Can Fairtrade certification improve farmers’ livelihoods in small-scale coffee farming tribal communities in India? Has Fairtrade contributed to capacity-building among the farmers? To answer these questions, household data of 256 coffee farmers from a tribal coffee-producing community in southern India was collected in 2010. Using the propensity score matching technique, the empirical findings show that Fairtrade certification has a positive impact on farmers’ income. However, the incidence of poverty in the community is very high, with 84% of the certified farmers being extremely poor. Some improvement in the livelihoods of certified farmers has occurred from higher and assured farm gate prices, regular collection of coffee from the village centers that reduces travel costs, and from the social Fairtrade premium. But while the benefits are modest and the process is slow, challenges remain in terms of improving the effectiveness and management of the cooperative system, as well as raising the awareness of farmers about Fairtrade certification. There is a need to strengthen the positive impacts created by Fairtrade certification by collaboration between the cooperative and local government to enhance the technical, financial and human capacities of the coffee cooperative members.