Summary
This paper seeks to understand how effectively export quality premiums are transmitted to producers certified by Voluntary Sustainability Standards (VSS), with a focus on Ethiopia’s coffee sector. Using a census of export level transaction data and large-scale production level data, the authors find that producers receive only a third of the premium realized at export. Furthermore, it is evident that even in a more efficient transmission scenario, small premiums and low production levels mean a coffee farmer’s annual income would only increase by 20 USD. It is concluded that due to limited actual transmission and the limited potential of more effective transmission, VSS premiums are unlikely to significantly improve the welfare or coffee producers in Ethiopia.