Hostname: page-component-586b7cd67f-r5fsc Total loading time: 0 Render date: 2024-11-25T14:04:14.109Z Has data issue: false hasContentIssue false
  • English
  • Français

The role of cooperative business models for the success of smallholder coffee certification in Nicaragua: A comparison of conventional, organic and Organic-Fairtrade certified cooperatives

Published online by Cambridge University Press:  08 May 2012

Tina D. Beuchelt  and
Manfred Zeller
Tina D. Beuchelt*
Affiliation:
CIMMYT, Km. 45, Carretera Mexico-Veracruz, El Batán, Texcoco, Edo. de México, CP 56130, Mexico.
Manfred Zeller
Affiliation:
Department of Agricultural Economics and Social Sciences in the Tropics and Subtropics, University of Hohenheim, Institute 490a, 70593 Stuttgart, Germany.
*
*Corresponding author: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Supported by policy-makers and non-governmental organizations (NGOs), coffee farmer organizations obtain organic and Fairtrade certifications to upgrade their coffee and, thus, increase returns to their members. Whether this and other upgrading strategies fit into the business model of the cooperative and lead to success are often not considered. This research aims to identify similarities and differences between conventional and certified cooperatives and the resultant impact on farmers' incomes. We analyze the business models, upgrading strategies, and strengths, weaknesses, opportunities and threats (SWOT) of seven conventional, organic and Organic-Fairtrade certified coffee cooperatives and link these to members' coffee gross margins. We use data from over 100 in-depth qualitative interviews and a household survey of 327 cooperative members in northern Nicaragua. Results indicate that cooperatives often apply the same upgrading strategies despite very different business models and SWOT. There are also many commonalities of SWOT among cooperatives but no clear-cut differences between conventional, organic and Organic-Fairtrade certified cooperatives. The qualitative comparison of coffee gross margins among the cooperatives shows no clear income effect from participating in certified coffee production and certified cooperatives. It indicates, rather, dependence of gross margins on yield levels, the business model and upgrading strategies of the cooperatives. Upgrading through certification seems only successful with a suitable business model and other upgrading strategies. Policies should focus on (i) increasing as well as stabilizing coffee yields, and (ii) on the institutional framework of cooperatives by offering strategic support, credit access, external auditing of cooperatives and the establishment of a functional national coffee institute.

Keywords

business modelcertificationcoffeecooperativeFairtradegross marginorganicSWOT analysisupgrading strategy
Type
Research Papers
Information
Renewable Agriculture and Food Systems , Volume 28 , Issue 3 , September 2013 , pp. 195 - 211
Copyright
Copyright © Cambridge University Press 2012 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1Asfaw, S., Mithöfer, D., and Waibel, H. 2010. Agrifood supply chain, private-sector standards, and farmers health: Evidence from Kenya. Agricultural Economics 41(3–4):251–263.Google Scholar
2Basu, A.K., Chau, N.H., and Grote, U. 2003. Eco-labelling and stages of development. Review of Development Studies 7(2):228–247.Google Scholar
3Codron, J.M., Siriex, L., and Reardon, T. 2006. Social and environmental attributes of food products in an emerging mass market: Challenges of signaling and consumer perception, with European illustrations. Agriculture and Human Values 23(3):283–297.Google Scholar
4Swinnen, J.F.M. and Maertens, M. 2007. Globalization, privatization, and vertical coordination in food value chains in developing and transition countries. Agricultural Economics 37:89–102.Google Scholar
5Ponte, S. and Gibbon, P. 2005. Quality standards, conventions and the governance of global value chains. Economy and Society 34:1–31.Google Scholar
6Rigby, D. and Cáceres, D. 2001. Organic Farming and the sustainability of agricultural systems. Agricultural Systems 68(1):21–40.Google Scholar
7Bolwig, S., Gibbon, P., and Jones, S. 2009. The economics of smallholder organic contract farming in tropical Africa. World Development 37(6):1094–1104.Google Scholar
8Pelupessy, W. and Díaz, R. 2008. Upgrading of lowland coffee in Central America. Agribusiness 24(1):119–140.Google Scholar
9Kaplinsky, R. 2000. Globalisation and unequalisation: What can be learned from value chain analysis? Journal of Development Studies 37(2):117–146.Google Scholar
10Cashin, P., McDermott, C.J., and Scott, A. 2002. Booms and slumps in world commodity prices. Journal of Development Economics 69(1):277–296.Google Scholar
11Humphrey, J. and Schmitz, H. 2002. Developing country firms in the world economy: Governance and upgrading in global value chains. INEF Report 61, Institut für Entwicklung und Frieden der Gerhard-Mercator-Universität Duisburg, Duisburg, DE.Google Scholar
12Markelova, H., Meinzen-Dick, R., Hellin, J., and Dohrn, S. 2009. Collective action for smallholder market access. Food Policy 34(1):1–7.Google Scholar
13Riisgaard, L., Bolwig, S., Ponte, S., Du Toit, A., Halberg, N., and Matose, F. 2010. Integrating poverty and environmental concerns into value-chain analysis: A strategic framework and practical guide. Development Policy Review 28(2):195–216.Google Scholar
14Kilian, B., Jones, C., Pratt, L., and Villalobos, A. 2006. Is sustainable agriculture a viable strategy to improve farm income in Central America? A case study on coffee. Journal of Business Research 59(3):322–330.Google Scholar
15Linton, A. 2008. A niche for sustainability? Fair labor and environmentally sound practices in the specialty coffee industry. Globalizations 5(2):231–245.Google Scholar
16Willer, H. and Yussefi, M. 2007. The World of Organic Agriculture. Statistics and Emerging Trends 2007. International Federation of Organic Agriculture Movements (IFOAM) and Forschungsinstitut für biologischen Landbau (FiBL), Bonn, DE.Google Scholar
17Wollni, M., Lee, D.R., and Thies, J.E. 2010. Conservation agriculture, organic marketing, and collective action in the Honduran hillsides. Agricultural Economics 41(3–4):373–384.Google Scholar
18Kaganzi, E., Ferris, S., Barham, J., Abenakyo, A., Sanginga, P., and Njuki, J. 2009. Sustaining linkages to high value markets through collective action in Uganda. Food Policy 34(1):23–30.Google Scholar
19MAGFOR. 2006. Política sectorial agropecuaria de Nicaragua. Ministerio Agropecuario y Forestal (MAGFOR), Managua, NI. Available at Web site http://www.iica.int.ni/estudios_pdf/estrat_des_rural.pdf (accessed September 16, 2011).Google Scholar
20MAGFOR. 2004. Estrategia para la reconversión y la diversificación competitiva de la caficultura en Nicaragua. Programa para el sector agropecuario y economia rural en Nicaragua. Ministerio Agropecuario y Forestal (MAGFOR), Managua, NI. Available at Web site http://www.ruta.org/downloads/estrategiacaficulturanicaragua/librodeestrategia.pdf (accessed September 16, 2011).Google Scholar
21Gutierrez, G.E. 2011. La caficultura orgánica en Colombia. División de estrategia y proyectos especiales de comercialización. Federacion Nacional de Cafeteros, CO. Available at Web site http://www.guiadelcafe.com/la-caficultura-organica-en-colombia (accessed September 16, 2011).Google Scholar
22IFOAM. 2006. Organic agriculture and rural development. International Federation of Organic Agriculture Movements (IFOAM), Bonn, DE. Available at Web site http://wwwifoam.org/growing_organic/3_advocacy_lobbying/eng_leaflet_PDF/Rural_Development.pdf (accessed December 15, 2010).Google Scholar
23Wills, C. 2006. Fair trade: What's it all about? In Osterhaus, A. (ed.). Business Unusual. Successes and Challenges of Fair Trade. FLO, IFAT, NEWS and EFTA, Newcastle-upon-Tyne, UK. p. 7–27.Google Scholar
24Barrett, H.R., Browne, A.W., Harris, P.J.C., and Cadoret, K. 2001. Smallholder farmers and organic certification: Accessing the EU market from the developing world. Biological Agriculture and Horticulture 19(2):183–199.Google Scholar
25Osterhaus, A. 2006. Business Unusual. Successes and Challenges of Fair Trade. FLO (Fairtrade Labeling Organizations International), IFAT (International Fair Trade Association), NEWS! (Network of European Worldshops) and EFTA (European Fair Trade Association), Newcastle-upon-Tyne, UK.Google Scholar
26Raynolds, L.T. 2000. Re-embedding global agriculture: The international organic and fair trade movements. Agriculture and Human Values 17(3):297–309.Google Scholar
27Raynolds, L.T., Murray, D., and Heller, A. 2007. Regulating sustainability in the coffee sector: A comparative analysis of third-party environmental and social certification initiatives. Agriculture and Human Values 24(2):147–163.Google Scholar
28Arnould, E.J., Plastina, A., and Ball, D. 2009. Does fair trade deliver on its core value proposition? Effects on income, educational attainment, and health in three countries. Journal of Public Policy and Marketing 28(2):186–201.Google Scholar
29Bacon, C., Ernesto Mendez, V., Gomez, M.E.F., Stuart, D., and Flores, S.R.D. 2008. Are sustainable coffee certifications enough to secure farmer livelihoods? The Millennium Development Goals and Nicaraguas fair trade cooperatives. Globalizations 5(2):259–274.Google Scholar
30Raynolds, L.T., Murray, D., and Taylor, P.L. 2004. Fair trade coffee: Building producer capacity via global networks. Journal of International Development 16(8):1109–1121.Google Scholar
31Bray, D.B., Sánchez, J.L.P., and Murphy, E.C. 2002. Social dimensions of organic coffee production in Mexico: Lessons for eco-labeling initiatives. Society and Natural Resources 15(5):429–446.Google Scholar
32Taylor, P.L., Murray, D.L., and Raynolds, L.T. 2005. Keeping trade fair: Governance challenges in the fair trade coffee initiative. Sustainable Development 13(3):199–208.Google Scholar
33Bacon, C. 2005. Confronting the coffee crisis: Can fair trade, organic and specialty coffees reduce small-scale farmer vulnerability in northern Nicaragua? World Development 33(3):497–511.CrossRefGoogle Scholar
34Wollni, M. and Zeller, M. 2007. Do farmers benefit from participating in specialty markets and cooperatives? The case of coffee marketing in Costa Rica. Agricultural Economics 37(2–3):243–248.Google Scholar
35Mutersbaugh, T. 2002. The number is the beast: A political economy of organic-coffee certification and producer unionism. Environment and Planning A 34:1165–1184.Google Scholar
36Neilson, J. 2008. Global private regulation and value-chain restructuring in Indonesian smallholder coffee systems. World Development 36(9):1607–1622.Google Scholar
37Philpott, S.M., Bichier, P., Rice, R. and Greenberg, R. 2007. Field-testing ecological and economic benefits of coffee certification programs. Conservation Biology 21(4):975–985.Google Scholar
38Barham, B.L., Callenes, M., Gitter, S., Lewis, J., and Weber, J. 2011. Fair trade/organic coffee, rural livelihoods, and the ‘agrarian question’: Southern Mexican coffee families in transition. World Development 39(1):134–145.Google Scholar
39Valkila, J. 2009. Fair trade organic coffee production in Nicaragua—sustainable development or a poverty trap? Ecological Economics 68(12):3018–3025.Google Scholar
40Hellin, J., Lundy, M., and Meijer, M. 2009. Farmer organization, collective action and market access in Meso-America. Food Policy 34(1):16–22.Google Scholar
41Pickard, D.H. 1970. Factors affecting success and failure in farmers co-operative organizations. Agricultural Economics 21(1):105–119.CrossRefGoogle Scholar
42Thorp, R., Stewart, F., and Heyer, A., 2005. When and how far is group formation a route out of chronic poverty? World Development 33(6):907–920.Google Scholar
43Dülfer, E. 1995. Betriebswirtschaftslehre der Genossenschaften und vergleichbarer Kooperative. Vandenhoeck und Ruprecht, Göttingen, DE.Google Scholar
44Kramer, J.W. 2000. Co-Operatives as Actors in a Market Economy. Berlin Cooperative Papers No. 50, Institut für Genossenschaftswesen an der Humboldt-Universität zu Berlin, Berlin, DE.Google Scholar
45Magretta, J. 2002. Why business models matter. Harvard Business Review 80(5):86–92.Google Scholar
46Zerche, J., Schmale, I., and Blome-Drees, J. 1998. Einführung in die Genossenschaftslehre: Genossenschaftstheorie und Genossenschaftsmanagement. Oldenbourg, München, DE.Google Scholar
47Deininger, K. 1995. Collective agricultural production: A solution for transition economies? World Development 23(8):1317–1334.Google Scholar
48Blandón, R., Hermógenes, I., Ruiz Chavéz, J.F., Róger Juárez, I., and Duarte Mena, J.J. Undated. Manual básico de cooperativismo. Federación Nacional de Cooperativas (FENACOOP), Managua, NI.Google Scholar
49FitzGerald, E.V.K. 1985. Agrarian reform as a model of accumulation: The case of Nicaragua since 1979. Journal of Development Studies 22(1):208–226.Google Scholar
50FRD. 1993. Nicaragua: A Country Study. Federal Research Division (FRD), Library of Congress, Washington, DC.Google Scholar
51Ruben, R. and Zerman, Z. 2005. Why Nicaraguan peasants stay in agricultural production cooperatives. Revista Europea de Estudios Latinoamericanos y del Caribe 78:31–47.Google Scholar
52Shafer, S.M., Smith, H.J., and Linder, J.C. 2005. The power of business models. Business Horizons 48(3):199–207.Google Scholar
53Bolwig, S., Ponte, S., Du Toit, A., Riisgaard, L., and Halberg, N. 2010. Integrating poverty and environmental concerns into value-chain analysis: A conceptual framework. Development Policy Review 28(2):173–194.Google Scholar
54Gereffi, G. 1999. International trade and industrial upgrading in the apparel commodity chain. Journal of International Economics 48(1):37–70.Google Scholar
55Giuliani, E., Pietrobelli, C., and Rabellotti, R. 2005. Upgrading in global value chains: Lessons from Latin American clusters. World Development 33(4):549–573.Google Scholar
56Ponte, S. and Ewert, J. 2009. Which way is ‘up’ in upgrading? Trajectories of change in the value chain for South African wine. World Development 37(10):1637–1650.Google Scholar
57Fleisher, C.S. and Bensoussan, B.E. 2003. Strategic and Competitive Analysis: Methods and Techniques for Analyzing Business Competition. Prentice Hall, Upper Saddle River, NJ.Google Scholar
58Dabbert, S. and Braun, J. 2009. Landwirtschaftliche Betriebslehre. Eugen Ulmer, Stuttgart, DE.Google Scholar
59Rauch, P. 2007. SWOT analyses and SWOT strategy formulation for forest owner cooperations in Austria. European Journal of Forest Research 126(3):413–420.Google Scholar
60Beuchelt, T.D. and Zeller, M. 2011. Profits and poverty: Certification's troubled link for Nicaragua's organic and Fairtrade coffee producers. Ecological Economics 70(7):1316–1324.Google Scholar
61Field, A. 2005. Discovering Statistics using SPSS. 2nd ed. Sage Publications, London.Google Scholar
62Zeller, M., Schrieder, G., von Braun, J. and Heidhues, F. 1997. Rural Finance for Food Security for the Poor: Implications for Policy and Research. Food Policy Review No. 4. International Food Policy Research Institute, Washington, DC, US.Google Scholar