Does Fair Trade Fulfill the Claims of its Proponents? Measuring the Global Impact of Fair Trade on Participating Coffee Farmers

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.