How Standards Compete: Comparative impact of coffee certification in Northern Nicaragua

Purpose - Smallholder farmers are increasingly subject to different types of standards that
offer specific conditions for their market incorporation. The proliferation of private and
voluntary standards raises questions regarding their impact on farmers' welfare and their role in
upgrading of value chains.

Design/methodology/approach –Based on extensive fieldwork and careful matching of 315
farmers in Northern Nicaragua that produce coffee under Fair Trade, Rainforest Alliance and
Café Practices labels or deliver to independent traders we compare the effects on income,
production and investments. Moreover, the implications of different contract conditions for risk
behaviour, organizational force, loyalty and gender attitudes are assessed

Findings – We find that Fair Trade provides better prices compared to independent producers,
but private labels outcompete Fair Trade in terms of yield and quality performance. While Fair
Trade can be helpful to support initial market incorporation, private labels offer more suitable
incentives for quality upgrading.

Research limitations/implications – Civic standards exhibit major effects on local institutions
and farmers behaviour, while B2B standards are more effective for improving production and
management practices. Dynamic improvement standards may bridge the gap between both.

Practical implications – Fair Trade standards are useful to provide initial market access to
smallholders, but private standards offer better prospects for subsequent quality upgrading.

Originality/value – This is the first large-scale comparative impact assessment of coffee
standards that delivers un-biased empirical results.

Keywords - Voluntary and Private Standards, Fair Trade, Responsible Trade, Welfare Effects,
Coffee, Nicaragua.