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Where Does the Fair Trade Money Go? How Much Consumers Pay Extra for Fair Trade Coffee and How This Value Is Split along the Value Chain

Aufsätze referiert extern - Web of Science

Helene Naegele

In: World Development 133 (2020), 105006, 12 S.


Fair Trade certification aims at transferring wealth from the consumer to the farmer; however, coffee passes through many hands before reaching final consumers. Bringing together retail, wholesale, and stock market data, this study estimates how much more consumers are paying for Fair Trade-certified coffee in US supermarkets and finds estimates around $1.50 per lb. The study then assesses how this price premium is split between the different stages of the value chain: most of the premium goes to the roaster’s profit margin, while the retailer surprisingly makes smaller absolute profits on Fair Trade-certified coffee, compared to conventional coffee. In the period studied in this study, the coffee farmer receives about a sixth of the price premium paid by the consumer.

JEL-Classification: L15;L31;L66;O13;Q01
Keywords: Coffee, Fair trade, Price premium, Value chain, Voluntary sustainability standards