The Sunday Times reported that an analysis of the pricing structure shows that only a part of the considerable premiums being charged by supermarkets is being fed back to producers. The bulk of the price hike is being pocketed by the stores in profits.
John McCabe, a retail pricing expert with the consultants Connector Global told the paper that “people do not go for the cheapest product when buying Fairtrade because they think the extra money is helping someone in the developing world”. He added: “What they will be surprised to learn is that the lion’s share of the extra money appears in many cases to be going to the supermarkets.”
The report said the price of Fairtrade products can be double that of the ordinary equivalents, leaving room for generous profits.
Waitrose appears to be the only major supermarket not to make extra profits from Fairtrade items. Its prices are higher for such products but only to reflect the extra money paid to farmers.
Sainsbury’s, in contrast, charges £2.49 for 8oz of Fairtrade coffee — 60p more than its regular premium coffee. Of the extra charged, only about 21p is thought to be paid to farmers.
The Sunday Times said Sainsbury’s already sells 1 million Fairtrade bananas a week, while Tesco, which only joined the scheme earlier this year, sells more than 500,000.
The paper said supermarkets had declined to comment on their profit margins but pointed out that the scheme was still benefiting Third World farmers.