The Institute of Economic Affairs, a think tank, in an in-depth report into Fair Trade said that the scheme "often better reflected the prejudices of western consumers than the needs of poor producers".
The label, which was on nearly £1 billion of goods over the last 12 months, can be found on chocolate, coffee, tea, bananas and other food. It has become increasingly mainstream and has been adopted by Cadbury for its Dairy Milk chocolate bars, as well as Nestle for some of its Nescafe coffee and KitKat chocolate bars. The scheme promises to pay producers a guaranteed price for their goods and a premium above the market price.
However, the IEA report said that it was unclear how much of the additional price actually reached the producers. "Even analysts sympathetic to the movement have suggested that only 25 per cent of the premium reaches producers. No study ever produced has shown that the benefit to producers anything like matches the premium paid."
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