Does Fair Trade Deliver on Its Core Value Proposition? Effects on Income, Educational Attainment, and Health in Three Countries

Abstract

Alternative trade organizations (ATOs) based on philosophies of social justice and/or environmental well-being are establishing new channels of trade and marketing. Partisans promote ATOs as systems to transfer benefits from consumers in the wealthy northern hemisphere to producers in the poor southern hemisphere. The central public policy question is whether the well-being of poor agricultural producers in the southern hemisphere is actually being improved by fair-trade practices, or are consumers who buy products on this premise deceived? The research reported here partially answers the question whether participation in a fair-trade coffee marketing channel delivers benefits to small-scale producers in Latin America. The authors employ a survey methodology to compare TransFair USA (TF) cooperative participants and nonparticipating farmers in three countries on socioeconomic indicators of well-being. According to the analysis, the economic effects of fair-trade participation are unassailable; the effects on educational and health outcomes are uneven. However, TF cooperative participation positively affects educational attainment and the likelihood that a child is currently studying. The authors find positive health-related consequences of TF cooperative participation.