Date of Award

6-2008

Document Type

Union College Only

Degree Name

Bachelor of Arts

Department

Economics

Language

English

Keywords

fair, trade, coffee, higher, program

Abstract

Since Fair Trade’s inception ten years ago, the program has precipitated issues worth examination. This thesis discusses the fundamental effects of price floors – namely oversupply – as exhibited in the Fair Trade program. Further, it reports on the program’s high costs of entry and operation that have kept many from experiencing its intended economic benefits. Through data collected from a local survey, this thesis reveals what sentiments most drive Fair Trade support, as well as what underlying personal characteristics may be compelling such sentiments. I have found that most in support of the program are so due to imperfect information, namely the widely held belief that the program guarantees workers in the coffee fields higher wages – which it does not. Further, many respondents exhibited waning support for the program near completion of the three-page survey when informed of several less-known facts about Fair Trade’s operating mechanisms – principally that its guidelines nowhere indicate the guarantee of higher wages. Also worth noting is the deviation in characteristics exhibited by Fair Trade drinkers in my survey from those of others; Fair Trade drinkers on the whole did not exhibit a higher degree of global awareness than non-Fair Trade drinkers. Lastly, this thesis explores who is profiting from the program’s creation of excess rents; in my case study, through a markup analysis, the coffee roasting company is making higher profits on Fair Trade coffee than non-Fair Trade coffee at the expense of the retailer. Further, this thesis argues that the non-Fair Trade drinker is now paying a higher price for his cup of coffee due to cost and price averaging.

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