Ethiopian Coffee and Fair Trade - An empirical study

Abstract

Fair Trade labeled products have become increasingly popular for western consumers in recent years. Fair Trade Labeling Organization International (FLO) claims to contribute to development by increasing profits to farmers and empowering producer communities. This thesis evaluates the economic impact of Fair Trade certification for small-scale coffee farmers in Ethiopia when world market prices for coffee are relatively high. Two cooperative unions are interviewed about Fair Trade and the coffee marketing chain in Ethiopia is described. A regression analysis based on primary data collected from coffee farmers, during a field study in Ethiopia, shows that Fair Trade certified farmers are economically better off. Fair Trade certified farmers receive a remarkably higher price than other farmers despite the fact that FLO does not claim to increase prices for farmers at a time of high world market coffee prices.