Working Paper: CEPR ID: DP13935
Authors: Rocco Macchiavello; Josepa Miquelflorensa
Abstract: This paper studies the Sustainable Quality Program in Colombia - a quality upgrading program implemented on behalf of a multinational coffee buyer. The Program is a bundle of contractual arrangements involving farmers, intermediaries, exporters and the multinational buyer. We tackle three questions. First, we investigate the impact of the Program on the supply of quality coffee. Eligible farmers upgraded their plantations, expanded land under coffee cultivation, increased quality and received higher farm gate prices. Second, we quantify how the Program gains are shared between farmers and intermediaries along the chain. In regions in which the Program was rolled out surplus along the chain increased by 30%. Eligible farmers kept at least half of the gains and their welfare increased by 20%. Finally, we examine how the Program works conducting counterfactual exercises and comparing the Program price premia along the chain against two prominentnon-buyer driven certifications. The Program achieved a better transmission of the export gate price premium for quality to the farm gate and curbed market failures that stifled quality upgrading. Contractual arrangements at the export gate significantly contributed to higher farmers welfare in rural areas.
Keywords: quality upgrading; buyer-driven supply chain; contracts; market structure; voluntary standards
JEL Codes: O12; F61; L23; Q12; Q13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Sustainable Quality Program (Q01) | coffee quality upgrading (L15) |
| coffee quality upgrading (L15) | welfare gains (D69) |
| Sustainable Quality Program (Q01) | welfare gains (D69) |
| Sustainable Quality Program (Q01) | export gate price premium transmission (F16) |
| export gate price premium transmission (F16) | coffee quality upgrading (L15) |
| contractual arrangements at the export gate (L14) | coffee quality upgrading (L15) |
| Sustainable Quality Program (Q01) | high delivery rates to program implementer (L87) |