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Shocks and coffee : lessons from Nicaragua


  • Vakis, Renos
  • Kruger, Diana
  • Mason, Andrew D.


Using household level panel data from Nicaragua, this paper explores the impact of the recent coffee crisis on rural households engaged in coffee production, and coffee labor work. Taking advantage of the panel structure of the data, a number of findings emerge: a) while overall growth between 1998, and 2001 was widespread in rural Nicaragua, coffee households saw large declines in various socioeconomic outcomes; b) among coffee households, it is small farm households that were affected the most, and not poor labor households as previously expected; c) even though coffee households used various risk management strategies to address the shock, it was pre shock, ex-ante strategies (like income diversification) that were the most effective in allowing coffee households insulate against the shock. By contrast, the coffee households that used ex-post coping instruments, did not manage to mitigate the adverse impact as well, with additional potential long run implications via extensive uses of harmful coping strategies (like increases in child labor); and, d) the coffee shock affected upward mobility, and downward poverty vulnerability of coffee households. Such findings seem to confirm the widespread impact of shocks on overall household behavior, and indicate the importance of incorporating risk management in the policy agenda of poverty reduction.

Suggested Citation

  • Vakis, Renos & Kruger, Diana & Mason, Andrew D., 2004. "Shocks and coffee : lessons from Nicaragua," Social Protection and Labor Policy and Technical Notes 30164, The World Bank.
  • Handle: RePEc:wbk:hdnspu:30164

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    References listed on IDEAS

    1. Benjamin Davis & Marco Stampini, 2002. "Pathways Towards Prosperity in Rural Nicaragua: Why households drop in and out of poverty, and some policy suggestions on how to keep them out," Working Papers 02-12, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    2. Varangis, Panos & Siegel, Paul & Giovannucci, Daniele & Lewin, Bryan, 2003. "Dealing with the coffee crisis in Central America - impacts and strategies," Policy Research Working Paper Series 2993, The World Bank.
    3. Skoufias, Emmanuel & Quisumbing, Agnes R., 2003. "Consumption insurance and vulnerability to poverty," FCND briefs 155, International Food Policy Research Institute (IFPRI).
    4. Glewwe, Paul & Hall, Gillette, 1998. "Are some groups more vulnerable to macroeconomic shocks than others? Hypothesis tests based on panel data from Peru," Journal of Development Economics, Elsevier, vol. 56(1), pages 181-206, June.
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    Cited by:

    1. Vakis, Renos, 2006. "Complementing natural disasters management : the role of social protection," Social Protection and Labor Policy and Technical Notes 35378, The World Bank.
    2. Pelham, Larissa & Clay, Edward & Braunholz, Tim, 2011. "Natural disasters : what is the role for social safety nets?," Social Protection and Labor Policy and Technical Notes 59699, The World Bank.
    3. Degnet, Abebaw & Mburu, John & Holm-Müller, Karin, 2008. "Responding to an Income Shock through Increasing Forest Extraction: Survey Evidence from Ethiopian Coffee Farmers," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 17(2).
    4. Romer Lovendal, Christian & Knowles, Marco, 2006. "Tomorrow's Hunger: A Framework for Analysing Vulnerability to Food Security," WIDER Working Paper Series 119, World Institute for Development Economic Research (UNU-WIDER).
    5. Carlos Felipe Jaramillo & Daniel Lederman & Maurizio Bussolo & David Gould & Andrew Mason, 2006. "Challenges of CAFTA : Maximizing the Benefits for Central America," World Bank Publications, The World Bank, number 7127.
    6. Beuchelt, Tina & Zeller, Manfred & Oberthur, Thomas, 2009. "Justified hopes or utopian thinking? The suitability of coffee certification schemes as a business model for small-scale producers," 2009 Conference, August 16-22, 2009, Beijing, China 51717, International Association of Agricultural Economists.
    7. Javier E. Baez & Dorothy Kronick & Andrew D. Mason, 2013. "Rural Households in a Changing Climate," World Bank Research Observer, World Bank Group, vol. 28(2), pages 267-289, August.
    8. Maluccio, John A., 2005. "Coping with the “coffee crisis” in Central America: The Role of the Nicaraguan Red de Protección Social," FCND discussion papers 188, International Food Policy Research Institute (IFPRI).


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