Does Fair Trade Fulfill the Claims of its Proponents? Measuring the Global Impact of Fair Trade on Participating Coffee Farmers
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While proponents claim that fair trade provides meaningful benefits for
participating commodity growers, few studies to date have measured these
benefits on a global scale. This study estimates the worldwide monetary benefits
that fair trade provides to participating coffee farmers, most of whom belong to
cooperative organizations. These benefits can be significant for individual farmers
and reach up to $100 per year, averaged across all beneficiaries, when coffee
prices are low. When market prices for coffee are relatively high, the annual
benefits from fair trade shrink to an average of $35 per beneficiary. The fact that
less than two percent of the world's coffee farmers currently sell any coffee under
certified fair trade labels - and because fair trade coffee farmers are already
producing quantities that exceed market demand - weakens proponents' arguments
that fair trade provides an attractive new paradigm for the global coffee market.
Another concern is that consumers spend between $2 and $10 extra on fair trade
for every dollar that reaches participating farmers. By comparison, projects that
aim to improve coffee farmers' production, processing, and marketing skills show
the potential to provide benefits at a lower cost and also reach a broader clientele.