Do Sustainability Standards Benefit Smallholder Farmers Also When Accounting For Cooperative Effects? Evidence from Côte d'Ivoire

Abstract

Although many studies analyzed effects of sustainability standards—such as Fairtrade or Rainforest Alliance—on smallholder farmers in developing countries, most did not sufficiently account for systematic differences between certified and noncertified farmers. Certified farmers are typically organized in cooperatives. When sampling only from a small number of cooperatives, as previous studies did, it is not easy to disentangle certification effects from possible cooperative effects. Here, we address this shortcoming by randomly sampling from a large number of cooperatives, thus better capturing existing institutional heterogeneity. In particular, we collect and use data from cocoa farmers in Côte d'Ivoire who are organized in Fairtrade‐certified and noncertified cooperatives. Regression models with instrumental variables show that Fairtrade has positive and significant effects on cocoa yields, prices, and living standards. These effects remain significant also after controlling for cooperative characteristics, but the magnitude of the estimates changes. We draw two conclusions. First, in Côte d'Ivoire, Fairtrade certification benefits farmers economically. Second, and more generally, cooperative characteristics are jointly correlated with certification and relevant outcomes, which needs to be accounted for to avoid bias when evaluating the benefits of sustainability standards in the small farm sector.

A CSR/fair trade inspired policy for fairer geographical indications

“…In the case of cocoa farmers, fair trade organizations have worked with key industry players, enabling them to source large volumes of cocoa from fair trade farmers, which, in turn, facilitate larger quantities of cocoa to be sold on terms that are more favorable to those farmers (Fairtrade Foundation, 2020a). In the last quarter of 2019, it was recorded that the income of cocoa farmers that sold fair trade cocoa in Côte d'Ivoire (or Ivory Coast), the largest cocoa‐producing country in the world (Sellare et al, 2020), increased by approximately US$15 million compared to the income of farmers who sold non‐certified cocoa (Simmons, 2020). In the same period, the price cocoa farmers in the fair trade system took home increased by 17% (Simmons, 2020).…”

“…In the same period, the price cocoa farmers in the fair trade system took home increased by 17% (Simmons, 2020). Thus, it is clear that the fair trade certification “seems to be one of the few opportunities for cocoa farmers in Côte d'Ivoire to achieve a price higher than the government‐fixed price” (Sellare et al, 2020, p. 689).…”

Food sustainability standards and agricultural cooperatives: implications for the small farm sector of Côte d’Ivoire

“…Third, Fairtrade cooperatives often provide general agricultural extension and agronomic training to help farmers increase their crop productivity (Meemken & Qaim, 2018b;Sellare, Meemken, Kouamé, et al, 2020). Such extension services are frequently financed through the Fairtrade premium, an amount of money paid to certified cooperatives dependent of the quantity of produce marketed through Fairtrade channels.…”

“…Farmers are free to choose which of the cooperatives in their vicinity they want to be members of. In addition to logistical considerations and expected costs and benefits, factors related to kinship and other social ties often influence the decision of which cooperative to join (Sellare, Meemken, Kouamé, et al, 2020).…”

“…promises remains an open question (Meemken, 2020;Oya et al, 2018). Several studies analyzed effects of sustainability standards on economic indicators, such as crop yields, prices, profits, and household income Beuchelt & Zeller, 2011;Chiputwa et al, 2015;Meemken et al, 2017;Sellare, Meemken, Kouamé, et al, 2020;van Rijsbergen et al, 2016;Vanderhaegen et al, 2018). Effects on environmental and health indicators were analyzed much less.…”