Fairtrade and market efficiency: Fairtrade-labeled coffee in the Swedish coffee market

Artikel

Fairtrade labeling has the potential to increase market efficiency by connecting farmers to altruistic consumers who are willing to pay a premium for sustainability-certified products. A requirement for increased efficiency, though, is that the farmers' benefits are larger than the Fairtrade processing costs and the excess payment by consumers that does not accrue to farmers; otherwise direct transfers to farmers would be more efficient. This paper analyzes how excess payment for Fairtrade-labeled coffee is distributed in the Swedish market, using information on production costs and scanner data on almost all roasted and ground coffee products sold by retailers. A key finding is that roasters and retailers get 61-70%, while producer countries, in this paper comprising coffee farmers, cooperatives, middlemen, exporters, and Fairtrade International, get 24-31%; Fairtrade Sweden gets 6-8%. These values are the upper and lower bounds that reflect assumptions made about the additional costs of producing roasted and ground Fairtrade coffee, given the cost of beans and the Fairtrade license. The Fairtrade label thus seems to create a coffee product that roasters and retailers can use to exploit their market power.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Economies ; ISSN: 2227-7099 ; Volume: 8 ; Year: 2020 ; Issue: 2 ; Pages: 1-17 ; Basel: MDPI

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; International Linkages to Development; Role of International Organizations ; Other Economic Systems: Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty
• Subject: coffee supply chain ; fair trade ; Fairtrade ; market power

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Durevall, Dick
• Event: Veröffentlichung
• (who): MDPI
• (where): Basel
• (when): 2020

Further information

• DOI: doi:10.3390/economies8020030
• Handle: http://hdl.handle.net/10419/257079
• Last update: 10.03.2025, 11:45 AM CET