited overproduction.

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Paper provided by European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 44134.

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Date of creation: 2008
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Handle: RePEc:ags:eaae08:44134

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This paper has been announced in the following NEP Reports:

NEP-ALL-2008-11-25 (All new papers)
NEP-IAS-2008-11-25 (Insurance Economics)

References listed on IDEAS
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Bontems, P. & Bouamra-Mechemache, Z., 2004. "Predatory accomodation in vertical contracting with externalities," Economics Working Paper Archive (Toulouse) 200402, French Institute for Agronomy Research (INRA), Economics Laboratory in Toulouse (ESR Toulouse). [Downloadable!]
Other versions:
- Bontems, Philippe & Bouamra-Mechemache, Zohra, 2003. "Predatory Accommodation In Vertical Contracting With Externalities," 2003 Annual meeting, July 27-30, Montreal, Canada 22044, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
Sylvaine Poret & Claire Chambolle, 2007. "Fair Trade Labeling: Inside or Outside Supermarkets?," Journal of Agricultural & Food Industrial Organization, Berkeley Electronic Press, vol. 5(1). [Downloadable!]

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This page was last updated on 2009-12-26.

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