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Can coffee certification schemes increase incomes of smallholder farmers? Evidence from Jinotega, Nicaragua

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Abstract

This paper investigates the impact of Fairtrade and organic certification on household income of smallholder coffee farmers in the Jinotega Municipality of Nicaragua. Using a sample of 233 coffee farming households and employing endogenous switching regression model and propensity score matching method, the results found that Fairtrade and organic certification standards have different effects on the certified farmers; while Fairtrade farmers had experienced yield gains, organic farmers had the price advantage. However, the overall impact of these certification standards on the total household income is found to be statistically not significant. While some of the Fairtrade-certified cooperatives have used the social premium in creating community-level infrastructure, there is a need for more investment. The major constraint the organic-certified farmers face is lack of availability of adequate organic inputs such as manures and organic herbicides.

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Notes

  1. Certification is seen as only one of many actual and potential poverty alleviation tools, and its impacts are, and will be, always limited.

  2. All coffee yields in this paper refer to green bean.

  3. Here we use the income poverty incidence definition of 1.25$ a day (extreme) and 2$ a day (moderate) as defined by the World Bank. The dollar value has been converted into Nicaraguan Cordoba (C$) by using the PPP exchange rate for 2005 and then adjusted for the national inflation levels to arrive at the equivalent PPP exchange rate for 2009 (year of survey). The latest PPP exchange rate figure for dollar in Nicaraguan currency is available for 2005. The translation into the PPP exchange rate and the inflation rate correction allowed to convert the 1.25 US$ poverty line (extreme) into 15.92 C$.

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Acknowledgments

This paper was written in the context of a broader project (COFEIN) that was carried out by the Institute for Environmental Economics and World Trade of the Leibniz University Hannover in Ethiopia, Nicaragua and India. Further information is available at http://www.iuw.uni-hannover.de. The authors thank the participants of PEGNet Conference 2010, South Africa, and the participants of Tropentag Conference 2012, Germany, for their helpful comments on an earlier version of the paper that was presented in these conferences. Authors thank Falguni Guharay from SIMAS, Nicaragua for his insightful discussions with the authors during the field visit in Nicaragua.

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Authors and Affiliations

  1. School of Management, National Institute of Technology Karnataka, Surathkal, Mangalore, India

    Pradyot Ranjan Jena

  2. Institute for Environmental Economics and World Trade, Leibniz University Hannover, Königsworther Platz 1, 30167, Hannover, Germany

    Till Stellmacher & Ulrike Grote

Authors
  1. Pradyot Ranjan Jena
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  2. Till Stellmacher
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  3. Ulrike Grote
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Correspondence to Pradyot Ranjan Jena.

Appendix

Appendix

See Tables 7, 8, 9 and 10.

Table 7 Pearson’s correlation among the independent variables used in probit model
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Table 8 t-statistics of explanatory variables used in PSM before and after matching
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Table 9 ESR results for log total income for FT certification
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Table 10 ESR results for log total income for organic certification
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Jena, P.R., Stellmacher, T. & Grote, U. Can coffee certification schemes increase incomes of smallholder farmers? Evidence from Jinotega, Nicaragua. Environ Dev Sustain 19, 45–66 (2017). https://doi.org/10.1007/s10668-015-9732-0

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