Fair Trade Contracts for Some, an Insurance for Others

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Date

11 mars 2009

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info:eu-repo/semantics/OpenAccess




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Claire Chambolle et al., « Fair Trade Contracts for Some, an Insurance for Others », HAL SHS (Sciences de l’Homme et de la Société), ID : 10670/1.733e30...


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This article analyzes the impact of Fair Trade contracts between sub-groups of farmers and a Fair Trade organization on the spot market price. We analyze a three level vertical chain gathering perfectly competitive farmers upstream who offer their raw product on a spot market to manufacturers who then sell finished products to a downstream retailer. Absent Fair Trade, the entire raw product is sold on the spot market. When a Fair Trade organization offers a Fair Trade contract to a sub-group of farmers, it gathers a Guaranteed Minimum Price clause and a straight relationship between the sub-group of farmers and the retailer. This article highlights several conditions such that a snowball effect exists, i.e farmers outside of the Fair Trade contract also benefit from a higher spot market price.

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