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Are Fairtrade Prices Fair? An Analysis of the Distribution of Returns in the Swedish Coffee Market

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  • Durevall, Dick

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

This paper analyses how the premium customers pay for Fairtrade-labelled coffee is distributed in the Swedish market, using information on costs of production and scanner data on almost all roasted and ground coffee products sold by retailers. A key finding is that roasters and retailers get 43–70%, while producer countries, in this paper comprising coffee farmers, cooperatives, middlemen, exporters and Fairtrade International, get 24–51%. Fairtrade Sweden gets 5–8%. These values are upper and lower bounds that reflect assumptions made about the additional costs of producing roasted and ground Fairtrade coffee, given the cost of beans and the Fairtrade license, and whether conventional coffee is compared with organic or non-organic Fairtrade coffees. Since roasters’ and retailers’ margins are higher for Fairtrade than conventional coffee, there is evidence that Fairtrade retail prices are higher than the level attributable to costs. However, producer countries receive a significantly larger share of the premium paid than reported in earlier studies, which are either dated or analyse very small samples of coffees.

Suggested Citation

  • 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.
    • Handle: RePEc:hhs:gunwpe:0615
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    File URL: https://gupea.ub.gu.se/handle/2077/38327
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    References listed on IDEAS

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    More about this item

    Keywords

    coffee supply chain; ethic labels; Fair Trade; extra price; Fairtrade; market power; organic coffee;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • P46 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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