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Impact of Eco-Labelling on Indonesia's Smallholder Coffee Farmers

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Author Info

  • Nuva

    ()
    (Department of Resource and Environmental Economics (ESL), Bogor Agricultural University)

  • Yusif

    (Department of Resource and Environmental Economics (ESL), Bogor Agricultural University)

  • Nia Kurniawati H.

    (Department of Resource and Environmental Economics (ESL), Bogor Agricultural University)

  • Hanna

    (Department of Resource and Environmental Economics (ESL), Bogor Agricultural University)

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    Abstract

    In terms of value, coffee which is mostly grown on smallholder farms, ranked fourth in the exports of food and agricultural commodities of Indonesia in 2008. Together with state-owned and private plantations, they add up to 969,082 ha of area harvested – the second largest in the world. Nevertheless, Indonesia ranked only seventh in the world in terms of yield per hectare. In addition, the coffee sector is facing many problems related to environment and its sustainability. Eco-labelling can be a solution to indirectly increase productivity and solve environmental problems brought about by coffee cultivation through better farming techniques imposed by eco-labelling organizations. This research studies the impact of eco-labelling implementation by Indonesia’s smallholder coffee farmers using financial analysis. Financial analysis was used to compare the profitability of eco-labelling and non-eco-labelling smallholder coffee farms. Descriptive statistical analysis was also used to present the stakeholders’ and farmers’ perceptions of eco-labels in the coffee sector. To get the primary data, survey and personal in-depth interviews were conducted. Findings show that eco-labelling in the coffee sector is profitable as evidenced by the results of cash flow analysis for both eco-labelled and non-eco-labelled Arabica and Robusta coffee farms. Nevertheless, problems still exist in the implementation of coffee certification i.e., limited support from government, quite difficult to implement due to low educational level of farmers and lack of awareness of advantages of eco-labels, the differences of certification scheme required by different coffee-importing countries, and financing problem for the certification fee.

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    File URL: http://www.eepsea.net/pub/rr/2013-RR9_Nuva.pdf
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    Bibliographic Info

    Paper provided by Economy and Environment Program for Southeast Asia (EEPSEA) in its series EEPSEA Research Report with number rr2013032.

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    Date of creation: Mar 2013
    Date of revision: Mar 2013
    Handle: RePEc:eep:report:rr2013032

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    Keywords: pollution; Eco-labelling; Indonesia;

    This paper has been announced in the following NEP Reports:

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    1. Kilian, Bernard & Jones, Connie & Pratt, Lawrence & Villalobos, Andres, 2006. "Is sustainable agriculture a viable strategy to improve farm income in Central America? A case study on coffee," Journal of Business Research, Elsevier, vol. 59(3), pages 322-330, March.
    2. Blackman, Allen & Naranjo, Maria A., 2012. "Does eco-certification have environmental benefits? Organic coffee in Costa Rica," Ecological Economics, Elsevier, vol. 83(C), pages 58-66.
    3. Giovannucci, Daniele & Pierrot, Joost & Kasterine, Alexander, 2010. "Trends in the Trade of Certified Coffees," MPRA Paper 27551, University Library of Munich, Germany.
    4. Loraine Ronchi, 2002. "The Impact of Fair Trade on Producers and Their Organisations: A Case Study with Coocafé in Costa Rica," PRUS Working Papers 11, Poverty Research Unit at Sussex, University of Sussex.
    5. Giovannucci, Daniele & Koekoek, Freek Jan, 2003. "The State of Sustainable Coffee: A Study of Twelve Major Markets," MPRA Paper 17172, University Library of Munich, Germany.
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