Is Fair Trade Really Fair: Evidence from the Swedish Coffee Marke

• Consumers pay a premium for Fairtrade coffee, often assuming that it mainly benefits poor producers. This paper analyses how the Fair Trade premium is allocated between roasters and retailers and bean exporting countries. Scanner data for everyday sales from 3,088 stores across Sweden are used to estimate Fair Trade and conventional consumer coffee price differences for ground and instant coffee, while controlling for product characteristics. Information about production costs are then used to calculate the shares of the Fair Trade premium. The allocations depend on how much more costly it is to produce Fair Trade than conventional coffee, given the costs of beans and licences, for which there is limited information. Assuming it costs 5 SEK per kg more to produce Fair Trade ground coffee, which is on the high side, roasters and retailers get 60% of the premium, while they get about 70% when it is assumed that there is no difference in costs. The share going to roaster and retailers for instant coffee is about 70%. Countries that export Fair Trade beans and Fairtrade International, the organization that certifies the beans, thus get 30% to 40% of the premium.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Economics (hsv//eng)

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