Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Gothenburg, Department of Economics

No 708: Who Benefits from Fairtrade? Evidence from the Swedish Coffee Market

Dick Durevall ()
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Dick Durevall: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O.Box 640, SE 40530 GÖTEBORG, Sweden

Abstract: This paper analyses how the premium customers pay for Fairtrade-labelled coffee is distributed in the Swedish market, using information on costs of production and scanner data on almost all roasted and ground coffee products sold by retailers. A key finding is that roasters and retailers get 43–70%, while producer countries, in this paper comprising coffee farmers, cooperatives, middlemen, exporters and Fairtrade International, get 24–51%. Fairtrade Sweden gets 5–8%. These values are 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, and whether conventional coffee is compared with organic or non-organic Fairtrade coffees. Since roasters’ and retailers’ margins are higher for Fairtrade than conventional coffee, there is evidence that Fairtrade retail prices are higher than the level attributable to costs. However, producer countries receive a significantly larger share of the premium paid than reported in earlier studies, which are either dated or analyse very small samples of coffees.

Keywords: coffee supply chain; ethic labels; Fair Trade; extra price; Fairtrade; market power; organic coffee

JEL-codes: D43; O19; P46

29 pages, September 2017

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