This paper analyses the validity of the fixed Minimum Price approach used by Fair Trade Movement (FTM). It focuses on coffee, from the Brazilian state of Minas Gerais, where the majority of FTM Arabica coffee is produced. Two main organizations operate worldwide: Fairtrade Labeling Organizations (FLO) and World Fair Trade Organization (WFTO), but only the first one has a worldwide recognized certification process. The most important conditions are: i) a worldwide Minimum Price, fixed since 2011 at US$ 1.35/pound (Arabica natural and non-organic); ii) a premium of at least US$ 0.20/pound for the organization (1/5 for productivity and quality improvement, and 4/5 for community projects). Episodes of side selling have been reported and the validity of the Minimum Price approach is at risk. This paper uses four sets of data: the local production costs in Reais (January 2012 to October 2016), the international price in US$, the FTM international price and the local price (April 2011 to October 2016). All data were converted into Reais, for one 60 kg bag.
Fair trade minimum price: a comparative analysis for the Arabica coffee market
SANTUCCI, Fabio Maria;
2017
Abstract
This paper analyses the validity of the fixed Minimum Price approach used by Fair Trade Movement (FTM). It focuses on coffee, from the Brazilian state of Minas Gerais, where the majority of FTM Arabica coffee is produced. Two main organizations operate worldwide: Fairtrade Labeling Organizations (FLO) and World Fair Trade Organization (WFTO), but only the first one has a worldwide recognized certification process. The most important conditions are: i) a worldwide Minimum Price, fixed since 2011 at US$ 1.35/pound (Arabica natural and non-organic); ii) a premium of at least US$ 0.20/pound for the organization (1/5 for productivity and quality improvement, and 4/5 for community projects). Episodes of side selling have been reported and the validity of the Minimum Price approach is at risk. This paper uses four sets of data: the local production costs in Reais (January 2012 to October 2016), the international price in US$, the FTM international price and the local price (April 2011 to October 2016). All data were converted into Reais, for one 60 kg bag.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
