Does fair trade certification improve farmworkers’ welfare and empowerment? Evidence from Nicaragua and Brazil

Abstract

Fairtrade (FT) is one of the most well-known Alternative Trade Organizations (ATOs). FT originally aimed to create empowerment among small producers and improve their livelihoods. In 2011, FT USA started certifying coffee estates, in order to include also farmworkers into a new certification scheme, known as Fair Trade for All (FT4ALL). Through the data collected by the Centre for tropical agriculture (CIAT) in Brazil and Nicaragua, we conducted an analysis to answer the following questions: (1) what is the causal effect of FT4ALL on workers’ welfare? and (2) is FT4ALL effective at empowering farm workers? We measured the average treatment effect of the certification through the implementation of the OLS model, propensity score matching (PSM) and difference-in-differences. Our results suggest that the certification has an overall positive impact on both welfare and empowerment.