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Who benefits from the rapidly increasing Voluntary Sustainability Standards? Evidence from Fairtrade and Organic coffee in Ethiopia

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  • Minten, Bart J.
  • Dereje, Mekdim
  • Engeda, Ermias
  • Tamru, Seneshaw

Abstract

Voluntary Sustainability Standards (VSS) are rapidly increasing in global value chains. While consumers (mostly in developed countries) are willing to pay significant premiums for such stand-ards, it is however not well understood how effective these incentives are transmitted to producing countries. We study VSS in Ethiopia’s coffee sector, its most important export commodity, using a unique census of transaction data at the export level and large-scale data at the production level. We find that transmission of the export quality premiums to coffee producers is limited, with only one-third of this premium being passed on. Moreover, as quality premiums are small and with low average production levels from coffee farmers in these settings, these premiums would only lead to an increased income of 20 USD per year even with a perfect transmission scenario, and would therefore have little effect on the livelihoods of an average coffee farmer.

Suggested Citation

  • Minten, Bart J. & Dereje, Mekdim & Engeda, Ermias & Tamru, Seneshaw, 2015. "Who benefits from the rapidly increasing Voluntary Sustainability Standards? Evidence from Fairtrade and Organic coffee in Ethiopia," 2015 Conference, August 9-14, 2015, Milan, Italy 212708, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae15:212708
    DOI: 10.22004/ag.econ.212708
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    Cited by:

    1. Vincent Canwat, 2023. "Value chains and sustainable development: A perspective of sustainable coffee value chains in East Africa," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(2), pages 668-679, April.
    2. Minten, Bart & Dereje, Mekdim & Engida, Ermias & Kuma, Tadesse, 2019. "Coffee value chains on the move: Evidence in Ethiopia," Food Policy, Elsevier, vol. 83(C), pages 370-383.
    3. Fikadu Mitiku & Yann De Mey & Jan Nyssen & Miet Maertens, 2017. "Do Private Sustainability Standards Contribute to Income Growth and Poverty Alleviation? A Comparison of Different Coffee Certification Schemes in Ethiopia," Sustainability, MDPI, vol. 9(2), pages 1-21, February.
    4. Karla Rubio‐Jovel, 2023. "The voluntary sustainability standards and their contribution towards the achievement of the Sustainable Development Goals: A systematic review on the coffee sector," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(6), pages 1013-1052, August.
    5. Dick Durevall, 2020. "Fairtrade and Market Efficiency: Fairtrade-Labeled Coffee in the Swedish Coffee Market," Economies, MDPI, vol. 8(2), pages 1-17, April.
    6. Oya, Carlos & Schaefer, Florian & Skalidou, Dafni, 2018. "The effectiveness of agricultural certification in developing countries: A systematic review," World Development, Elsevier, vol. 112(C), pages 282-312.
    7. Minten, Bart & Dereje, Mekdim & Engeda, Ermias & Kuma, Tadesse, 2015. "Coffee value chains on the move: Evidence from smallholder coffee farmers in Ethiopia:," ESSP working papers 76, International Food Policy Research Institute (IFPRI).
    8. Mitiku, Fikadu & de Mey, Yann & Nyssen, Jan & Maertens, Miet, 2017. "Do Private Sustainability Standards Contribute to Poverty Alleviation? A Comparison of Different Coffee Certification Schemes in Ethiopia," Working Papers 253589, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.

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