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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.

Suggested Citation

  • Chambolle, Claire & Poret, Sylvaine, 2008. "Guaranteed Minimum Price Contracts for Some, an Insurance for Others?," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44134, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae08:44134
    DOI: 10.22004/ag.econ.44134
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    References listed on IDEAS

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    1. 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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    Cited by:

    1. Florence TOUYA, 2019. "Relationships and Nature of Contracts in the Distribution Structure for Responsible Trade," Working Papers 2018-2019_10, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Oct 2019.
    2. Florence Lachet-Touya, 2019. "Relationships and nature of contracts in the distribution structure for responsible trade," Working Papers hal-02937865, HAL.
    3. Florence TOUYA, 2019. "Relevance of Potential Supply Structures in Frameworks involving Consumer's private Information: the Case of Fair Trade," Working Papers 2018-2019_12, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Aug 2019.
    4. Florence Lachet-Touya, 2019. "Relevance of potential supply structures in frameworks involving consumer's private information: the case of fair trade," Working Papers hal-02937902, HAL.

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    Keywords

    Demand and Price Analysis; International Relations/Trade;

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