Drivers affecting revenues and premium price for producers in the Fairtrade certification system

This research develops from the collaboration between the no-profit organization Fairtrade Italia and the University of the Studies of Milan. The aim of the study is to provide an analysis as comprehensive as possible of the Fairtrade producers' organizations, focusing on the factors that lead to greater success in the participation in the certification system in terms of revenues. Furthermore, we also investigate the features that lead to a higher premium, the amount of money received on top of selling price for certified products to be spent in organization and community projects. The novelty of this study is that it analyzes the Fairtrade affiliated organizations from the comprehensive dataset on worldwide certified producers collected by the Monitory, Evaluation and Learning program, that has never been analyzed before. The database comprises information on all the certified producer organizations, including every product and country; exogenous country-specific data has been added. Data refer to 2013 and includes 878 producers' organizations, distributed in 77 developing countries. Using a linear regression model, the analysis highlights the roles of the duration of participation in Fairtrade, organization size, yields, labour intensity, percentage of females and degree of involvement in the network as crucial determinants. Finding determinants of the revenues and the premium derived from Fairtrade more analytically, concerning the stated goals of Fairtrade and to the previous findings from the literature, can improve knowledge about the effectiveness and the impact of the Fairtrade system on producers' organizations and their communities.