The Journal of Development Studies

ISSN: 0022-0388 (Print) 1743-9140 (Online) Journal homepage: https://www.tandfonline.com/loi/fjds20

How Effective is Multiple Certification in Improving

the Economic Conditions of Smallholder Farmers?
Evidence from an Impact Evaluation in Colombia’s
Coffee Belt

Thomas Dietz, Andrea Estrella Chong, Janina Grabs & Bernard Kilian

To cite this article: Thomas Dietz, Andrea Estrella Chong, Janina Grabs & Bernard Kilian (2019):
How Effective is Multiple Certification in Improving the Economic Conditions of Smallholder
Farmers? Evidence from an Impact Evaluation in Colombia’s Coffee Belt, The Journal of
Development Studies, DOI: 10.1080/00220388.2019.1632433

To link to this article: https://doi.org/10.1080/00220388.2019.1632433

View supplementary material

Published online: 09 Jul 2019.

Submit your article to this journal

Article views: 307

View related articles

View Crossmark data

Full Terms & Conditions of access and use can be found at

https://www.tandfonline.com/action/journalInformation?journalCode=fjds20
The Journal of Development Studies, 2019
https://doi.org/10.1080/00220388.2019.1632433

How Effective is Multiple Certification in

Improving the Economic Conditions of
Smallholder Farmers? Evidence from an Impact
Evaluation in Colombia’s Coffee Belt
THOMAS DIETZ *, ANDREA ESTRELLA CHONG*, JANINA GRABS *
& BERNARD KILIAN**
*Institute of Political Science, Westfälische Wilhelms-Universität Münster, Münster, Germany, **INCAE Business School,
Alajuela, Costa Rica

(Original version submitted August 2018; final version accepted June 2019)

ABSTRACT Voluntary sustainability standards (VSS) in the coffee sector have become a popular tool to improve
the livelihoods of smallholder coffee farmers. As third-party and company-led VSS have proliferated, an
increasing number of producer groups are turning toward multiple certification to diversify their export
channels. Yet, each certification requires added efforts and expenses, both at the farm and the organisational
level. Hence, it is important to evaluate the additionality of multiple certification in bringing benefits to
smallholders’ farm economy. This study addresses this research gap using a sample of over 600 coffee farmers
from two Fairtrade-certified cooperatives in Colombia’s coffee belt to assess the additional economic impact of
Starbucks C.A.F.E. Practices, Nespresso AAA, 4C, and the combination of Rainforest Alliance/Nespresso AAA
certification. In examining coffee gross profit and household income, we find limited gains from the addition of
industry and company-led standards to the Fairtrade certification. Evaluating pathways to improved economic
performance, gross profit improvements appear most likely if higher average prices are combined with lower
production costs. Finally, we show that the majority of farmers are unable to break even, irrespective of their
certification status. This alarming result illustrates the need for further intervention in the coffee value chain.

1. Introduction
Coffee is one of the most traded commodities in international markets, both in terms of volume and
value (Borrella, Mataix, & Carrasco-Gallego, 2015). In 2015/2016, 151 million bags of coffee were
produced (International Coffee Organization, 2017), and the size of the coffee export market is
estimated at USD 19 billion (Greenberg, 2017). Smallholder farmers are responsible for around 70
per cent of the global coffee production, and an estimated 25 million producers depend directly on
coffee for their livelihoods (Borrella et al., 2015; Caswell, Méndez, & Bacon, 2012). However,
circumstances such as low and volatile prices, the uneven distribution of value and risks across the
coffee value chain, rising input and labour costs, as well as the impacts of climate change, pests, and
diseases, are pushing smallholder farmers beyond the limits of profitability (Lernoud et al., 2017).
Rural poverty and economic vulnerability are pervasive in coffee growing regions.

Correspondence Address: Thomas Dietz, Institute of Political Science, Westfälische Wilhelms-Universität Münster, Scharnhorststr
100, Münster, 48151, Germany. Email: thomas.dietz@uni-muenster.de
Supplementary Materials are available for this article which can be accessed via the online version of this journal available at
https://doi.org/10.1080/00220388.2019.1632433

© 2019 Informa UK Limited, trading as Taylor & Francis Group

2 T. Dietz et al.

Against this background, a now vibrant debate has emerged discussing the ability of Voluntary
Sustainability Standards (VSS) to improve the economic sustainability of smallholder farmers in
coffee producing countries of the Global South. These standards have served as a way of compensat-
ing producers for the implementation of environmentally friendly and socially just agricultural
production practices. The coffee sector, in particular, has been a pioneering industry for sustainability
standards (Reinecke, Manning, & von Hagen, 2012). Once accounting for only a niche segment of
the market, the production of standard-compliant coffee has now entered supply chains across
mainstream markets. Coffee, indeed, ranks among the sectors with the highest rate of VSS uptake
of all global business sectors. According to the International Trade Centre’s ‘State of Sustainable
Markets’ report, the most reliable source on the dissemination of VSS, between 26 per cent and 45
per cent of global coffee production surface was certified or verified under one or more standards in
2016 (Dietz, Auffenberg, Estrella, Grabs, & Kilian, 2018; Lernoud et al., 2017, 2018).
The ITC’s wide range of estimates point to an issue of growing concern with regard to VSS
dissemination: The rise of multiple certification of the same farmers. As VSS have multiplied, driven
both by the proliferation of NGO- and multi-stakeholder initiatives (such as the rise of the 4C
Association as of 2007) and the maturation of own-supply chain initiatives (such as Nespresso AAA
and Starbucks C.A.F.E. Practices), the access to sustainable markets has become increasingly
fragmented. Furthermore, the uptake of each type of certified coffee has been outpaced by supply,
leading to considerable oversupply in most initiatives. For instance, in 2017 only 34 per cent of
Fairtrade-certified coffee globally was also sold as such (Panhuysen & Pierrot, 2018), leaving
Fairtrade-certified cooperatives to sell the remainder of their harvest into conventional markets. In
response, producer groups and cooperatives that had already begun to position themselves with
regard to sustainability certifications – for instance, through becoming Fairtrade-certified – increas-
ingly acquire additional certifications, which frequently are rolled out to a subset of cooperative
associates, in order to access additional export channels. The pressure to do so increases as
certification moves from a differentiation factor to a market access barrier.
Yet, there are considerable opportunity costs involved with this strategy. Many cooperatives have
to add entire teams of compliance managers that are able to oversee the implementation of separate
certification schemes which each have slightly different requirements. Frequently, there is the need to
pay for separate certification audits. For farmers, keeping up with the rules of certification schemes
often creates on-farm opportunity costs, for instance regarding the payment of higher wages, limiting
their production surface in order to protect biodiverse areas, or investing in worker safety require-
ments such as personal protection equipment and first aid kits (Grabs, 2018).
Given these opportunity costs, there is thus an important need to evaluate the additionality of
multiple certification compared with the counterfactual of limiting oneself to one, cooperative-wide
certification such as Fairtrade. Yet, while recent years have seen a rise in the number of studies
analysing the economic effects of certification schemes, the impact of multiple certification still
constitutes a research gap. Indeed, industry-driven certifications such as 4C, Nespresso AAA or
Starbucks C.A.F.E Practices, which are frequently adopted to comply with specific buyers’ require-
ments, are understudied in general (for VSS uptake rates see Appendix A). Most studies on coffee
assess the impacts of Fairtrade certification (Chiputwa, Spielman, & Qaim, 2015; Cramer, Johnston,
Mueller, Oya, & Sender, 2017; de Janvry, McIntosh, & Sadoulet, 2015; Dragusanu & Nunn, 2014; Jena,
Chichaibelu, Stellmacher, & Grote, 2012; Ruben, Fort, & Zúñiga-Arias, 2009; van Rijsbergen, Elbers,
Ruben, & Njuguna, 2016), followed by studies on organic (Barham, Callenes, Gitter, Lewis, & Weber,
2011; Bolwig, Gibbon, & Jones, 2009). Fewer studies focus on NGO-driven certifications, such as
Rainforest Alliance (Barham & Weber, 2012; Ruben & Zuniga, 2011; Rueda & Lambin, 2013; Rueda,
Thomas, & Lambin, 2014) and UTZ (Kamau, Mose, Fort, & Ruben, 2010; van Rijsbergen et al., 2016).
With only a few notable exceptions (Akoyi & Maertens, 2017; Giuliani, Ciravegna, Vezzulli, &
Kilian, 2017; Ruben & Zuniga, 2011), rigorous impact studies assessing the impacts of industry and
company-led certifications are still missing. Most of the existing impact evaluations on industry
and company-led standards have been commissioned by the sustainability standards themselves
 Economic impact of multiple certification 3

(see CRECE, 2013; Kuit, Guinée, & Anh, 2016). Given the potential conflicts of interests inherent
in such studies, it is important to supplement commissioned studies by independent evaluations that
are neutral in their expectations. Moreover, the existing rigorous studies also suffer from significant
limitations. While Giuliani et al. (2017) fail to name the certifications being analysed due to
confidentiality agreements, Ruben and Zuniga (2011) limit their focus on farmers certified by C.
A.F.E. Practices without taking into account further industry- and company-led standards. In sum,
there is a significant gap in the literature regarding independent and robust research on the
economic impact of the now pivotal industry- and company-led VSS in global coffee production.
What is more, the question of the additionality of further certification has seldom been posed. The
multiplicity of standards has been identified as a considerable challenge to their problem-solving
potential, given the likely development of a ‘standards market’ (Reinecke et al., 2012), multiple
certification has been flagged as an issue of rising concern in a number of reviews (Lernoud et al.,
2017; Potts et al., 2014), and there have been incipient evaluations of multiply-certified farmers when
compared with a no-certification control (Akoyi & Maertens, 2017; van Rijsbergen et al., 2016).
However, we know of no paper to date that has probed the economic effectiveness of multiple
certification directly.
In this article, we aim to address this research gap. In detail, we conduct a cross-sectional study
with a random sample from two cooperatives in Colombia’s coffee belt (n = 612) in order to assess
and compare the economic effects of 4C,1 Starbucks C.A.F.E. Practices, Nespresso AAA, and
Rainforest Alliance/Nespresso AAA certifications on smallholder coffee farmers, using Fairtrade
certified farmers as the control group. We account for potential trade-offs and substitution effects
between coffee production and other economic activities that are part of the livelihood portfolio.
Further, this study goes beyond most of the existing impact literature in two important ways. First, we
evaluate potential ‘pathways’ of coffee certifications that, in addition to Fairtrade, may lead to an
improved financial situation, in order to identify strategies of VSS that yield higher returns for coffee
farmers. Second, we take into account local governance structures in which these standards are
embedded (in this case, cooperatives) and analyse how these structures impact the ability of VSS to
improve the economic situation of smallholder coffee producers.
The remainder of this article is organised as follows: Section 2 introduces the background of coffee
production in Colombia in general, and our study region in particular. Section 3 presents the
theoretical pathways toward economic development through multiple certification that will be
analysed. Section 4 then gives an overview of the operationalisation and methods of analysis,
while Section 5 presents our results. Sections 6 and 7 discuss our findings and conclude the paper.

2. Coffee production in Colombia

Colombia is the world’s fourth-largest coffee producer and the main producer of mild washed
Arabica coffee (Biswas-Tortajada & Biswas, 2015). The coffee sector plays an important role in
the country’s economy and is heavily supported by governmental and non-governmental institutions,
among which the Colombian Coffee Grower’s Federation (FNC) plays the most significant role. The
FNC is a semi-governmental organisation representing both producers and government institutions,
and is in charge of implementing regulatory policies for the coffee sector (Vellema, Buritica
Casanova, Gonzalez, & D’Haese, 2015; World Bank, 2002). The FNC manages and receives funding
from the National Coffee Fund, a parafiscal account sustained by an export tax of USD 0.06 per
pound of coffee (Rueda & Lambin, 2013). This institution provides several services to coffee farmers,
including the provision of technical assistance, research and development, infrastructure develop-
ment, quality control, sales, marketing, and, perhaps most saliently, a guarantee of purchase. This
ensures that all producers – especially smallholders – can sell their coffee to the FNC at an equal or
higher price than the New York ‘C’ coffee price (minus the export tax) (World Bank, 2002).
Thanks in part to the FNC’s support of sustainability standards as part of their value-added coffee
strategy (Grabs, 2018), Colombia has positioned itself as one of the major providers of sustainable coffee
4 T. Dietz et al.

in the world. Overall, Colombia shows the largest Fairtrade-certified area in the world (213,000 hectares),
the second-largest 4C production area (354,217 ha), and the third-largest Rainforest Alliance surface
(39,600 hectares) (Lernoud et al., 2018). Potts et al. (2014, p. 176) further highlight ‘the significant
penetration of sustainability initiatives within Colombia, with many producers exhibiting compliance
with more than a single initiative’. This makes the Colombian case particularly representative of the
research question regarding the economic additionality of multiple certification.
Our study region, Colombia’s coffee belt, is one of the most important coffee-producing areas in
the country. Within this area, we implemented the study with cooperatives located in the depart-
ments of Caldas and Antioquia. Due to the privacy of the data collected, we refer to them as
cooperatives A and B. Data was collected for the calendar year 2015. That year showcased both
economic and climatic challenges that have become increasingly typical for smallholder producers
in subtropical regions. Most importantly, climate change is having a variety of negative impacts on
the coffee sector, due to the associated increases in temperature, changes in rainfall patterns and
intensification of weather events such as El Niño (Ramirez-Villegas, Salazar, Jarvis, & Navarro-
Racines, 2012). El Niño effects such as reduced rainfall, increased temperatures and a higher
propagation rate of the coffee berry borer and other pests were felt in both our study regions in
2015. Consequently, the coffee beans could not fully develop, which in turn harmed bean quality
and ultimately affected the average price received by coffee growers. Farmers also experienced
increased production costs due to the additional management practices required to help withstand
the effects of this phenomenon (Federacion Nacional de Cafeteros de Colombia, 2015; Redacción
Economía, 2015).
To compound the challenge, international coffee prices experienced high volatility – the New York
‘C’ coffee price decreased 25 per cent, reaching 1.13 USD/lb in September before partially recover-
ing to 1.20 USD/lb by the end of the year (Federacion Nacional de Cafeteros, 2016). These are
circumstances under which more assured market access and training in better agricultural practices
may have made an important difference for producers engaging in multiple certification. Our study is
designed to test this possible effect.

3. Pathways to economic improvements

How should we expect economic improvements from multiple certification to come about? For this
analysis, we use the pathways or mechanisms identified by Bray and Neilson (2017) and adapt them
to our purpose: assessing the impact of multiple certification with Fairtrade as a baseline. Bray and
Neilson identify five pathways for potential economic development through VSS: a) reduced
financial risk and price volatility; b) price premiums, c) increased productivity, d) lower production
costs, and e) improved access to credit. While reduced financial risk and price volatility are
mechanisms identified by the authors, we were not able to collect individual-level data on these
topics for the two cooperatives. As for access to credit, given that Fairtrade and the cooperatives
already provide this service, and the certifications being analysed fail to address this pathway
directly,2 we do not expect additionality from further VSS and thus omit this mechanism from the
analysis. However, this does not apply to the remaining three pathways, namely premiums, increased
productivity and decreased production costs. Table 1 below describes each of the general pathways
and links it to their underlying practices.
Regarding these three potential pathways, the additional certifications under investigation may
well be able to create further positive effects when used in addition to Fairtrade. In terms of
price premiums, Fairtrade establishes a minimum floor price (1.40 USD/lb for green Arabica
coffee) and a fixed social premium (0.20 USD/lb), which is paid to the cooperative and may be
passed on to farmers or used for collective investments (Benoit & Isabelle, 2011; IISD, 2003).
However, in most cooperatives, only part of the harvest is sold under Fairtrade contracts. The
rest of the supply, though certified, is sold into the mainstream market and subject to the same
price volatility as uncertified coffee. Hence, additional certifications may complement the
 Economic impact of multiple certification 5

Table 1. Impact pathways of standards leading to economic sustainability improvements

Impact pathway Description Underlying practices

i) Price premiumsa Price premiums are an important Depending on the type of cooperative,
catalyst to incentivise producers’ price premiums can be administered
adoption of certifications. In theory, in different ways:
VSS can provide a means to - Passed on directly (all or a portion of
incorporate sustainable practices into it) to the producer as compensation for
the pricing mechanism. the implementation of sustainable
practices.
- Held by the cooperative to cover
internal costs.
- Used for the implementation of social
projects (typically the Fairtrade
premium).
ii) Increased productivityb Good agricultural practices (GAP) - Training in GAP
promoted by certifications can lead - Improved agricultural practices:
to increased productivity. pruning, removing the stems, insect
& disease control, soil analysis,
appropriate fertilisation.
iii) Lower production costsc Improved farm management practices - Training in GAP
can result in efficiency gains by - Improved agricultural practices: soil
lowering agricultural and labour analysis, appropriate fertilisation
inputs in coffee production. - Record-keeping to track production
expenses
a
Source: Barham and Weber (2012); Bray and Neilson (2017); Grabs (2018); Potts et al., (2014); Rueda and
Lambin (2013); Snider, Gutiérrez, Sibelet, and Faure (2017).
b
Source: Barham and Weber (2012); Hughell and Newsom (2013); Ruben and Zuniga (2011); Whelan and
Newsom (2014).
c
Source: Bray and Neilson (2017); Lyngbæk and Muschler (2001); Valkila (2009).

Fairtrade strategy by offering alternative sales channels to producers. In these channels, price
premiums over the market price are negotiated between the buyer and the seller. In many cases
– particularly for the industry standards Nespresso AAA and C.A.F.E. Practices –, premiums are
partially based on the quality that farmers achieve. The total volume of coffee sold into each
channel, as well as the premium level, and total incomes, thus depends on the demand and
supply of certified coffee in each category. If farmers with multiple certifications, compared
with only-Fairtrade farmers, are able to sell a higher share of their overall harvest into sales
channels that provide them with significant price premiums over their next-best alternative, we
will expect them to receive significantly higher coffee revenues, which will likely translate into
higher coffee gross profits than in the Fairtrade-only scenario.
Regarding the increased productivity pathway, all of the analysed certifications aim to improve it.
However, the measures differ across certifications. Fairtrade stipulates that at least five cents of the
social premium should be invested in measures to improve productivity and/or coffee quality, for
example through trainings in Good Agricultural Practices (GAP). Rainforest Alliance, Nespresso
AAA, C.A.F.E. Practices and 4C directly require the implementation of specific farm practices to
increase yields. In doing so, the measures to improve productivity by the additional standards under
investigation again reinforce and complement the Fairtrade standard and may thus be able to generate
an additional impact within this pathway of economic development.
As for the pathway of decreased production cost, this pathway is particularly prevalent for
Rainforest Alliance and Nespresso AAA and also 4C includes a number of underlying practices of
this pathway in its standard catalogue. In contrast, Fairtrade does not explicitly reference lowering
production costs or increasing efficiency as goals in their standard catalogue, but merely implicitly
6 T. Dietz et al.

covers some of the underlying practices of this pathway in its training requirements. In other words,
when it comes to decreased production costs, the additional certifications under investigation go even
beyond the Fairtrade standard and may thus have a positive effect on this pathway of economic
development.
After having laid out the different pathways of how the certifications in addition to Fairtrade in our
sample may, theoretically, improve the economic situation of smallholder coffee producers, we will
now proceed by presenting our methods of analysis.

4. Methods
4.1. Data collection and sample design
We collected original data from Colombia’s coffee belt through a farm-household survey and in-depth
interviews with coffee cooperatives and key stakeholders along the value chain. The fieldwork took
place from August to October 2016 and was conducted by local enumerators, whom we trained and
supervised during the implementation of the study.
The production of certified coffee in Colombia is to a large extent cooperative-driven (Grabs,
Kilian, Hernández, & Dietz, 2016). We thus decided to sample within cooperatives to ensure external
validity, and selected the sampled cooperatives based on geographic proximity and similar agro-
ecological and socioeconomic conditions. Furthermore, the most common avenue for multiple
certification is to start with (cooperative-wide) Fairtrade certification and use the mandated social
premium to finance upfront investments, additional trainings and extension agents or, in some cases,
audits, that allow them to access additional certification schemes (Grabs, 2018). This was also the
broad trajectory for both of the cooperatives we examined. We therefore opted to use the Fairtrade
standard as a baseline to construct our control group. Of the sustainability labels being analysed,
Nespresso AAA and C.A.F.E. Practices were present in both cooperatives A and B. Rainforest
Alliance/Nespresso AAA and 4C were only present in one of the cooperatives (see Table 2 below
for sample design).
After selecting the cooperatives, we randomly selected farmers from their membership lists. We
applied pre-sampling propensity score matching with available criteria from these lists (such as
gender and farm size) to ensure constructing a control group that is as similar as possible to the
certified farmers. The final sample comprises 612 households, including 375 VSS-certified farmers
and 237 Fairtrade controls.
The survey was implemented using a structured questionnaire consisting of 290 questions on
detailed socio-economic and environmental indicators at the farm and household level. We recorded
key data that allowed us to calculate the production costs, productivity, coffee prices, sales through
certified channels and income from other on-farm and off-farm activities for each of the interviewed
households.
Our data allows us to conduct a two-step analysis of the effects of certifications. In the first
step, we assess the effects per certification within each cooperative. For instance, we measure the
effect of C.A.F.E. Practices (n = 46) in cooperative A by comparing it to the Fairtrade controls
within the cooperative (n = 94). This microanalysis for each cooperative, alongside the fact that

Table 2. Sample design

Rainforest Alliance/
Cooperative Nespressoa C.A.F.E. Practicesa 4Ca Nespresso AAAa Fairtradeb

A 100 46 - 79 94
B 41 35 74 - 143

Notes: aDenotes treatment group; bdenotes control group. The unit of observation is the household.
 Economic impact of multiple certification 7

two of the standards are present both in cooperatives A and B, enables us, to a certain extent, to
disentangle the effects of certifications from the impacts of cooperative membership. In the
second step, we pull together producers holding additional VSS from both cooperatives (for
instance Nespresso AAA, n = 141) and compare them against the pool of controls certified only
with Fairtrade (n = 237). This gives us an estimate of the effect of each additional certification for
the full sample.

4.2. Operationalisation of variables of interest

Our first variable of interest is coffee gross profit, defined as the coffee revenue received by the
farmer minus coffee production costs, calculated on a per farm, hectare and volume (per ‘carga’, or
125 kilograms) basis. We calculate coffee gross profit (sometimes also called gross margin) by
subtracting the variable costs of production from total coffee revenue for the calendar year 2015, as
illustrated by the following equation 1.

X
n X
m X
o
GP ¼ Pi  Qi  IPj  IQ j  LPk  LQk  OC (1)
i j k

In which GP denotes gross profit; Pi and Qi are the price received and quantities sold for n types of
coffee (for example certified, regular, and inferior quality) that each farmer may sell; IPj and IQj
represent the price and quantities of m types of inputs (such as organic and chemical fertilisers) used
in coffee production; LPk and LQk represent the price and quantities of different types of labour used
(for example coffee pickers, day labourers, permanent employees, or labourers conducting dangerous
work); and OC represent other costs, such as transportation costs, processing costs, and the costs of
trees planted that particular year.
As the equation shows, we thus take into account all variable, or operational, costs of maintaining
the farm and harvesting the coffee, including the material inputs and labour for fertilising, weed
control, pest control, pruning, coffee processing, and transportation, among others. On the other hand,
we are not including fixed costs such as the cost of land, the investment and amortisation costs for
machinery, or the coffee trees that are already standing on the farm. This is for several reasons,
including the fact that farmers are commonly unable to report on costs that occurred several years in
the past with a high level of accuracy, and that many resources are typically not exclusively used for
coffee.3 In addition, gross profit (rather than net profit, which would include fixed costs) also
provides a more actionable profit measure to farmers (International Coffee Organization, 2019),
and a more appropriate indicator for program evaluation, given that farmers are unable to change
fixed costs that occurred in the past.
As our second variable of interest, we calculate household income. Here, we take into account both
coffee sales revenue as well as additional income reported by the producer, such as other agricultural
activities, livestock production, salaried work, government subsidies, remittances and income from
renting property. This measure does not include the costs of production.
Third, we calculate households’ likelihood of living below the national poverty line by constructing
the Poverty Probability Index (PPI)4 according to the guidelines specified by Innovations for Poverty
Action. Further information on this index can be found at IPA (2012).

4.3. Propensity score matching and regression analysis

In order to construct our comparison groups for the four specified certifications and arrive at a robust
estimation of the gains provided by additional sustainability standards to the Fairtrade certification,
we conducted post-sampling propensity score matching (PSM), and calculated the Average Treatment
Effect on the Treated (ATET).5 We used the following covariates in the PSM: gender; age; years of
schooling; household size; number of children; land tenure; distance (measured in travel time) to
8 T. Dietz et al.

school, health centre, market, and between house and coffee plot; total farm area; FNC membership;
and participation in cooperative programs. Appendix B2 in the Supplementary Materials shows the
complete overview of covariates for each group, given that select variables needed to be excluded due
to collinearity in some groups.
In addition, ordinary least-squares (OLS) regression was conducted for the main outcome vari-
ables. Similar to Mitiku, Mey, Nyssen, and Maertens (2017), the estimation model used is as follows:

Yi ¼ a þ βTi þ γXi þ εi (2)

Where Yi measures the economic impact of certifications on individual households i; a is the

constant; Ti are the treatment variables for each certification (using dummy variables); Xi is a vector
of control variables (using the same covariates as in the PSM) and εi is the error term. The model is
estimated separately for each of the outcome variables and certifications.
To evaluate the three pathways toward economic improvements, we (1) calculated price premiums
and shares of certified production for each subgroup; (2) calculated yield levels by dividing total
output by the coffee production surface; and (3) calculated production costs per unit of output by
dividing the total production costs by total output.

5. Results
5.1. Baseline and cooperative characteristics
Appendix B in the Supplementary Materials presents full descriptive statistics for each certification
and cooperative. We can see that farmers in our sample on average are around 53 years old, have
attended abound 5 years of schooling, and can be considered smallholders with total farm sizes of 4
to 5 hectares. The producers from cooperative A and B are broadly comparable, except that there
exist small differences in the share of female producers, distance to output markets, and total farm
area, all of which are higher in cooperative A than B.
The two cooperatives further differ in their organisational characteristics, marketing strategies
and focus. Cooperative A is significantly smaller than cooperative B, with less than half the
number of affiliated producers and a coffee volume five times lower than that of cooperative B.
This cooperative has been a pioneer in sustainability certifications, starting with Fairtrade in
1997, and has also been able to leverage funds from international development agencies for
improvements in individual and collective coffee processing facilities. It has a wide range of
social and environmental programmes, including a national pension scheme partially funded by
the Fairtrade premium. This cooperative is highly dependent on sustainability certifications as a
strategy to differentiate their product and improve farmer incomes and livelihoods. Yet, in 2015
Fairtrade farmers only sold 58 per cent of their coffee into the Fairtrade channel, while 40 per
cent was sold as low-quality ‘consumo’ coffee and 2 per cent went into conventional, average-
quality channels.
Cooperative B is a larger cooperative, in both its number of members and in volume of coffee
purchased. This cooperative stands out for having several value chain partners and progressive
economic and social programmes for its members. For instance, they have a programme that
guarantees enrolled farmers a base price for coffee, regardless of decreases in the market price
(though for a limited volume). They also offer futures contracts and use sales premiums to
incentivise the younger generation of coffee farmers. For cooperative B, certifications are only
one of the approaches used to increase profitability. They also devote much effort to increasing
productivity and implementing innovative financial instruments for price protection (internal
reports, 2015). This cooperative takes its marketing strategy to a higher level by partnering
with international coffee roasters and directly exporting green coffee. This allows for a more
effective negotiation of coffee prices with their buyers and thus a better marketing performance,
 Economic impact of multiple certification 9

understood as the average price received by farmers at the end of the season (Wollni & Zeller,
2007). For the aforementioned reasons, we identified cooperative B as the higher performing
cooperative. Still, in terms of its ability to access Fairtrade channels, cooperative B shows
remarkable parallels with cooperative A, with producers also placing around 55 per cent of
their output into the Fairtrade sales channel. In contrast, 29 per cent of their output was sold as
conventional coffee and only 14 per cent as low-quality ‘consumo’. In a next step, we will see
whether these differences affected their economic performance.

5.2. Farmers’ economic performance

As a first, and rarely answered question, we want to draw attention to what we consider one of the
most critical questions of our research: are smallholder coffee farmers profitable? When calculating
gross profits, we found that 33 per cent of all farmers were below the break-even point and were thus
unable to meet their cash expenditures and sustain coffee production at least in the short-term. If we
include the opportunity cost of own labour into the equation – a cost that many farmers do not
consciously consider – over half, 53 per cent, of the farmers were not breaking even.
How does the data break down by cooperative? In a first instance, our results show that the
differences in cooperative management translates into differences in household income, with
farmers in cooperative B performing better than sampled farmers in cooperative A (see
Appendix B2 in the Supplementary Materials). On average, producers in cooperative B display
more than twice as much gross profit per farm than producers in cooperative A, with a gross
profit of over 3,600 USD per farm compared to 1,700 USD per farm. The same is true for the
gross profit per hectare, and is mainly driven by higher productivity, better prices for their
standard coffee and a lower amount of low quality coffee than cooperative A farmers. Given
that coffee farmers in both cooperatives rely to 90 per cent on coffee as their only source of
income, this difference also translates into a lower household income in cooperative A, as well as
a higher probability of living under the national poverty line (30%, compared to 18% in
cooperative B). These underlying differences justify our two-step approach of both investigating
the impact of certifications in general as well as for each cooperative context.

5.3. The economic impact of multiple certification

We now turn to the next question: Can multiple certification make a difference to farmers’ bottom
line? Starting again with the central notion of break-even, we find that 32 per cent of farmers holding
additional VSS were below the break-even point, compared to 35 per cent of Fairtrade only farmers.
Including unpaid labour, 52 per cent of multiple certified farmers and 55 per cent of the Fairtrade
controls do not break even (see depiction in Figures 1 and 2 of Appendix E in the Supplementary
Materials). Hence, at first glance, additional certifications only made a marginal difference to the
economic situation of farmers.
Delving deeper, Table 3 shows the PSM results of the economic impact of certifications for each
cooperative. For each indicator, we present two numbers. The first is the Average Treatment Effect
on the Treated, that is, the average effect of certification compared to a Fairtrade baseline. The
second number, in italics, represents the mean result for the respective group, in order to provide a
point of comparison. We recommend to read Table 3 as follows: In cooperative A, C.A.F.E.
Practices farmers showed a mean coffee sales revenue per farm of 10,861.43 USD (in 2015
dollars). This was, on balance, 1,219.94 USD higher than their matched control group of
Fairtrade farmers. Yet, the difference was not statistically significant. On the other hand, the
Nespresso AAA group in the same cooperative only showed a mean revenue of 4,305.11 USD –
2,878.16 USD lower on average than comparable Fairtrade farmers. This result was significant at
the 95 per cent level of confidence.
Table 3. Economic impact in cooperatives A & B, comparing additional certification to Fairtrade baseline. The first line displays the Average Treatment on the Treated
(with robust standard errors reported in parentheses for significant results), while the second, in italics, shows the means for each group

Economic impact
10 T. Dietz et al.

C.A.F.E. Practices Nespresso AAA Rainforest/AAA 4C

variables
Coop A (n = 46) Coop B (n = 35) Coop A (n = 100) Coop B (n = 41) Coop A (n = 79) Coop B (n = 74)

Income indicators (in 2015 USD)

Coffee sales revenue per +1,219.94 +1,223.326 −2,878.16** (1,142.47) −1,609.21 +118.94 +423.68
farm 10,861.43 8,472.28 4,305.11 8,975.31 7,801.84 8,786.31
Coffee sales revenue per +221.384 +471.63 −237.61 −295.74 +432.73* (260.85) +72.37
hectare 2,936.324 3,564.58 2,504.19 3,730.59 2,796.23 3,508.07
Coffee gross margins per +1712.49 +951.33 −1,224.94* (725.37) −660.41 +1,410.6 +747.71
farm 3,159.95 3,033.86 690.03 4,066.83 2,420.74 3,462.40
Coffee gross margins per +146.62 +646.81 −63.63 −329.79 +529.12** (261.52) +168.75
hectare 742.56 1,272.13 532.46 1,655.48 725.07 1,228.56
Coffee gross margins per −25.14 +62.03 −4.40 +0.22 +54.86** (25.00) +25.04
carga (a) –15.26 47.83 –3.49 85.00 15.68 49.23
Other income per farm −1,264.08 −337.03** (151.16) −394.39 +166.79 −251.06 −665.33* (396.57)
1,060.84 12.54 285.19 706.55 370.29 633.23
Household income −44.13 +123.41 −3,272.55*** (1,213.34) −811.72 −132.12 −1,114.98
11,922.28 8,484.81 4,590.30 9,681.86 8,172.12 9,419.54
Social outcomes
Reported savings −0.08 −0.16 +0.02 −0.23 +0.03 −0.12
(dummy, 1 = yes)a 0.15 0.11 0.09 0.27 0.17 0.16
Reported food shortage 0 +0.03 0 +0.15*** (0.05) +0.01 +0.01
during the year 0 0.03 0 0.15 0.01 0.11
(dummy, 1 = yes)
Poverty Probability Index −1.37 −2.21 −3.62** (1.50) −1.42 −0.76 −1.72
(PPI) 46.67 43.34 41.03 48.45 45.17 46.57

Notes: aA dummy variable is a dichotomous or binary variable that takes the values of 0 or 1. ***p < 0.01; **p < 0.05; *p < 0.1. For C.A.F.E. Practices, PSM was
conducted using calipers of width equal to 0.4 of the SD of the probit of the propensity score. (a) 1 carga = 125 kg.
 Economic impact of multiple certification 11

Our disaggregated analysis of additional VSS to Fairtrade thus shows significant negative effects for
Nespresso AAA farmers within cooperative A: these producers have lower coffee revenues, gross profits
and household income, and a higher probability of living under the poverty line. In cooperative B
producers holding the Nespresso AAA certification did not display significant differences to compar-
able producers holding only the Fairtrade standard. The results for the full sample showed similar
negative impacts to those of cooperative A (see Appendix C in the Supplementary Materials for the
overall results). The effects of C.A.F.E. Practices and 4C on these indicators are non-significant both
within the two cooperatives and for the full sample, while for Rainforest Alliance/Nespresso AAA we
find positive effects in coffee revenue and gross profit for certification holders in cooperative A. In
terms of social outcomes, Nespresso AAA farmers in cooperative B reported food shortage at higher
rates compared to their matched counterparts. Hence, with the exception of Rainforest Alliance/
Nespresso AAA in cooperative A, we find low additional gains in smallholders’ economic conditions
when industry and company-led standards are used in addition to Fairtrade certification. The table also
shows large differences between the household incomes in the two cooperatives, even when farmers are
certified with the same standard. We will reflect further on the importance of institutional capacity for
farmer incomes in the discussion. However, the next section will first examine which pathways may
explain the improvements within each cooperative that are driven by certification schemes.

5.4. Impact pathways for economic development

In Table 1 we identified price premiums, increased productivity, and lower production costs as
potential impact pathways of how VSS in addition to Fairtrade may improve the economic sustain-
ability of smallholder coffee producers. Following these pathways, we assess in the following how
the different VSS are performing in the specified mechanisms and their underlying practices. We
display the results in Tables 4 and 5.

5.5. Price premiums

An analysis of the full sample shows significantly higher average coffee prices for C.A.F.E. Practices and
4C Association farmers compared to farmers that only carry Fairtrade certification (see Appendix D in the
Supplementary Materials). On the level of the two cooperatives A and B, Table 4 shows that farmers
within cooperative A who hold the additional certification of C.A.F.E. Practices and Rainforest Alliance/
Nespresso AAA received higher average prices for their coffee than their matched pairs. Within
cooperative B, only Nespresso AAA shows a positive effect.
Two factors may explain the differences – or lack thereof – in average prices paid to farmers: the
actual differences in prices paid for various types of coffee, and the share of coffee sold into each
certification channel. We will consider each of these factors in turn.
First, Table 6 displays the average reported prices for conventional, Fairtrade and further differ-
entiated coffee, as well as the percentage increase that premiums represent.6
It strikes us that the prices for conventional, Fairtrade and additional VSS vary significantly across
cooperatives. The price for conventional coffee in cooperative B was 8 per cent higher than in
cooperative A. The potential to generate additional income through price premiums by selling
standard compliant coffee is therefore generally much smaller in cooperative B than in cooperative
A. Indeed, as becomes clear in Table 6, in cooperative B the average prices farmers received for
coffee certified by the labels of Fairtrade, 4C and C.A.F.E. Practices almost match the prices of
conventional coffee. Only the prices for coffee sold through the Nespresso AAA channel are higher
by 7 per cent, which helps clarify why only those farmers in Cooperative B who hold the Nespresso
AAA certification received a higher average price for their coffee sales compared to their matched
counterparts.
In cooperative A the situation is different. The gap for average prices is both higher between
conventional and certified coffee in general, as well as higher between Fairtrade coffee and the other
 12 T. Dietz et al.

Table 4. Impact pathways in cooperatives A and B, comparing additional certification to Fairtrade baseline. The first line displays the Average Treatment on the Treated
(with robust standard errors reported in parentheses for significant results), while the second, in italics, shows the means for each group (in 2015 USD unless specified)

C.A.F.E. Practices Nespresso AAA Rainforest/AAA 4C

Impact pathway variables
Coop A (n = 46) Coop B (n = 35) Coop A (n = 100) Coop B (n = 41) Coop A (n = 79) Coop B (n = 74)

Price premiums
Coffee sales revenue per carga +18.50*** (6.28) +0.74 +8.77 +10.41** (4.31) +13.27** (5.85) +0.49
(in USD/125kg) 236.78 254.36 232.51 274.2 239.25 261.37
Productivity
Yields per hectare (in kg/ha) +7.61 +213.09 −174.73 −208.78 +144.46 +11.66
1,549.18 1,748.87 1,330.96 1,699.14 1,451.90 1,668.49
Costs of production
Cost of agricultural inputs (per farm) −318.82 +147.37 −569.02** (229.97) +33.35 −793.11 +167.24
1,752.75 1,040 768.77 1,211.993 971.20 1,160.22
Labor costs per farm −328.65 +4.67 −1,053.10** (485.21) −699.96 −565.02 −594.48
5,687.4 4,148.23 2,771.94 3,386.92 4,231.34 3,901.77
Other costs per farm +153.13 +53.08 −36.41 +30.37 +55.48 +36.63
249 160.34 63.27 181.89 159.14 168.10
Production costs per farm −492.55 +271.99 −1,653.22** (687.45) −948.79 −1,291.66 −324.03
7,701.48 5,438.45 3,615.08 4,908.49 5,381.1 5,323.91
Production costs per hectare (in USD/ha) +74.77 −175.18 −173.991,971.73 +34.05 −96.39 −96.38
2,193.77 2,292.45 2,075.10 2,071.16 2,279.51

Notes: ***p < 0.01; **p < 0.05; *p < 0.1. For C.A.F.E. Practices, PSM was conducted using calipers of width equal to 0.4 of the SD of the probit of the propensity score.
Table 5. Underlying practices in cooperatives A and B, comparing additional certification to Fairtrade baseline. The first line displays the Average Treatment on the
Treated (with robust standard errors reported in parentheses for significant results), while the second, in italics, shows the means for each group

C.A.F.E. Practices Nespresso AAA Rainforest/AAA 4C

Underlying practices variables
Coop A (n = 46) Coop B (n = 35) Coop A (n = 100) Coop B (n = 41) Coop A (n = 79) Coop B (n = 74)

Training
Always attends trainings (dummy, 1 = yes) +0.07 −0.06 −0.05* (0.03) −0.09 −0.04* (0.02) +0.04
0.98 0.69 0.94 0.76 0.95 0.82
Always implements what is learned in trainings +0.05 −0.19 −0.06* (0.03) −0.06 −0.03 ±0
(dummy, 1 = yes) 0.95 0.71 0.90 0.9 0.94 0.93
Agricultural practices
Prunes coffee plants (dummy, 1 = yes) +0.23** (0.10) −0.07 +0.05 +0.25*** (0.06) −0.04 +0.20*** (0.07)
0.72 0.06 0.51 0.27 0.53 0.33
Practices removing the stems (dummy, 1 = yes) +0.12 −0.2** (0.09) +0.02 −0.14 +0.03 −0.17
0.76 0.71 0.7 0.59 0.71 0.64
Implements insect control (dummy, 1 = yes) +0.04 +0.04 +0.01 +0.03 −0.03 +0.01
1 0.69 0.99 0.65 0.97 0.78
Utilises disease control (dummy, 1 = yes) −0.03 0.03 −0.02 −0.14 −0.02 0.15** (0.06)0.57
0.07 0.17 0.03 0.56 0.01
Access to soil analysis (dummy, 1 = yes) +0.07 −0.13** (0.06) −0.07 +0.38** (0.18) +0.19*** (0.06) +0.09
0.20 0.03 0.11 0.54 0.30 0.27
Fertiliser input (in bags per hectare) −61.45 −73.3 −113.59** (54.30) +134.16 −125.94** (52.96) +115.57* (66.38)
537.56 372.54 430.10 501.79 367.11 532.33
Record keeping & knowledge
Record keeping (dummy, 1 = yes) −0.05 +0.3*** (0.08) −0.04 +0.1 −0.025 +0.01
0.48 0.37 0.42 0.49 0.48 0.35
Spend 5+ hours in record keeping (dummy, 1 = yes) −0.02 +0.03 −0.06* (0.33) −0.01 −0.04 −0.03
0.07 0.03 0.02 0.05 0.05 0

Notes: ***p < 0.01; **p < 0.05; *p < 0.1. For C.A.F.E. Practices, PSM was conducted using calipers of width equal to 0.4 of the SD of the probit of the propensity score.
Economic impact of multiple certification 13
14 T. Dietz et al.

Table 6. Average prices for parchment coffee for year 2015 (USD per pound)

Premium as per cent of Premium as percentage

Type of coffee Coop A market price Coop B of market price

Conventional 0.90 0.97

Fairtrade 0.99 10.4% 0.98 0.6%
Rainforest Alliance/AAA 1.04 16.1% – –
C.A.F.E. Practices 1.05 16.5% 0.99 1.4%
Nespresso AAA 1.03 14.0% 1.04 7.0%
4C – – 0.99 1.8%

Table 7. Market uptake of certified coffee

Certification group Sales channel Coop A Coop B

C.A.F.E. Practices (n = 81) C.A.F.E. Practices 35% 15%

Fairtrade 8% 50%
Conventional 16% 22%
Low quality 41% 14%
Nespresso AAA (n = 141) Nespresso AAA 47% 64%
Fairtrade 3% 16%
Conventional 2% 13%
Low quality 48% 6%
Rainforest Alliance (n = 79) Rainforest Alliance 51% –
Fairtrade 9%
Conventional 2%
Low quality 39%
4C (n = 74) 4C – 22%
Fairtrade 30%
Conventional 38%
Low quality 10%

Notes: Data calculated based on the reported sales by sampled producers. The percentages are
the certified production actually sold through each certification channel.

labels. This helps us understand why producers in cooperative A holding additional certifications to
Fairtrade received on average higher prices for their total coffee sales, at least for the labels of C.A.F.E.
Practices and Rainforest Alliance/Nespresso AAA.
This leads us to consider the second factor that may explain average prices received: the market
uptake of each type of coffee (see Table 7).7
The results make clear that holding a certification and implementing the sustainability practices
required does not guarantee sales through a certification channel. Generally, the uptake rates for the
additional certifications displayed in Table 7 reach at best around 50%. Moreover, there appears to be
a displacement effect, wherein the additional certification channel replaces the share of coffee that
can be sold through the Fairtrade channel. On the one hand, this may be due to informal quality
requirements; on the other, it may be a feature of the cooperative management. Either way, we see
that adding another certification does not bring farmers much further than their Fairtrade-only
brethren in the share of coffee they can sell into a differentiated market: it reaches 50–60 per cent
in most groups, with only the Nespresso AAA group in cooperative B forming an exception (with
80%). This latter group, again, is the only one that showed significantly higher average prices than
their controls in cooperative B. The limited overall market uptake could thus be a potential explana-
tion for the general findings presented in Table 3, according to which the overall economic impact of
the additional certifications is rather limited.
 Economic impact of multiple certification 15

Again, we also find differences between the two cooperatives A and B. According to Table 7,
the market uptake rates are particularly low for C.A.F.E. Practices and 4C in cooperative B. This
result adds to the explanation of why producers’ certifications in addition to Fairtrade in
cooperative B do not in practice translate to higher coffee prices – the volumes sold appear too
small.
In cooperative A the uptake rates are at least somewhat higher, which, besides the higher price
differentials mentioned above, could explain why the impact of the additional certifications –
although limited – is higher in cooperative A compared to cooperative B.

5.6. Increased productivity

The field results presented in Table 4, and Appendix D in the Supplementary Materials, reveal that
for all the analysed certifications, at the level of both cooperatives A and B as well as the full sample,
their impact on productivity (yields) is non-significant. However, concerning the underlying practices
that may lead to higher productivity in coffee production, we see a number of significant results: for
the full sample, C.A.F.E. Practices and Rainforest Alliance/Nespresso AAA farmers display higher
attendance rates of good agricultural practices trainings than their controls. Nespresso AAA produ-
cers, on the other hand, show a lower rate of implementing the content learned in trainings, both for
the full sample and within cooperative A.
Concerning the implementation of good agricultural practices, our results show that certified
farmers implement some of these practices at higher rates than their Fairtrade controls. For instance,
pruning is performed at significantly higher rates by all certification holders, for both the full sample
and at the cooperative level. As for insect control, only Rainforest Alliance/Nespresso AAA farmers
display positive results, while the 4C Association shows significantly negative results. These certi-
fication holders, though, are the only group that reports implementing disease control at higher rates
than their matched pairs. In terms of soil analysis, all certifications except for C.A.F.E. Practices
report having soil analyses at higher rates than Fairtrade-only farmers (although for Nespresso AAA
this result only applies to cooperative B).
Our results, therefore, confirm on the one hand at least partially, the predictions of Section 3:
additional certifications that complement Fairtrade can indeed have a positive effect on the imple-
mentation of improved production techniques. However, our results also show that the uptake of good
agricultural practices is highly fragmented and, most importantly, does not translate into increased
yields (cf. Barham & Weber, 2012).

5.7. Costs of production

In terms of decreased production costs, we find mixed results across certifications. The results for the
overall sample (see Appendix D in the Supplementary Materials) show that Nespresso AAA and
Rainforest Alliance/Nespresso AAA farmers have significantly lower production costs per farm than
Fairtrade-only farmers. On the other side of the spectrum, C.A.F.E. Practices and 4C label do not
present significant differences to the controls. Only farmers in cooperative B who hold the C.A.F.E.
Practices label in addition to Fairtrade show higher levels of record-keeping compared to their matched
counterparts. However, these record-keeping efforts fail to translate into decreased costs of production.
At the cooperative level it strikes us that Nespresso AAA farmers in cooperative A, who show
significantly positive results in the indicator of lower production costs (see Table 4), have also been
identified as the farmers with lower coffee revenue, gross profits and household income, as well as a
higher probability of living under the poverty line (see Table 3). When combined, these results
suggest that the lower production costs rather reflect a lack of sufficient investment in coffee farming
(for example lower fertiliser input) than efficiency gains triggered by the implementation of good
agricultural practices and the tracking of expenses by record-keeping techniques. On the other hand,
the Rainforest Alliance/AAA farmers manage to combine lower production costs with higher sales
16 T. Dietz et al.

revenues and gross profits due to a combination of higher average yields and prices. Low production
costs thus presents a tricky indicator that must be analysed in the context of productivity to generate
meaningful results.

6. Discussion
Overall, our results suggests that additional coffee certifications in addition to the Fairtrade standard
do not necessarily lead to the foreseen changes on the ground described in Section 3. That is, certified
farmers holding industry and company-led VSS sometimes underperform their Fairtrade controls in
expected sustainability practices. In addition, although some groups perform positively in certain
pathways, this does not necessarily translate to an improved economic situation. Furthermore, we find
differing effects of additional VSS in the analysed cooperatives.
In cooperative B, the key indicators measured were at similar levels for farmers holding additional
VSS and those certified only with the Fairtrade standard. Part of the explanation is that cooperative B
has already reached relatively high operational levels in both productivity and marketing. In parti-
cular, the section on price premiums made clear that cooperative B has very little room left for
improvements through certification. Whether or not Fairtrade or the FNC played a significant role in
driving the relatively well-developed organisational capacities of cooperative B is beyond the scope
of our analysis. Overall, our results suggest that under the condition of an economically relatively
well-developed cooperative, the possibilities for multiple certifications to generate further addition-
ality seem rather limited.
However, even under the relatively favourable conditions present in cooperative B, production
practices could be improved. This becomes clear when we look at the underlying practice indicators
for increased productivity and lower production costs (Table 5). The mean results show that for most
variables in this study area, large shares of both the control and treatment group do not implement the
improved agricultural and record-keeping practices that are part of the additional certifications’
standard catalogues. Regarding those practices, the additional certifications therefore clearly fail to
generate much additional gains despite the room for it.
In cooperative A, the picture is different. Since they generally operate on a lower economic level
than cooperative B, there is also more room within this cooperative for potential improvements
through additional certifications to Fairtrade. We see this again in the section on price premiums,
where, unlike cooperative B, price premiums do at least partly translate into higher average coffee
prices (see Table 4). However, the main problems of cooperative A are weaker market access
(including fewer value chain partners) and lower coffee quality.8 It is exactly here where the
certifications in addition to Fairtrade fail to make a meaningful impact. Overall, the received price
premiums are too small to translate into significant economic improvements for smallholder coffee
producers, with the exception of the combination of Rainforest Alliance/Nespresso AAA. Further,
though coffee producers that hold additional certifications to Fairtrade perform significantly better in
implementing some improved agricultural practices, ultimately this does not lead to significant
productivity gains.
Indeed, among all investigated VSS certifications, the only certification we found significant in
improving the economic situation of smallholder producers above and beyond the Fairtrade baseline
(in that it led to higher revenue and gross profit) was Rainforest Alliance/Nespresso AAA within
cooperative A. This is the only case where certified farmers received significant price premiums and
operated with lower costs of production due to more efficient use of agricultural inputs than
comparable Fairtrade-only farmers. It is worth mentioning that production costs is precisely the
pathway that was not addressed by Fairtrade, and therefore, as expected, exhibited higher additional
gains.
While our results overall support a number of previous studies, they also deviate from the existing
literature. The positive economic results found for the Rainforest Alliance/Nespresso AAA certified
farmers are in line with previous studies that find significantly higher income for Rainforest Alliance
 Economic impact of multiple certification 17

farmers (Ruben & Zuniga, 2011; Rueda & Lambin, 2013). Moreover, they point to the effectiveness
of multiple-certification (Akoyi & Maertens, 2017; van Rijsbergen et al., 2016), and specifically of
NGO-led standards.
The insignificant or even negative economic outcomes we found for the industry and company-led
certifications of 4C, Nespresso AAA and C.A.F.E. Practices align with the findings of Kuit et al.
(2016) in Uganda and Vietnam.
On the other hand, our study differs markedly from other impact evaluations that show yield
improvements for farmers holding more advanced certifications (see Ruben & Zuniga, 2011, Hughell
& Newsom, 2013; Whelan & Newsom, 2014). However, our data suggest that soil analysis and
appropriate fertilisation can lead to efficiency gains, as in the case of Rainforest Alliance/Nespresso AAA.
Additionally, our results show that economic diversification is a key livelihood strategy that can help
withstand climate shocks and price volatility in coffee production and sales. For this study, we measure it
using additional income from coffee as a proxy. A result common to the studied industry and company-led
VSS, except for the Rainforest Alliance/Nespresso AAA certification, where results are ambiguous, is a
less diversified activity pattern than their controls. These findings suggest that the adoption of further
certification standards could be associated with the reallocation of resources from other economic
activities, while non-certified farmers – and in this case, those holding only the baseline standard – are
able to maintain a more diversified activity pattern. This ultimately results in higher household incomes
for farmers that do not implement more specialised standards (Vellema et al., 2015; Barham & Weber,
2012; Ruben & Fort, 2012; van Rijsbergen et al., 2016).
With the evidence displayed, it might seem unclear why farmers choose to specialise in coffee, given
the low market uptake and ambivalent effect on their economic outcomes. But the decision to adopt a
certification often does not depend directly on the producer, as is made clear by one coffee roaster we
interviewed, who explained: ‘The cluster itself is chosen for the coffee quality [by virtue of its regional
characteristics, for example altitude], not for the specific producers. Once we have delimited the
geographic area, we work with the implementers to find the producers that are willing to work with
our programme.’ (coffee roaster, 2016). In the case of industry-led standards, the roasters themselves
select specific areas for VSS rollout based on farm location and quality requirements. They typically
commission technicians who support farmers to achieve their quality standards and bear most of the
certification costs. Furthermore, the FNC encourages VSS adoption in the coffee sector, often providing
capacity building, extension services, and in some cases, they hold the certificate for groups of farmers
(Grabs et al., 2016). Thus, considering low adoption costs, the promise of market access and better prices,
one can better understand the pursuit of certifications or the decision to continue in these programmes.

7. Conclusion
Company and industry-led standards now play a pivotal role in the certification of smallholder coffee
production. It is a widespread strategy for farmers who are already certified by other standard systems (in this
case, Fairtrade) to become certified by additional company or industry-led standards. In this article, we
identified different pathways through which company and industry-led standards, in addition to the Fairtrade
certification, can potentially improve the economic situation of smallholder coffee producers. We then
analysed this question empirically using a random sample from two cooperatives in the Colombian Coffee
Belt, with Fairtrade certified farmers as the control group. Specifically, we assessed the impact of the
following VSS: C.A.F.E. Practices, Nespresso AAA, 4C and the combination of Rainforest Alliance/
Nespresso AAA.
In sum, our results show that the adoption of company and industry-led VSS in addition to the Fairtrade
certification resulted in low additional economic gains for the smallholders. Among all investigated
standards, only the combination of Rainforest Alliance/Nespresso AAA was associated with significant
economic improvements in one of the cooperatives. This is not to say that there were no differences between
the producers certified by one of the mentioned additional certifications and Fairtrade-only producers.
However, our data shows that the positive effects in some of the identified pathways – for instance, in
18 T. Dietz et al.

price premiums – do not necessarily translate into higher gross profits, household income or poverty
reduction.
Further, our study shows the impact of certifications in a particular context. The results generated in this
study are based on data from two specific cooperatives in one region in Colombia can therefore not simply be
extrapolated to other cooperatives and coffee regions. Our study indicates that the overall economic
conditions that are present in a given cooperative, in terms of market access, marketing strategies, farmer
support programmes and the quality of the produced coffee, seem to have a far more significant economic
impact on smallholders than the question of whether a smallholder producer holds additional certifications or
not. However, further research employing a larger sample of certified and non-certified cooperatives is
necessary to validate these findings.
Generally, smallholder coffee farmers in Colombia’s Coffee Belt are struggling to make a living. The
challenging conditions of coffee production are not expected to disappear, as price volatility, rising costs of
production, low market uptake of certified coffee, the negative impacts of climate change, pests and diseases
are all increasingly common burdens for the coffee sector. Industry and company-led VSS may be a tool to
promote sustainability practices and increase market access. However, at least in our study context, the
impact generated by these tools seems to be too limited to make a real difference.

Acknowledgements
This work was supported by the Land Nordrhein-Westfalen, Ministerium für Kultur und Wissenschaft
through its financial support of the research group TRANSSUSTAIN. We are grateful to comments by Bernd
Schlipphak, Jan Börner, Doris Fuchs and Steve Boucher, and to Nadav Chudler for proof reading the article.
We are also immensely thankful to Laura Deal for her help with the final edits and formatting of this piece.

Disclosure statement
No potential conflict of interest was reported by the authors.

Funding
This work was supported by the Land Nordrhein-Westfalen, Ministerium für Kultur und Wissenschaft [Project
number: 005-1503-0008].

Notes
1. Having been conceived in a multi-stakeholder initiative as a baseline code that would allow participating farmers to slowly
move up to more stringent certifications such as UTZ or Rainforest Alliance, the Code of Conduct for the Coffee Community
(4C) stands out among these programs due to its comparatively low requirements. However, we still include it in our analysis as
a program that may show economic additionality over cooperative-wide Fairtrade certification for two reasons: One, much of
the 4C code focuses on disseminating good agricultural practices, for instance through training programs, which may lift
participating producers over non-participants in terms of their yield or production efficiency. Two, it again becomes relevant as
an additional access to (somewhat) differentiated markets, given the limited uptake of Fairtrade certification.
2. 4C mentions access to finance as one of the services members should have, but does not indicate how to attain it (4C
Association, 2015).
3. For certified farmers, we also recorded the certification costs, which typically focused on from infrastructure improvements
to the acquisition of occupational health supplies. Given the rationale laid out above, we do not include such costs in the
gross profit measure, since they were one-off costs. However, in a separate sensitivity analysis we did recalculate the main
economic indicators taking certification costs into consideration, and the results remained similar.
4. This is a tool developed by the Grameen Foundation and managed by Innovations for Poverty Action (IPA, 2012).
5. The STATA command teffects psmatch was chosen for the estimation of treatment effects, as it incorporates Abadie and
Imbens (2016) adjustment, taking into account estimated propensity scores rather than true ones, which improves the
calculation of standard errors.
6. Although the average price does not reflect the variation of prices throughout the coffee cycle, in Colombia, as opposed to
other producing countries, coffee is produced during most of the year (FNC, 2010). Monthly price data for cooperative B
can be found in the Supplementary Material.
 Economic impact of multiple certification 19

7. For the ‘Rainforest Alliance’ category, we added the sales made as double-certified coffee (Rainforest Alliance/Nespresso
AAA) to the sales made only as Rainforest Alliance certified, which did not meet the Nespresso AAA quality standard.
Nespresso AAA requires that less than 2 per cent of coffee per batch is affected by the coffee berry borer (CBB) pest, while
Rainforest Alliance has a requirement of less than 4.5 per cent of CBB.
8. At least that specific year, this cooperative had a higher share of low quality coffee than cooperative B. Descriptive statistics
per cooperative, including the share of low quality coffee, can be found in Appendix B in the Supplementary Materials.

ORCID

Thomas Dietz http://orcid.org/0000-0002-3041-3127

Janina Grabs http://orcid.org/0000-0002-1630-5672

References
4C Association. (2015). 4C code of conduct. Bonn: 4C Association.
Abadie, A., & Imbens, G. W. (2016). Matching on the estimated propensity score. Econometrica, 84(2), 781–807.
Akoyi, K. T., & Maertens, M. (2017). Walk the talk: Private sustainability standards in the ugandan coffee sector. Journal of
Development Studies, 1–27. doi:10.1080/00220388.2017.1327663
Barham, B. L., Callenes, M., Gitter, S., Lewis, J., & Weber, J. (2011). Fair trade/organic coffee, rural livelihoods, and the “agrarian
question”: Southern mexican coffee families in transition. World Development, 39(1), 134–145.
Barham, B. L., & Weber, J. G. (2012). The economic sustainability of certified coffee: Recent evidence from Mexico and Peru.
World Development, 40(6), 1269–1279.
Benoit, D., & Isabelle, V. (2011). From commoditisation to de-commoditisation … and back again: Discussing the role of
sustainability standards for agricultural products. Development Policy Review, 29(1), 91–113.
Biswas-Tortajada, A., & Biswas, A. K. (2015). Sustainability in coffee production: Creating shared value chains in Colombia.
doi:10.4324/9781315697505
Bolwig, S., Gibbon, P., & Jones, S. (2009). The economics of smallholder organic contract farming in Tropical Africa. World
Development, 37(6), 1094–1104.
Borrella, I., Mataix, C., & Carrasco-Gallego, R. (2015). Smallholder farmers in the speciality coffee industry: Opportunities, constraints
and the businesses that are making it possible. IDS Bulletin, 46(3), 29–44.
Bray, J. G., & Neilson, J. (2017). Reviewing the impacts of coffee certification programmes on smallholder livelihoods. International
Journal of Biodiversity Science, Ecosystem Services & Management, 13(1), 216–232.
Caswell, M., Méndez, V. E., & Bacon, C. M. (2012). Food security and smallholder coffee production: Current issues and future
directions Martha. ARLG Policy Brief # 1, (2012).
Chiputwa, B., Spielman, D. J., & Qaim, M. (2015). Food standards, certification, and poverty among coffee farmers in
Uganda. World Development, 66, 400–412.
Cramer, C., Johnston, D., Mueller, B., Oya, C., & Sender, J. (2017). Fairtrade and labour markets in Ethiopia and Uganda. Journal of
Development Studies, 53(6), 841–856.
CRECE. (2013). Executive summary CRECE’s monitoring & evaluation study on the Nespresso AAA sustainable quality TM program
in Colombia. Retrieved from https://www.nestle-nespresso.com/asset-library/Documents/Nespresso-AAAProgram-
MonitoringandevaluationoftheAAAProgrambyCRECE2013.pdf
de Janvry, A., McIntosh, C., & Sadoulet, E. (2015). Fair trade and free entry: Can a disequilibrium market serve as a development tool?
Review of Economics and Statistics, 97(3), 567–573.
Dietz, T., Auffenberg, J., Estrella, A., Grabs, J., & Kilian, B. (2018). The voluntary coffee standard index (VOCSI). Developing a
composite index to assess and compare the strength of mainstream voluntary sustainability standards in the global coffee industry.
Ecological Economics, 150 (March), 72–87.
Dragusanu, R., & Nunn, N. (2014). The impacts of fair trade certification: Evidence from coffee producers in Costa Rica. Harvard
Business School Working Paper (2013).
Federacion Nacional de Cafeteros. (2010). Nuestras regiones cafeteras. Retrieved from http://www.cafedecolombia.com/particulares/
es/la_tierra_del_cafe/regiones_cafeteras/
Federacion Nacional de Cafeteros. (2016). Contenido Coyuntura y perspectivas del mercado cafetero. Bogota: Federacion Nacional de
Cafeteros.
Federacion Nacional de Cafeteros de Colombia. (2015). El Niño hits colombian coffee growing. Retrieved from https://www.
federaciondecafeteros.org/algrano-fnc-en/index.php/comments/el_nino_hits_colombian_coffee_growing
Giuliani, E., Ciravegna, L., Vezzulli, A., & Kilian, B. (2017, August). Decoupling standards from practice: The impact of in-house
certifications on coffee farms’ environmental and social conduct. World Development, 96, 294–314.
Grabs, J. (2018). The effectiveness of market-driven regulatory sustainability governance. The design of private sustainability standards
and their impacts on Latin American coffee farmers’ production practices. Münster: Westfälische Wilhelms-Universität Münster.
Grabs, J., Kilian, B., Hernández, D. C., & Dietz, T. (2016). Understanding coffee certification dynamics: A spatial analysis of voluntary
sustainability standard proliferation. International Food and Agribusiness Management Review, 19(3), 31–56.
20 T. Dietz et al.

Greenberg, J. (2017). No, coffee is not the second-most traded commodity after oil. Retrieved from http://www.politifact.com/global-
news/statements/2017/may/08/starbucks/no-coffee-not-second-most-traded-commodity-after-o/
Hughell, D., & Newsom, D. (2013). Impacts of rainforest alliance certification on coffee farms in Colombia. New York: Rainforest
Alliance.
IISD. (2003). Sustainability in the coffee sector: Exploring opportunities for international cooperation. Winnipeg: International
Institute for Sustainable Development.
International Coffee Organization. (2017). Historical data on the global coffee trade. Total production. London: International Coffee
Organization.
International Coffee Organization. (2019). Profitability of coffee farming in selected Latin American countries – Interim report. London:
International Coffee Organization.
IPA. (2012). Poverty probability index for Colombia. Retrieved from https://www.povertyindex.org/country/colombia
Jena, P. R., Chichaibelu, B. B., Stellmacher, T., & Grote, U. (2012). The impact of coffee certification on small-scale producers’
livelihoods: A case study from the Jimma Zone, Ethiopia. Agricultural Economics, 43(4), 429–440.
Kamau, M., Mose, L., Fort, R., & Ruben, R. (2010). The impact of certification on smallholder coffee farmers in Kenya : The case of ‘
UTZ ’ certification program. African Association of Agricultural Economists (AAAE), (September), 19–23.
Kuit, M., Guinée, L., & Anh, P. V. (2016). 4C impact study phase 2. Estimating the impact of implementation of the 4C entry level
standard in Uganda and Vietnam. The Netherlands: Kuit Consultancy.
Lernoud, J., Potts, J., Sampson, G., Schlatter, B., Huppe, G., Voora, V., & Dang, D. (2018). The state of sustainable markets – Statistics
and emerging trends 2018. Geneva: International Trade Centre.
Lernoud, J., Potts, J., Sampson, G., Voora, V., Willer, H., & Wozniak, J. (2015). The state of sustainable markets - statistics and emerging
trends 2015. Geneva: International Trade Centre.
Lernoud, J., Potts, J., Sampson, G., Voora, V., Willer, H., & Wozniak, J. (2017). The state of sustainable markets - statistics and emerging
trends 2017. Geneva: International Trade Centre.
Lyngbæk, A. E., & Muschler, R. G. (2001). Productivity and profitability of multistrata organic versus conventional coffee farms in
Costa Rica. Agroforestry Systems, 53(2), 205–213.
Mitiku, F., Mey, Y. D., Nyssen, J., & Maertens, M. (2017). Do private sustainability standards contribute to income growth and poverty
alleviation? A comparison of different coffee certification schemes in Ethiopia. Sustainability (Switzerland), 9(2). doi:10.3390/
su9020246
Panhuysen, S., & Pierrot, J. (2018). Coffee barometer 2018. The Hague: Conservation International/COSA/Hivos/Oxfam
Wereldwinkels/Solidaridad.
Potts, J., Lynch, M., Wilkings, A., Huppé, G., Cunningham, M., & Voora, V. (2014). The state of sustainability initiatives review.
Winnipeg: International Institute for Sustainable Development (IISD) and the International Institute for Environment and
Development (IIED).
Ramirez-Villegas, J., Salazar, M., Jarvis, A., & Navarro-Racines, C. E. (2012). A way forward on adaptation to climate change in
Colombian agriculture: Perspectives towards 2050. Climatic Change, 115(3–4), 611–628.
Redaccion Economia. (2015). El Niño afecta por lo menos 90.000 hectáreas de café colombiano. Retrieved from https://www.
elespectador.com/noticias/economia/el-nino-afecta-menos-90000-hectareas-de-cafe-colombiano-articulo-587105
Reinecke, J., Manning, S., & von Hagen, O. (2012). The emergence of a standards market: Multiplicity of sustainability standards in the
global coffee industry. Organization Studies, 33(5–6), 791–814.
Ruben, R., & Fort, R. (2012). The impact of fair trade certification for coffee farmers in Peru. World Development, 40(3), 570–582.
Ruben, R., Fort, R., & Zúñiga-Arias, G. (2009). Measuring the impact of fair trade on development. Development in Practice, 19(6),
777–788.
Ruben, R., & Zuniga, G. (2011). How standards compete: Comparative impact of coffee certification schemes in Northern
Nicaragua. Supply Chain Management: An International Journal, 16(2), 98–109.
Rueda, X., & Lambin, E. F. (2013). Linking globalization to local land uses: How eco-consumers and gourmands are changing the
Colombian coffee landscapes. World Development, 41(1), 286–301.
Rueda, X., Thomas, N. E., & Lambin, E. F. (2014). Eco-certification and coffee cultivation enhance tree cover and forest connectivity in
the Colombian coffee landscapes. Regional Environmental Change, 15(1), 25–33.
Snider, A., Gutiérrez, I., Sibelet, N., & Faure, G. (2017). Small farmer cooperatives and voluntary coffee certifications. Rewarding
Progressive Farmers of Engendering Widespread Change in Costa Rica? Food Policy, 69, 231–242.
Valkila, J. (2009). Fair trade organic coffee production in Nicaragua — Sustainable development or a poverty trap? Ecological
Economics, 68(12), 3018–3025.
van Rijsbergen, B., Elbers, W., Ruben, R., & Njuguna, S. N. (2016). The ambivalent impact of coffee certification on farmers’ welfare:
A matched panel approach for cooperatives in Central Kenya. World Development, 77, 277–292.
Vellema, W., Buritica Casanova, A., Gonzalez, C., & D’Haese, M. (2015). The effect of specialty coffee certification on household
livelihood strategies and specialisation. Food Policy, 57, 13–25.
Whelan, T., & Newsom, D. (2014). Sustainable coffee farming: Improving income and social conditions protecting water, soil and
forests. Rainforest Alliance, 10
Wollni, M., & Zeller, M. (2007). Do farmers benefit from participating in specialty markets and cooperatives? The case of coffee
marketing in Costa Rica. Agricultural Economics, 37(2–3), 243–248.
World Bank. (2002). Colombia coffee sector study. Retrieved from http://ssrn.com/abstract=996138