Market Disintermediation and Producer Value Capture: The Case of Fair Trade Coffee in Nicaragua, Peru, and Guatemala

Abstract

Does participation in Fair Trade (FT) coffee marketing deliver added value to small-scale producers in developing countries? Is FT fair to producers as promised? The present study adopts a survey methodology designed to measure a combination of socioeconomic impact indicators as well as measures particular to the FT coffee-growing and marketing experience. We surveyed over 1,200 small-scale coffee producers in Nicaragua, Peru, and Guatemala, of which about two-thirds participate in coffee marketing schemes sponsored by TransFair USA. The study reports selected results related to production, marketing, material quality of life, education, health, and general well-being. Results show that producers participating in TransFair USA-supported FT cooperatives are indeed capturing more value than nonparticipants. This benefit transfer translates into modest but measurable improvements in quality of life, health, education, material comforts, social participation, technical and social assistance, and even sustainable agricultural practices. Consumers can have confidence that the FT scheme works. Retailers may be assured that by selling FT coffee they can defend the position that they are participating in a social change campaign.

Citation

Arnould, E.J., Plastina, A. and Ball, D. (2007), "Market Disintermediation and Producer Value Capture: The Case of Fair Trade Coffee in Nicaragua, Peru, and Guatemala", Rosa, J.A. and Viswanathan, M. (Ed.) Product and Market Development for Subsistence Marketplaces (Advances in International Management, Vol. 20), Emerald Group Publishing Limited, Leeds, pp. 319-340. https://doi.org/10.1016/S1571-5027(07)20014-2