AgriFood-Report 2009:1

Fairtrade labelling

Authors: Helena Johansson 

Note that the report is written in Swedish.

Sales of Fairtrade labelled foods in grocery stores is a growing business in Europe and the United States. The aim of the labelling scheme is to improve working and living conditions for export-oriented small-scale farmers and hired labour in developing countries

The purpose of this report is to analyse the effects of the Fairtrade labelling scheme (Rättvisemärkt in Sweden) using economics theory and existing empirical studies.

The overall conclusion is that Fairtrade labelling can have positive impacts on farmers belonging to certified cooperatives; the price fall during times of low world market prices is limited, resources are generated for investment in common goods, and good working conditions and environmental are encouraged. There are several weaknesses, though. Above all, the Fairtrade minimum price can never be extended to a larger number of poor farmers. Hence, the Faitrade system as currently constructed cannot have a significant role in combating world poverty. In addition, Fairtrade is generally inefficient in transferring resources between consumer and producer, or dealing with other problems like lack of micro-credits or too few schools. Finally, it is difficult to guarantee compliance with environmental and labour standards at certified farms and plantations.


Helena Johansson

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