How Does Fairtrade Affect the Market? A Case Study in South Africa.

Sammanfattning: The fairtrade label ensures that requirements set by the Fairtrade Labelling Organization on working standards and income levels are met by fairtrade certified producers. The fairtrade market, although still very small, is one of the fastest growing markets in the world. Considering the growth of fairtrade production it becomes important to understand its influence on the market better. Recently fairtrade has both been criticised for having negative effects on the market and praised for fixing market errors. Very little academic literature has so far examined fairtrade and its effects on the market. The aim of this thesis is therefore to analyse to what extent fairtrade affects the market, and to investigate arguments both positive and negative towards fairtrade. The analysis of the arguments is divided into a theoretical part including trade theory models, and a more practical part in which interviews with people involved in fairtrade in South Africa are used as the main source. The findings of this thesis indicate: That fairtrade might lead to increased production depending on the size of the demand the producer faces relative to the output produced before certification. That fairtrade does not lead to lower quality of products. That there are both positive and negative effects of including bigger plantations as fairtrade producers. That all of the extra amount spent on fairtrade products does not reach the workers on fairtrade farms.