IDEAS home Printed from https://ideas.repec.org/p/hhs/huiwps/0108.html
   My bibliography  Save this paper

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

Author

Listed:
  • Durevall, Dick

    (HUI Research)

Abstract

Consumers pay a premium for Fair Trade coffee, often assuming that it mainly benefits poor coffee farmers. However, several studies report that most of the premium accrues to actors in the consumer countries, such as roasters and retailers. This paper analyses how the returns to Fair Trade are distributed among bean producer countries, roasters and retailers, and Fairtrade Sweden, using scanner data on 185 products from Sweden and information about costs of production. The distribution depends on how much more costly it is to produce Fair Trade coffee compared to conventional coffee, given costs of beans and licences. Assuming the difference is 5 SEK per kg (about USD 0.80), which is on the high side, roasters and retailers get 61%, while producer countries, i.e., coffee farmers, cooperatives, middlemen, exporters and Fairtrade International, get 31%. The rest accrues to Fairtrade Sweden. These estimates are uncertain, but there is there strong evidence that Fair Trade retail prices are higher than the level attributable to the costs of Fair Trade beans and licences.

Suggested Citation

  • Durevall, Dick, 2015. "Are Fairtrade Prices Fair? An Analysis of the Distribution of Returns in the Swedish Coffee Market," HUI Working Papers 108, HUI Research.
    • Handle: RePEc:hhs:huiwps:0108
    as

    Download full text from publisher

    File URL: http://www.hui.se/BinaryLoader.axd?OwnerID=3a577059-d869-4d1b-bff1-5673eefc3461&OwnerType=0&PropertyName=EmbeddedFile_a9bc7cc4-49ec-4704-be41-3a9e2b1fa144&FileName=HUIwp108.pdf&Attachment=True
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    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. Emi Nakamura & Dawit Zerom, 2010. "Accounting for Incomplete Pass-Through," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(3), pages 1192-1230.
    3. Peter Griffiths, 2014. "Fairtrade: Comment On Tedeschi And Carlson," Journal of International Development, John Wiley & Sons, Ltd., vol. 26(2), pages 277-289, March.
    4. Peter Griffiths, 2012. "Ethical Objections to Fairtrade," Journal of Business Ethics, Springer, vol. 105(3), pages 357-373, February.
    5. Veronika Andorfer & Ulf Liebe, 2012. "Research on Fair Trade Consumption—A Review," Journal of Business Ethics, Springer, vol. 106(4), pages 415-435, April.
    6. Kilian, Bernard & Jones, Connie & Pratt, Lawrence & Villalobos, Andres, 2006. "Is sustainable agriculture a viable strategy to improve farm income in Central America? A case study on coffee," Journal of Business Research, Elsevier, vol. 59(3), pages 322-330, March.
    7. repec:bla:devpol:v:25:y:2007:i:1:p:43-70 is not listed on IDEAS
    8. Weber, Jeremy G., 2011. "How much more do growers receive for Fair Trade-organic coffee?," Food Policy, Elsevier, vol. 36(5), pages 678-685.
    9. Victor V. Claar & Colleen E. Haight, 2015. "Fair Trade Coffee: Correspondence," Journal of Economic Perspectives, American Economic Association, vol. 29(1), pages 215-216, Winter.
    10. Pradyot Ranjan Jena & Bezawit Beyene Chichaibelu & Till Stellmacher & Ulrike Grote, 2012. "The impact of coffee certification on small-scale producers’ livelihoods: a case study from the Jimma Zone, Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 43(4), pages 429-440, July.
    11. Fredrik Carlsson & Jorge García & Åsa Löfgren, 2010. "Conformity and the Demand for Environmental Goods," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 47(3), pages 407-421, November.
    12. Joni Valkila & Pertti Haaparanta & Niina Niemi, 2010. "Empowering Coffee Traders? The Coffee Value Chain from Nicaraguan Fair Trade Farmers to Finnish Consumers," Journal of Business Ethics, Springer, vol. 97(2), pages 257-270, December.
    13. Shareen Hertel & Lyle Scruggs & C. Patrick Heidkamp, 2007. "Human Rights and Public Opinion: From Attitudes to Action," Economic Rights Working Papers 3, University of Connecticut, Human Rights Institute, revised Apr 2008.
    14. Jens Hainmueller & Michael J. Hiscox & Sandra Sequeira, 2015. "Consumer Demand for Fair Trade: Evidence from a Multistore Field Experiment," The Review of Economics and Statistics, MIT Press, vol. 97(2), pages 242-256, May.
    15. Durevall, Dick, 2007. "Competition in the Swedish coffee market, 1978-2002," International Journal of Industrial Organization, Elsevier, vol. 25(4), pages 721-739, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dick Durevall, 2020. "Fairtrade and Market Efficiency: Fairtrade-Labeled Coffee in the Swedish Coffee Market," Economies, MDPI, vol. 8(2), pages 1-17, April.
    2. Durevall, Dick, 2017. "Who Benefits from Fairtrade? Evidence from the Swedish Coffee Market," Working Papers in Economics 708, University of Gothenburg, Department of Economics.
    3. Podhorsky, Andrea, 2015. "A positive analysis of Fairtrade certification," Journal of Development Economics, Elsevier, vol. 116(C), pages 169-185.
    4. Peter Griffiths, 2015. "Marketing by Controlling Social Discourse: The Fairtrade Case," Economic Affairs, Wiley Blackwell, vol. 35(2), pages 256-271, June.
    5. Vo Hong Tu & Steven W. Kopp & Nguyen Thuy Trang & Andreas Kontoleon & Mitsuyasu Yabe, 2021. "UK Consumers’ Preferences for Ethical Attributes of Floating Rice: Implications for Environmentally Friendly Agriculture in Vietnam," Sustainability, MDPI, vol. 13(15), pages 1-27, July.
    6. 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.
    7. Nicholas G. Marconi & Neal H. Hooker & Nicholas DiMarcello III, 2017. "What's in a Name? The Impact of Fair Trade Claims on Product Price," Agribusiness, John Wiley & Sons, Ltd., vol. 33(2), pages 160-174, April.
    8. Helene Naegele, 2019. "Where Does the Fairtrade Money Go? How Much Consumers Pay Extra for Fairtrade Coffee and How This Value Is Split along the Value Chain," Discussion Papers of DIW Berlin 1783, DIW Berlin, German Institute for Economic Research.
    9. Raluca Dragusanu & Eduardo Montero & Nathan Nunn, 2022. "The Effects of Fair Trade Certification: Evidence from Coffee Producers in Costa Rica," Journal of the European Economic Association, European Economic Association, vol. 20(4), pages 1743-1790.
    10. Oya, Carlos & Schaefer, Florian & Skalidou, Dafni, 2018. "The effectiveness of agricultural certification in developing countries: A systematic review," World Development, Elsevier, vol. 112(C), pages 282-312.
    11. Wang, Xiaojin, 2016. "Is Fair Trade Fair for Consumers? A Hedonic Analysis of U.S. Retail Fair Trade Coffee Prices," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236344, Agricultural and Applied Economics Association.
    12. 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.
    13. Naegele, Helene, 2020. "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," World Development, Elsevier, vol. 133(C).
    14. 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.
    15. Tully, Stephanie M. & Winer, Russell S., 2014. "The Role of the Beneficiary in Willingness to Pay for Socially Responsible Products: A Meta-analysis," Journal of Retailing, Elsevier, vol. 90(2), pages 255-274.
    16. Veronika A. Andorfer & Ulf Liebe, 2014. "Do Information, Price, or Morals Influence Ethical Consumption? A Natural Field Experiment and Customer Survey on the Purchase of Fair Trade Coffee," University of Bern Social Sciences Working Papers 6, University of Bern, Department of Social Sciences.
    17. Bosbach, Moritz & Maietta, Ornella Wanda, 2019. "The Implicit Price for Fair Trade Coffee: Does Social Capital Matter?," Ecological Economics, Elsevier, vol. 158(C), pages 34-41.
    18. Volker Lingnau & Florian Fuchs & Florian Beham, 2019. "The impact of sustainability in coffee production on consumers’ willingness to pay–new evidence from the field of ethical consumption," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 30(1), pages 65-93, April.
    19. Hellwig, Robert & Atasoy, Ayse Tugba & Madlener, Reinhard, 2020. "The Impact of Social Preferences and Information on the Willingness to Pay for Fairtrade Products," FCN Working Papers 6/2020, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    20. Naegele, Helene, 2020. "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," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 133, pages 1-1.

    More about this item

    Keywords

    coffee supply chains; ethic labels; Fair Trade premium; 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:huiwps:0108. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hans Seerar Westerberg (email available below). General contact details of provider: https://edirc.repec.org/data/huistse.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.