Measuring the impact of fair trade on development

This study of the impact of fair trade relies on new field data from coffee and banana co-operatives
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, invest
ments, and attitudes to risk; and (c) institutional implications of fair trade for farmers’ organ
isations and externalities for local and regional employment, bargaining, and trading
conditions. Although direct effects in terms of net income remain fairly modest, important
benefits are found to include capitalising farmers and strengthening their organisations.