Does paying farmers a fairer price encourage more production and create over supply problems?
There is no evidence for this and in fact the it is difficult to imagine how Fairtrade could have this affect. Fairtrade is a voluntary model of trade that is consumer/market led. It is true Fairtrade includes prices designed to meet producers’ sustainable costs of production. But because Fairtrade is market led it can only grow in line with market demand. Farmers only receive the Fairtrade Minimum Prices and Premiums for produce where they have a buyer willing to pay for them. As there are already more produce than the market can support many producer groups continue to sell a lot, and in some cases most, of their produce to the conventional market. Fairtrade certified producers use the additional income from Fairtrade to improve the quality of their lives and to invest in their businesses. Farmers also invest the Fairtrade Premiums in crop diversification in order to escape from their dependence on a single crop as their primary source of income. Because Fairtrade certified producers
