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Do Farmers Benefit from Participating in Specialty Markets and Cooperatives? The Case of Coffee Marketing in Costa Rica

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  • Wollni, Meike
  • Zeller, Manfred

Abstract

Historically low prices in the conventional coffee market have caused financial and social hardship among coffee farmers. In the face of this crisis, specialty markets have attracted the attention of the international donor community. These market segments have shown consistent growth over the last decade and exhibit price premiums in international markets. Therefore, if higher prices are passed on to farmers, access to specialty markets could help to alleviate the crisis brought on by low prices in the conventional sector. The present study attempts to identify the factors that determine farmers' participation in specialized markets and whether participation in these markets leads to higher prices for farmers. A two-stage model is used to analyze farmers' marketing decisions and their effect on the prices received. This procedure allows us to control for the endogeneity bias introduced by the marketing choice. Our results indicate that farmers participating in the specialty coffee segment do in fact receive higher prices than those participating in conventional channels. Additionally, we find that participation in cooperatives has a positive impact on the probability that a farmer chooses to grow specialty coffee and analogously the prices that they receive. Based on these results it seems that efforts to increase participation in the specialty coffee segment and in cooperatives would help to lessen some of the hardships brought on by low prices in the conventional coffee sector.

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Bibliographic Info

Paper provided by International Association of Agricultural Economists in its series 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia with number 25670.

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Date of creation: 2006
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Handle: RePEc:ags:iaae06:25670

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Related research

Keywords: Central America; Costa Rica; coffee; specialty markets; cooperatives; Agribusiness; Marketing; Q13; L1;

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  1. Blackman, Allen & Albers, Heidi & Crooks, Lisa & √Āvalos-Sartorio, Beatriz, 2005. "Deforestation and Shade Coffee in Oaxaca, Mexico," Discussion Papers dp-05-39, Resources For the Future.
  2. D'Souza, Gerard E. & Cyphers, Douglas & Phipps, Tim T., 1993. "Factors Affecting The Adoption Of Sustainable Agricultural Practices," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 22(2), October.
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