A national chain of 46 coffeee bars, set up by three Oxford Brookes students from America who found it hard to buy a decent capuccino in the city, is now selling only Fairtrade coffee.

Angus, Alistair and Allan McCallum-Toppin will now serve only Fairtrade coffee

Brothers Alistair, Angus, and Alan McCallum-Toppin from Seattle, started AMT Coffee (named after their father Alexander) in 1993 with a hand cart coffee dispenser parked outside the Westgate Shopping Centre, followed shortly afterwards by a kiosk at Oxford rail station.

Alistair McCallum-Toppin said: "All our coffee will now be 100 per cent Fairtrade. It means that the price of a capuccino will go up from £1.40 to £1.55 but we feel good about it, knowing the guy who grows the coffee will get a fair price.

"And we are finding that most of our customers agree with us.

"We worked out the pros and cons of the move very carefully in the light of so many customers asking us for the change, and now we are more than happy with the decision."

He added that it was very appropriate that Fairtrade should be introduced at a chain founded in Oxford - Oxfam was one of the founding charities of the Fairtrade movement in 1992. Goods certified with the Fairtrade mark guarantee that growers receive a fair price for their product, often by cutting out middle men.

This year the price of green coffee beans for growers on the open market was 35p a pound compared with 68p a pound paid to growers under the Fairtrade scheme.

In a separate development, a row has blown up between the Fairtrade Foundation and US giant Kraft Foods, whose Banbury factory manufactures Kenco, Carte Noire and Maxwell House. Kraft is preparing to produce a new brand called Kenco Sustainable Development, paying farmers in Third World countries who meet its ethical standards 20 per cent more than the market rate - still less than the Fairtrade rate.

A spokesman for the Fairtrade Foundation said: "We feel this is a marketing ploy designed to cash in on the success of Fairtrade."

Jonathan Horrell, spokesman for Kraft, which employs 1500 people at its soluble coffee processing plant in Banbury, said: "We are a mainstream coffee producer, different from Fairtrade. But we share the objective of improving conditions for coffee growers."