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

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  • Chambolle, Claire
  • Poret, Sylvaine

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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File URL: http://purl.umn.edu/44134
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Bibliographic Info

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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Related research

Keywords: Guaranteed Minimum Price Contracts; Fair Trade; Vertical Chain.; Demand and Price Analysis; International Relations/Trade;

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  1. 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).
  2. Poret Sylvaine & Chambolle Claire, 2007. "Fair Trade Labeling: Inside or Outside Supermarkets?," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(1), pages 1-24, November.
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