Fairtrade in coffee: A study of opportunities and limitations for newcomers

Sigurd Fabrin

Student thesis: Master thesis


As a consequence of increased globalization, the rise of ethical consumerism has focused in on the plight of this world's destitute cash crop farmers, who are struggling with the boom-bust cycles of international commodity prices. Fairtrade is an outcome of the ethical consumption movement. It seeks to lessen the burden for poor farmers by securing them a stable income and a more friendly business environment. It does this by guaranteeing a fixed minimum price and a range of other benefits. In exchange for that and for compliance with a set of rules and standards, companies can use the Fairtrade label on their products. Fairtrade has now been operating for several decades and has had some positive impact on the participants' lives. Does this mean that it is able to repeat this in the future and on a larger scale? In this thesis, I ask the question of what opportunities and limitations Fairtrade certification brings about for poor coffee growers. The focus of the thesis is on what can be achieved by those farmers who are presently not involved in Fairtrade. In order to answer this question I explore it on three levels of abstraction: theory, literature and case studies. I discuss the working of Fairtrade in relation to a wide variety of theories on economic development. I then proceed to distilling opportunities and limitations from the relevant literature and from two distinct case studies. Finally, my findings are discussed against each other to see which of the perceived opportunities and limitations can truly hold water. My findings can be grouped into seven categories that hold within them both opportunities as well as limitations. These are: The Fairtrade minimum price, access to credit, the social premium, cutting out the middlemen, economic and social stability, benefits of organizing, and finally environmental sustainability and gender equality. As a result of a synthesis of these findings, my conclusions are that Fairtrade by design has some embedded shortcomings that inhibit it from enlisting large numbers of newcomers into the program. While it is benefiting farmers who are already inside, it has simultaneously raised entry barriers around the Fairtrade market to levels that make it difficult and less appealing for prospective entrants. The overarching problem regarding Faritrade's ability to absorb new members, is that demand cannot keep pace with supply – even with the current number of producers enlisted.

EducationsMSc in Business, Language and Culture, (Graduate Programme) Final Thesis
Publication date2010
Number of pages75