The increasing importance of premium segments and private labels raise skepticism about the ability of Fair Trade to help smallholders compete in high value-added markets. Using panel data collected in Mali, this paper contributes to the debate by estimating the impact of Fairtrade certification on the quality of Malian cotton. Controlling for the nonrandom certification of producers, results show a significant impact on the quality of cotton produced by both certified and geographically close noncertified growers via spillover effects. The analysis suggests that contract farming enforced by third-parties and demonstration effects foster the adoption of innovative agricultural practices.
