Honduran Coffee Trade: Economic Effects of Fair Trade Certification On Individual Producers

Abstract

Global demand for coffee has increased significantly due to emphasis placed on value creation throughout the coffee supply chain, increased consumption in emerging economies, and changes in consumer preference. The specialty coffee industry, in particular, has highlighted the economic effects on individual participants from producers to consumers. In an attempt to encourage a more equitable income distribution along the supply chain, organizations such as Fair Trade Coffee have emerged to address the welfare of producers. A simple regression analysis can be used to determine the impact of Fair Trade Certification on producer premiums obtained through these non-traditional distribution channels. The Fair Trade Model will also be evaluated based on historical market data related to the evolution of the specialty coffee industry, including similar trade models that have emerged due to increased awareness brought about by Fair Trade Coffee. This preliminary study will serve as a platform for future studies that will determine the overall impact of Honduran Fair Trade Coffee Certification on producer welfare.