The Effects of Fair Trade Certification: Evidence from Coffee Producers in Costa Rica

80 Pages Posted: 29 Jan 2018 Last revised: 16 Apr 2025

See all articles by Raluca Dragusanu

Raluca Dragusanu

Harvard University

Nathan Nunn

Harvard University - Department of Economics

Nathan Nunn

University of British Columbia (UBC)

Date Written: January 2018

Abstract

We study the effects of Fair Trade (FT) certification of coffee on producers and households in Costa Rica. Examining the production dynamics of all Costa Rican coffee mills from 1999–2014, we find that when global coffee prices are lower and the FT guaranteed minimum price is binding, FT certification is associated with a higher sales price, greater sales, and more revenues. We also find that certification reduces the probability of a mill closing down and exiting the industry. Looking at households, we find that certification is associated with higher incomes for farm owners. Part of this is due to a transfer of incomes from intermediaries whose incomes decrease due to FT. We find no effect of FT on unskilled workers, who are the more disadvantaged group within the coffee sector.

Suggested Citation

Dragusanu, Raluca and Nunn, Nathan and Nunn, Nathan, The Effects of Fair Trade Certification: Evidence from Coffee Producers in Costa Rica (January 2018). NBER Working Paper No. w24260, Available at SSRN: https://ssrn.com/abstract=3112047

Raluca Dragusanu (Contact Author)

Harvard University ( email )

Nathan Nunn

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

Nathan Nunn

University of British Columbia (UBC) ( email )

2329 West Mall
Vancouver, British Columbia BC V6T 1Z4
Canada

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