Fairtrade versus Rainforest Alliance

This study is a comparative analysis of Fairtrade and Rainforest Alliance focusing on the effects generated by a minimum price respectively investment support. The framework for this analysis is based on a study of litterateur addressing income support as a way of generating a more stable situation for the farmers as well as an increased income. An important aspect of income support is how it can affect the farmer’s production decision hence work as a coupling support. The question at issue for this paper is Fairtrade’s respectively Rainforest Alliance’ capability of generating insurance, wealth and coupling effects. The results from this comparison show how Fairtrade respectively Rainforest Alliance are both capable of generating a wealth effect, and that their potential varies as the world market price changes from a low level to higher level. Although constrained by the uncertainty of how much of the Fairtrade Certified production that will actually be sold under Fairtrade conditions, the minimum price will to some degree generate an insurance effect hence stimulate production. This incentive is not built into the Rainforest Alliance’ investment support to the same degree. Furthermore, a coupling effect is more likely to be generated by the minimum price compared to the investment support