Exploring the Effects of Price Regime Shifts on Coffee Income Among Farmers in Rwanda: Does Certification Matter?

In recent years, farmers have faced growing exposure to economic shocks, extreme weather, and conflicts, threatening their incomes—especially in developing countries. This study examines whether voluntary sustainability standards help mitigate the economic impact of price shocks, using Rwanda’s 2023 shift from a flexible to a fixed-price system for coffee cherries as a case study. Analyzing longitudinal data from 834 coffee farmers, we apply a difference-indifferences approach with continuous treatment, household fixed effects, and an instrumental variable strategy. Results show that the fixed-price regime reduced coffee revenues and overall household income, though the latter declined less sharply. While certified farmers received premiums, these were insufficient to offset income losses. Instead, farmers relied on agricultural diversification to stabilize earnings. The findings highlight the need for policies that improve coffee sector profitability, secure stable premiums for certified farmers, and support income diversification to sustain rural livelihoods.