Fairtrade and Market Efficiency: Fairtrade-Labeled Coffee in the Swedish Coffee Market
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 process...
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| Format: | Article |
| Language: | English |
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MDPI AG
2020-04-01
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| Series: | Economies |
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| Online Access: | https://www.mdpi.com/2227-7099/8/2/30 |
| _version_ | 1797571264329547776 |
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| author | Dick Durevall |
| author_facet | Dick Durevall |
| author_sort | Dick Durevall |
| collection | DOAJ |
| description | 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. |
| first_indexed | 2024-03-10T20:37:52Z |
| format | Article |
| id | doaj.art-76bd335f70fb47c0a46e651427a76074 |
| institution | Directory Open Access Journal |
| issn | 2227-7099 |
| language | English |
| last_indexed | 2024-03-10T20:37:52Z |
| publishDate | 2020-04-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Economies |
| spelling | doaj.art-76bd335f70fb47c0a46e651427a760742023-11-19T20:54:15ZengMDPI AGEconomies2227-70992020-04-01823010.3390/economies8020030Fairtrade and Market Efficiency: Fairtrade-Labeled Coffee in the Swedish Coffee MarketDick Durevall0HUI Research, Stockholm and Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 Gothenburg, SwedenFairtrade 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.https://www.mdpi.com/2227-7099/8/2/30coffee supply chainfair tradeFairtrademarket power |
| spellingShingle | Dick Durevall Fairtrade and Market Efficiency: Fairtrade-Labeled Coffee in the Swedish Coffee Market Economies coffee supply chain fair trade Fairtrade market power |
| title | Fairtrade and Market Efficiency: Fairtrade-Labeled Coffee in the Swedish Coffee Market |
| title_full | Fairtrade and Market Efficiency: Fairtrade-Labeled Coffee in the Swedish Coffee Market |
| title_fullStr | Fairtrade and Market Efficiency: Fairtrade-Labeled Coffee in the Swedish Coffee Market |
| title_full_unstemmed | Fairtrade and Market Efficiency: Fairtrade-Labeled Coffee in the Swedish Coffee Market |
| title_short | Fairtrade and Market Efficiency: Fairtrade-Labeled Coffee in the Swedish Coffee Market |
| title_sort | fairtrade and market efficiency fairtrade labeled coffee in the swedish coffee market |
| topic | coffee supply chain fair trade Fairtrade market power |
| url | https://www.mdpi.com/2227-7099/8/2/30 |
| work_keys_str_mv | AT dickdurevall fairtradeandmarketefficiencyfairtradelabeledcoffeeintheswedishcoffeemarket |