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

In recent years, farmers have faced growing exposure to economic shocks, extreme weather events, and conflicts, threatening their incomes, especially in developing countries. This study investigates whether voluntary sustainability standards help mitigate the economic impact of price shocks, using Rwanda’s 2023 coffee price stabilization policy as a case study. Drawing on a panel of 834 coffee farmers, the study implements a difference-in-differences design with continuous treatment and household fixed effects, complemented by an instrumental variable strategy. Results show that the fixed-price regime reduced coffee revenues, but did not affect overall household income. Income diversification was used as a strategy to stabilize earnings, especially among non-certified farmers. Price premium from certification was insufficient to offset revenue losses. 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.