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How much more do growers receive for Fair Trade-organic coffee?

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  • Weber, Jeremy G.

Abstract

I use a representative sample of coffee growing households in southern Mexico to estimate the price premium and gross income gain from participating in Fair Trade-organic markets through grower cooperatives. For the 2004–2005 season, FT-organic growers received an average premium of 12.8 cents per pound, yielding a gross income gain of 5% of total household income or about 26 dollars per household member. The gain is net of the costs of cooperative participation but not of other costs incurred to become certified and suggests that price premiums alone have a limited potential to increase household returns from growing coffee. More broadly speaking, the finding raises questions about the persistence of substantial price premiums associated with social or environmental labeling initiatives.

Suggested Citation

  • Weber, Jeremy G., 2011. "How much more do growers receive for Fair Trade-organic coffee?," Food Policy, Elsevier, vol. 36(5), pages 678-685.
    • Handle: RePEc:eee:jfpoli:v:36:y:2011:i:5:p:678-685
    DOI: 10.1016/j.foodpol.2011.05.007
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    Cited by:

    1. Raluca Dragusanu & Daniele Giovannucci & Nathan Nunn, 2014. "The Economics of Fair Trade," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 217-236, Summer.
    2. Bravo-Monroy, L. & Potts, S.G. & Tzanopoulos, J., 2016. "Drivers influencing farmer decisions for adopting organic or conventional coffee management practices," Food Policy, Elsevier, vol. 58(C), pages 49-61.
    3. Podhorsky, Andrea, 2015. "A positive analysis of Fairtrade certification," Journal of Development Economics, Elsevier, vol. 116(C), pages 169-185.
    4. Balineau, Gaëlle, 2013. "Disentangling the Effects of Fair Trade on the Quality of Malian Cotton," World Development, Elsevier, vol. 44(C), pages 241-255.
    5. Donovan, Jason & Poole, Nigel, 2016. "Changing asset endowments and smallholder participation in higher-value markets: Evidence from certified-coffee producers in Nicaragua," IFPRI book chapters,in: Innovation for inclusive value-chain development: Successes and challenges, chapter 3, pages 93-126 International Food Policy Research Institute (IFPRI).
    6. Barham, Bradford L. & Weber, Jeremy G., 2012. "The Economic Sustainability of Certified Coffee: Recent Evidence from Mexico and Peru," World Development, Elsevier, vol. 40(6), pages 1269-1279.
    7. Peter Griffiths, 2015. "Marketing by Controlling Social Discourse: The Fairtrade Case," Economic Affairs, Wiley Blackwell, vol. 35(2), pages 256-271, June.
    8. Donovan, Jason & Poole, Nigel, 2014. "Changing asset endowments and smallholder participation in higher value markets: Evidence from certified coffee producers in Nicaragua," Food Policy, Elsevier, vol. 44(C), pages 1-13.
    9. Ana C. Dammert & Sarah Mohan, 2015. "A Survey Of The Economics Of Fair Trade," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 855-868, December.
    10. repec:eee:jfpoli:v:71:y:2017:i:c:p:74-85 is not listed on IDEAS
    11. Minten, Bart & Dereje, Mekdim & Engeda, Ermias & Tamru, Seneshaw, 2014. "Who benefits from the rapidly increasing voluntary sustainability standards? Evidence from fairtrade and organic certified coffee in Ethiopia:," ESSP working papers 71, International Food Policy Research Institute (IFPRI).
    12. Goff, Sarah C., 2016. "Fair trade: global problems and individual responsibilities," LSE Research Online Documents on Economics 68285, London School of Economics and Political Science, LSE Library.
    13. repec:eee:wdevel:v:99:y:2017:i:c:p:285-298 is not listed on IDEAS
    14. Sekabira, Haruna & Qaim, Matin, 2016. "Mobile Money, Agricultural Marketing, and Off-Farm Income in Uganda," Discussion Papers 234998, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    15. 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.
    16. 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, Open Access Journal, vol. 9(2), pages 1-21, February.
    17. van Rijsbergen, Bart & Elbers, Willem & Ruben, Ruerd & Njuguna, Samuel N., 2016. "The Ambivalent Impact of Coffee Certification on Farmers’ Welfare: A Matched Panel Approach for Cooperatives in Central Kenya," World Development, Elsevier, vol. 77(C), pages 277-292.
    18. Barham, Bradford L. & Callenes, Mercedez & Gitter, Seth & Lewis, Jessa & Weber, Jeremy, 2011. "Fair Trade/Organic Coffee, Rural Livelihoods, and the "Agrarian Question": Southern Mexican Coffee Families in Transition," World Development, Elsevier, vol. 39(1), pages 134-145, January.
    19. Vellema, W. & Buritica Casanova, A. & Gonzalez, C. & D’Haese, M., 2015. "The effect of specialty coffee certification on household livelihood strategies and specialisation," Food Policy, Elsevier, vol. 57(C), pages 13-25.
    20. Kleemann, Linda & Abdulai, Awudu, 2013. "Organic certification, agro-ecological practices and return on investment: Evidence from pineapple producers in Ghana," Ecological Economics, Elsevier, vol. 93(C), pages 330-341.
    21. Herrell, Kevin M. & Tewari, Rachna & Mehlhorn, Joey, 2017. "Honduran Coffee Trade: Economic Effects of Fair Trade Certification On Individual Producers," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252729, Southern Agricultural Economics Association.
    22. Meemken, Eva-Marie & Spielman, David J. & Qaim, Matin, 2017. "Trading off nutrition and education? A panel data analysis of the dissimilar welfare effects of Organic and Fairtrade standards," Food Policy, Elsevier, vol. 71(C), pages 74-85.
    23. Durevall, Dick, 2015. "Are Fairtrade Prices Fair? An Analysis of the Distribution of Returns in the Swedish Coffee Market," Working Papers in Economics 615, University of Gothenburg, Department of Economics, revised Sep 2017.
    24. Abdoul Murekezi & Songqing Jin & Scott Loveridge, 2014. "Have coffee producers benefited from the new domestic cherry market? Evidence using panel data from Rwanda," Agricultural Economics, International Association of Agricultural Economists, vol. 45(4), pages 489-500, July.
    25. Vlaeminck, Pieter & Vranken, Liesbet & Van Den Broeck, Goedele & Vande Velde, Katrien & Raymaekers, Karen & Maertens, Miet, 2015. "Farmers’ preferences for Fair Trade contracting in Benin," Working Papers 225931, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.

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