Can fair trade resolve the “hungry farmer paradox”?

Fair trade (FT) schemes claim to improve food security by generating economic gains for certified households. Previous research has shown that FT-certified households may benefit from higher prices and incomes. However, little attention has been paid to the implications of FT for food security. In this paper, we use qualitative data, cross-sectional household surveys conducted among coffee-growing households in Peru and matching econometric methods to investigate whether economic gains resulting from FT are enough to ensure food security for farming households. Results show that although FT increased the return from certified coffee (prices, production, yields and net return), the extent of the food insecurity facing FT participants remained unchanged. Our qualitative results suggest that farming households use the additional income they receive from FT to pay for their children's higher education as a long-term non-farm investment. This leakage effect raises the question of the effect of FT in the medium and long term from a rural development perspective.