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Title: Fairtrade and market failures in international commodity trade
Author: Ronchi, Loraine
ISNI:       0000 0003 8357 3009
Awarding Body: University of Sussex
Current Institution: University of Sussex
Date of Award: 2005
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This thesis concerns an intervention in commodity markets known as 'Fairtrade', which pays producers a minimum 'fair' price and provides support to their cooperative organisations. Fairtrade justifies its intervention in commodity markets like coffee by claiming that factors like market power and producer organisation inefficiency marks down the prices producers receive ("producer price mark-downs"). As the market share of Fairtrade coffee grows. its intervention in commodity markets is of increasing interest. This is particularly true as international commodity policy also increasingly focuses less on the support and stabilisation of low prices. and more on enabling producers to increase their share of existing returns through gains in efficiency and profitability. Using an original data set collected from fieldwork in the coffee market for Costa Rica, the thesis assesses the role of Fairtrade in overcoming the market factors it claims limits producer returns. Careful research into farm-gate prices paid by milling firms and the detailed construction of an international benchmark price for Costa Rican coffee permit the construction of a producer price mark-down measure that informs on efficiency and market power. In addition to the role of Fairtrade, the measure permits the testing of hypotheses about what explains producer price mark-downs over mills and over time. Features of the Costa Rican input market for coffee permit a generalisation of the results. The empirical results find that market power is a limiting factor in the Costa Rican market and that Fairtrade does improve the efficiency of cooperatives, thereby increasing the returns to producers. The results also suggest that producers selling to vertically integrated multinational coffee mills face lower producer price mark-downs as compared to domestically owned non-cooperative mills. This result contradicts the popular view that increasing concentration of vertically-Integrated multinational firms account for a decline in coffee producer returns over time.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available