Questions have been raised about the monetary benefit of Fair Trade certification for some farmers by recently published analysis by the International Food Policy Research Institute
A study* that tracked the quality premium for coffee grown in Ethiopia found that less than a third of the premium is actually reaching farmers. The study suggests that, as quality premiums are small and average production levels low, the net benefit to coffee farmers is as little as US$22/year, even with a what the authors of the study described as a “perfect transmission scenario” and therefore would have little impact on the welfare of the average coffee farmer.
The authors of the report also argue that, given that the sustainability standards they studied are characterized by the highest premiums among such schemes, “it can be assumed that even lower benefits from other certification schemes trickle down to producers.”
Report author Bart Minten**, who works for the International Food Policy Research Institute (IFPRI) noted that voluntary sustainability standards such as Fair Trade and organic certified coffee have seen remarkable growth, especially over the past decade. However, in Ethiopia, he argues, the benefits for small coffee farmers haven’t been as significant as may be widely perceived. ■ C&CI Read more
*Tracking the Quality Premium of Certified Coffee: Evidence from Ethiopia, Bart Minten, Mekdim Dereje, Ermias Engida, Seneshaw Tamru.
**Bart Minten is a Senior Research Fellow in IFPRI’s Development Strategy and Governance Division. He is based in Addis Ababa, Ethiopia
This article first appeared in the January ’18 issue of C&CI, click on subscribe now if you wish to read the full story and other informative articles in the January and future issues of C&CI or log in here if you are already a subscriber.