Measuring the impact of fair trade on development

This study on the impact of fair trade relies on new field data from coffee and banana cooperatives in Peru and Costa Rica, including a detailed assessment of its welfare effects by comparing FT farmers with non-FT farmers as a benchmark. Attention is focused on three major effects: (a) direct tangible impact of FT arrangements on the income, welfare, and livelihoods of rural households; (b) indirect effects of fair trade for improving credit access, capital stocks, investments, and attitudes to risk; and (c) institutional implications of fair trade for farmers’ organisations and externalities for local and regional employment, bargaining, and trading conditions. Although direct net income effects remain fairly modest, important benefits are found to include capitalising farmers and strengthening their organisations.