International Journal of Economic Behavior and Organization

2022; 10(1): 7-16

http://www.sciencepublishinggroup.com/j/ijebo
doi: 10.11648/j.ijebo.20221001.12
ISSN: 2328-7608 (Print); ISSN: 2328-7616 (Online)

Impact of Agricultural Policy Fluidity on Trust Among Youth

Coffee Farmers in Tanzania: An Application of Difference in
Difference Method
Rogers Andrew1, *, Provident Dimoso1, Judith Namabira2
1
Department of Rural Development and Regional Planning, Institute of Rural Development Planning, Dodoma, Tanzania
2
Department of Development Finance and Management Studies, Institute of Rural Development Planning, Dodoma, Tanzania

Email address:
*
Corresponding author

To cite this article:

Rogers Andrew, Provident Dimoso, Judith Namabira. Impact of Agricultural Policy Fluidity on Trust Among Youth Coffee Farmers in
Tanzania: An Application of Difference in Difference Method. International Journal of Economic Behavior and Organization.
Vol. 10, No. 1, 2022, pp. 7-16. doi: 10.11648/j.ijebo.20221001.12

Received: January 2, 2022; Accepted: January 17, 2022; Published: January 21, 2022

Abstract: The present paper assesses impact of agricultural policy fluidity on youths’ trustworthiness in abiding to contracts
with private investors in the coffee sector in Tanzania. In the 2018/19 coffee season, the government provided onset directives on
marketing to institutionalize cooperatives to be a sole coffee collector from farmers unlike before the 2018/19 coffee season
whereby farmers groups and private traders dominated. This paper defines trust as upkeep of the agreements between youth
coffee farmers (a principal) and farmers groups and private investors (an agent) to supply coffee to private investors through
groups albeit regulation fluidity created loopholes for youth farmers to diverge coffee to other cooperatives. Data used were
collected from coffee farmers and respective cooperatives in the Southern highland of Tanzania and the Difference in Difference
(DID) method was applied to analyze the impact of agricultural policy fluidity on trust among youth coffee farmers. The results
indicate that the agricultural policy fluidity deterred trust among youth coffee farmers relative to elders. The results indicate that
the 2018/19 coffee marketing changes impacted the decline in coffee collection with an Average Treatment effect on the Treated
(ATT) of about 18.2kg of coffee parchment among youths relative to elders. In addition, it was revealed that farmers groups (new
cooperatives) which had no obligations to pay back loans experienced a boom in coffee collection relative to their counterparts. It
is recommended that since agricultural investments are long term, any change in agricultural policies, laws and regulations has to
have preparatory phase to allow investors, cooperatives, farmers and government units participating in the value chain to
determine possible negative effects and develop strategies of mitigating such effect. Cooperatives have to work with responsible
department at district level to institutionalize mistrust measures restricting farmers from selling coffee to other cooperatives. One
of the measures will be restricting cooperatives from receiving coffee from non-member farmer.

Keywords: Impact, Trust, Policy Fluidity, Difference in Difference, Youth Farmers, Coffee, Tanzania

1. Introduction
Trust has been instrumental to sustained economic
cooperation in any economic activities; be it agrarian or
multinational economic systems and is a new instrument for
value production in the global economy is the cooperative
mode of organization characterized as interdependent,
long-term relations among autonomous organizations [1].
Hardin, R. [2] Defines trust as an “encapsulated interest:
one actor trusting another to complete a specific action out
of self-interest, whether it is because the actor values the
other person’s welfare, closely identifies with that
individual, or wishes to maintain a relationship with that
person. Whereas [3] sees trust as a class of actions in which
we choose to take or not take risks and his focus is on
uncertainty and vulnerability in trust relations. It is widely
accepted among experts in different scientific fields that the
concept of trust presumes the presence of uncertainty or risk
8 Rogers Andrew et al.: Impact of Agricultural Policy Fluidity on Trust Among Youth Coffee Farmers in
Tanzania: An Application of Difference in Difference Method
[4] and it is a possible tool for business actors to cope with
the uncertainty or risk in exchange relations, behind which
lie information and time problems [5]. Furthermore, [6]
argues that trust occurs when the business partner expects
the other to behave predictably and in a mutually acceptable
way. Discussing the types of trust [6] distinguished – among
others – contractual trust and competence trust. (a)
Contractual trust: based on the mutually accepted norm of
honesty and keeping promises, one of the contracting
parties expects the other to keep his promises. (b)
Competence trust: the business partner trusts that the other
has the appropriate technical and managerial competence to
fulfill the commitments. Studies by [7, 8] revealed that trust
is important in achieving productivity in developing
economies. Accordingly, [9] stresses that virtually every
commercial transaction has within itself an element of trust,
certainly any transaction conducted over a period of time.
Algan, Y., & Cahuc, P. [10] assert that, a prerequisite for the
successful development of market economies would be to
depart from closed group interactions and to enlarge
exchanges to anonymous others in which trust and
trustworthiness appear as the keystone for successful
economic development. In accordance, investing in trust
should be considered as a new and central approach to
restoring economic growth and reinforcing social cohesion,
as well as a sign that governments are learning the lessons
of various crises witnessed in middle and low-income
countries [11]. Citing entrepreneurs and investors, [12]
argue that both of them need to trust that their property will
be protected and that they will have at least short returns
commensurate with their risk taking and that without such
trust, an economy stagnates. Besides, trust is ''key'' because
they encourage marketers to (a) work at preserving
relationship investments by cooperating with exchange
partners, (b) resist attractive short-term alternatives in favor
of the expected long-term benefits of staying with existing
partners, and (c) view potentially high-risk actions as being
prudent because of the belief that their partners will not act
opportunistically [13].
2. Theoretical Background
2.1. Trust
Trust alone cannot support the daily activities of
individuals or the functioning of economic life and
therefore it must be legitimately grounded in the
trustworthy actions of those individuals and institutions [14].
According to [15], the legal framework reduces risks,
thereby reducing the irrationality and uncertainty by
strengthening trust and eliminating monopolies and
entanglement of human relationships and offers greater
potential for economic integration. Mechanisms such as
shared information, reputational effects, enforceable
contracts, and insurance schemes are used to promote trust
among people in a context of uncertainty and vulnerability
[10]. Trust is a key element and decisive factor in the
cooperation relationship, which allows real commitment
and confidence among the partners to develop a vision for
the long-run [1]. Dishonesty turns trust into gullibility, thus
mechanisms linking interpersonal trust with institutional
success refer implicitly to honesty and civic morality:
offering a contract is a matter of trust, and performing it, a
matter of trustworthiness [16]. However in some cases,
there may be a serious flawed cooperative working
relationship because of untrustworthiness of any part which
will doom any agreement to failure and hence regulatory
framework firms existing trusts. According to [17], rational
choice scholars have advanced arguments about trust,
seeing it as rooted in expectations about individual interests.
The purpose of the government regulatory framework is to
ensure that the built trust is maintained to sustain
cooperation [18-20]. The regulations also play a function of
ensuring that a level playing field with other types of
business organizations is guaranteed and maintained.
Looking at a socially heterogeneous society in which there
are intergroup conflicts of interests, [17] argues that
informal mechanisms like trust will be ineffective in
resolving problems. Nonetheless, institutions, such as
legally enforceable contracts, are usually relatively specific;
they thus may induce clear ex-ante expectations about
actors’ likely strategies under circumstances that are
foreseen and addressed by the institution [17] and hence a
bidding factor of trust. Formal institutions may help actors
to engage in tightly defined transactions with a wide variety
of other actors that are not part of the same community, as
long as the latter actors are subject to the appropriate
institutions and the same third-party enforcer [17]. In
contrast, if the created the conditions henceforth institutions
may for trust becomes fluid it may result into generation of
opportunistic behaviour among actors and hence failure to
fulfilling of the ax-ante commitments.
Despite significant gains in understanding both micro and
the macro phenomena of trust [21-26], however gaps remain
in the literature, particularly with regard to understanding
how policy fluidity may trigger changes in trust levels
especially among youth farming households. In addition, it is
also possible that trust may not have the same predictors in
all countries, thereby underscoring the investigation of its
determinants in various countries [27]. Historical and cultural
backgrounds contribute to variations in trust among different
societies and economic cooperation [28]. According to [17],
the existence of institutions in common social settings can
affect the trustworthiness of the actors in those situations in
such a way as to create ongoing relationships of trust among
those actors. The present paper assesses impact of
agricultural policy fluidity on youths’ trustworthiness in
abiding to contracts with private investors in the coffee sector
in Tanzania.
2.2. Measurement of Trust
Measurement of trust among coffee farmers was based on
the descriptions of trust by [2] but using the outcome of the
untruthfulness in terms of quantity of coffee collected
 International Journal of Economic Behavior and Organization 2022; 10(1): 7-16
through cooperatives attached with loan repayment albeit
the loophole of diverging brought about by regulatory
framework fluidity. In his explanations, he came up with a
so-called encapsulated interest account of trust, which seeks
to define more precisely the relationship between trust,
trustworthiness, and cooperation. Trust, as [2] defines it, is
a three-part phenomenon: X trusts Y with regard to matter Z.
Trust can vary in each of these dimensions: the person
trusting, the person being trusted, and the matter at issue in
the trust relationship. I trust you, for example, with regard
to the $10 that I lent you at lunchtime yesterday; I may not
trust you with my life savings. I may not trust another
friend enough to lend him $10 for lunch; you, in contrast,
might. In [2]’s account, trust involves beliefs concerning
interest, as broadly defined. I trust you about a certain
matter to the extent that I believe that your interest
encapsulates mine with regard to that matter. Finally, where
the interests of two parties are consonant for reasons that
have nothing to do with their particular relationship, it is
difficult to see how trust meaningfully applies. Authors are
aware that trust has been measured based on the perception
in a World Values Survey by using a statement, ‘generally
speaking, would you say that most people can be trusted or
that you need to be very careful in dealing with people?
[29]. While these survey questions are interesting, [30]
express that they are also vague, abstract, and hard to
interpret. Other scholars measure trust and trustworthiness
by conducting experiments with monetary rewards
(examples: 30-32]. However, authors of this paper have
conceptualized a quantitative measurement of trust by
looking at the true outcome of the trust of farmers in term of
the quantity of coffee collected to private investors or
farmers groups in the realm of coffee marketing regulatory
framework fluidity.
Following Trust Game [31], trust game is designed to
measure trust in economic transactions. The first player, the
investor, has provided loans to farmers in terms of inputs
and coffee processing machines on a contractual basis
through their groups to pay back such loans after selling
coffee in the following selling season. With this context,
authors extend the application of the trust game by using a
true scenario to determine the outcome of the trustee due to
loopholes created by policy fluidity. The second player, the
trustees (coffee farmers through their groups) decided to
apply for a loan from investors to pay back during
harvesting. In measuring trust based on the reduced quantity
of coffee collected by youth relative to elders, the following
assumptions were set.
The trend of quantity of coffee produced has remained
relatively constant for several years. This implies that any
reduction of the quantity of coffee collected is due to
mistrust whereby farmers diverted coffee to avoid loan
repayment.
Second, coffee farmers are allowed to collect coffee at any
cooperative regardless of membership and hence youths can
collect coffee to other cooperatives even in nearby villages.
In connection with the game theory, trust is a risky move
9
because it goes against the Trustee’s self-interest to return
money because of opportunistic behaviours ameliorated by
change in regulation. But trusting can subsequently show if
the Trustee is willing to sacrifice self-interest to satisfy a
moral obligation [31]. With that regard, formal institutions
are very important to abide by trustees' payback accordingly
[32]. In the general farmers groups- private investor loan
payback system, farmers are obliged to collect coffee to the
groups or cooperatives for selling purposes and then
deductions are made per kg of collected coffee with respect
to the value of loan the specific farmer received. And this is
done according to a formal contract guided by certain laws
and policies that they must abide them. In Tanzania and
elsewhere, cooperative policies are of course strongly
influenced by the relationship between cooperatives and the
state.
2.3. Recent Government Directives on Coffee Marketing
Local socio-economic cooperation arrangements can
contribute to the development of adequate solutions which
can compensate for the negative impacts of globalization,
agriculture being one of the specific areas [5]. In recent
years, Tanzania has been experiencing onset decrees on
different regulatory frameworks including for coffee
marketing which this paper refers to as policy fluidity
which they are likely to affect the behaviours of actors in
the specific value chain. In the 2017/2018 coffee marketing
season, the government of Tanzania came up with an onset
decree (as detailed in Table 1 below) that sought to improve
efficiency of coffee marketing. However, such changes are
hypothesized by this paper that such changes created
loopholes for coffee farmers to practice dishonesty with
regard to pre-established synergy between them through
their groups and private investors in the coffee value chain.
Before the decree, farmers were used to receiving financial
and service loans from private investors through farmers
groups with expectation of paying back through deductions
to be made in the next coffee marketing season whereby it
was mandatory for farmers to sell coffee through their
cooperatives/ groups. However, the decree required coffee
collection to be done through cooperatives only and
therefore; private traders and farmers’ groups lost their
power to buy coffee directly from farmers. Onset changes in
regulatory framework; three scenarios are likely to occur;
first actors may continue with ex-ante arrangement fully,
second, they may partially commit to implement the
agreements or may avoid the ex-ante commitment involved
in subcontracting and selling outside the firm. If they make
the second and third choices, they are clearly breaching the
trust anchored in the formal institutions which at this point
are too fluid to impose the punishment. Notwithstanding,
while such decree was effected, it implies that such modus
operandi of collecting debts by private investors and
farmers groups had completely changed and such changes
created a loophole for dishonest farmers to deflect from
paying back the loan.
10 Rogers Andrew et al.: Impact of Agricultural Policy Fluidity on Trust Among Youth Coffee Farmers in
Tanzania: An Application of Difference in Difference Method

Table 1. Government Directives on marketing for the 2018/19 coffee season.

New rules/regulations (2017/2018 onwards)
Coffee will be collected from the farmers by the cooperative societies only. Farmer’s
groups and private traders will not be allowed to collect coffee from farmers
After collecting coffee from farmers, Cooperatives will take coffee for processing and
later selling at the auction.
Private traders will be required to purchase coffee at the auction in Moshi
Estates and plantation must sell their coffee at the TCB auction in Moshi, but those
with longer-term contact, the TCB will prepare special arrangements
Previous rules and regulations (before 2017/2018 season)
Farmers groups, cooperatives and private traders could
collect/buy coffee from farmers
All actors mentioned above could take coffee for processing at
the curing factories
Private traders were licensed to purchase coffee from farmers
Estates and plantation exported coffee directly

including age, gender, annual earnings, household size, and

2.4. Trust Among Youths
In the globalized world, it is marked that older people may
differ from younger individuals in their overall attitudes,
behaviors and predispositions [33-35]. Accordingly, trust
increases almost linearly with the increase in age [35-37].
Moreover, it is unclear how age might affect individuals’
truthfulness with respect to cooperation or contractual
arrangement in the face of policy fluidity. The current paper
is based on the government directives of coffee marketing
which the main key issues were restriction of private traders
from buying coffee from farmers and farmers groups to be
dissolved and become cooperatives provided they comply
with the cooperatives’ registration requirements. In view,
clustering groups has proved more effective with elders and
women than with youth and men, because elders and women
are more likely to repay the loan and they are thus more
trustful [38]. This paper intended to examine the extent to
which youth farming households collected coffee dishonestly
to cooperatives mandated to collect debts for private
investors and farmers groups relative to elders.
3. Methodology
3.1. Data Description
The analysis is based on data before the government decree
of the 2017/2018 coffee season and after the decree. From
2017/18, the government of Tanzania came up with an onset
decree that sought to improve efficiency of coffee marketing.
The staggered timing in the transition from one set option to
another provided a plausibly exogenous source of variation
that can help us identify the impact of onset government
decree on farmers’ decision not supplying coffee to their
cooperatives which they offered them with different services
with expectation to repay for them in the next season, which is
what we mean throughout by the term moral hazard. Data
contains the coffee collected through cooperatives for both
with contractual arrangement and without contractual
arrangement to make clear cutoff of the two groups. Group
one contains cooperatives and farmers with contractual
arrangement which is referred to as a treatment group since
onset government decree had high intensity of creating moral
hazard behaviours among these farmers. Group two includes
coffee farmers whose cooperatives had no contractual
arrangement with farmers and are referred to as control groups.
The data also contain relatively rich demographic information,
main source of income, religion, and household size, coffee
farming experience, location, extension services received,
coffee variety and access for financial services other than
private companies for control factors. For rigorous selection
of the groups, matching was applied in order to have two
groups with similar characteristics except treatment indicator.
This was done to clear the contention by [39] that the choice of
a comparison group may be unclear either due to an
ambiguous functional form in the pretreatment trend, lack of
balance in the distribution of covariates between the treatment
and comparison groups, or lack of overlap. Matching may be
particularly useful in cases where researchers are reluctant to
impose a functional form on time series data.
Data used were collected from coffee farmers and their
respective cooperatives. Cooperatives and farmers were
randomly selected whereby a total of 46 cooperatives were
found to have rich data useful in analyzing the impact of
government decree on moral hazard behaviour among coffee
farmers. Using whether a cooperative had contractual
arrangement or not, cooperatives were classified into two
groups; cooperative with contractual arrangement
(treatment-highly susceptible to defaulting famers from
collecting coffee because they had received loans during
previous season) and farmers group without contractual
arrangement (control-stable since farmers had no incentive of
selling coffee through other market channel). A total of 26
cooperatives were identified. In addition, the paper is based on
562 coffee farming households interviewed in Mbeya,
Songwe and Ruvuma regions. The data were collected
through questionnaire survey whereby about 202 youth
farmers (treatment group) and 360 elders (control) were
interviewed.
3.2. Data Analysis
3.2.1. Theoretical and Empirical Frameworks
Consider a group of N members of farmers, both youths
and elders acquiring services from private investors through
their groups/cooperatives. Based on this objective of this
paper, farmers are categorized into two groups; youth
farming households and elder coffee farming households. For
the purpose of this paper, youth is defined as young men and
women from the age group between 15 and 35 years old [40].
With this regard, there are two types of farmers: farmers with
age group of 15 to 35 and elders. Assuming that the level of
production among coffee farmers remains relatively constant
over some years with quantity (Q) and they allowed
 International Journal of Economic Behavior and Organization 2022; 10(1): 7-16
collecting coffee at farmers groups regardless of being youth
or elder in similar trend. With distrust among youths, the
present paper hypothesis that, youths will deliver less than
pre-agreed with their groups/cooperatives (CFG) and that
more to other groups relative to elder farming households. It
is assumed that, dishonest among youths arises because of
onset changes in regulatory framework which create loophole
as farmers’ obligations to comply are no longer lawful since
laws have changes. Together, the collective efforts of farmers
makes them collect to the cooperative from which they
secured loan/ or any other services α (NA)=NA/N, where NA
denotes the number of farmers selecting action A. Overall,
quantity is an increasing function of collective effort with
respect to low moral hazard behaviour, but the effort level of
each individual member is not revealed to the cooperative
other than by random chance. Notice that each member
received α(NA), that is, the patronage with expectation to
deliver quantity of coffee to cooperative as per general trend,
which, generally was provided by private investor. The
present chapter measure moral hazard behaviour in term of
farmers declined supplying coffee to their cooperatives which
they received loan in terms of inputs conditioned to payback
in due of coffee collection and these cooperatives had
secured funding from private investors as discussed in the
following paragraph.
Following [41], the standard moral hazard model assumes
that the principal (private investor) cannot directly observe the
effort level of the agent (farmer through farmer groups). Once
a contract has been signed the agent must choose between n
possible actions a , … … … … … . , a . These actions produce one
among m outcomes which we may denote x , … … … … … . , x .
Assume further that when the agent chooses action a , the
principal observes the outcome x with a probability p that is
positive. The agent receives a benefit w for supplying coffee
to other cooperative (positive outcome to farmer of dishonest
behaviour created by change in regulation) when the principal
observes the outcomex [41]. The income for the principal is
( x − w ). The specification for the Agent’s von Neumann
Morgenstern utility function [42] can be written as: u(w) – a, u
is increasing and concave. Assuming neutrality for the principal
as in most of the literature, his von Neumann-Morgenstern
utility function is written as μ w) − a, where μ is increasing
and concave. Assuming neutrality for the principal as in most of
the literature, his von Neumann-Morgenstern utility function is
written as (x − w) [42]. According to [42], when the principal
offers a contract w the agent’s utility maximization problem
can be written as:
Max … ∑ p μ w −a) (1)
If the Agent chooses a , then the (n-1) incentive
constraints (IC) is
∑ p μ w −a)≥ ∑ p μ w − a IC (2)
where k=1, …..n and k ≠ i.
The agents’ utility maximization problem is also subject to
the following (individual rationality (IR) constraint)
11
participation constraint:
∑ p μ w − a ) ≥ μ, IR (3)
where μ is the utility derived from taking an outside option.
The model is presented under individual receiving services
from cooperative with expectation of collecting coffee
through cooperative and then later a scenario under private
investor. Following the theoretical framework stated above
[42], the empirical strategy focuses on testing whether onset of
coffee regulatory framework (RF) caused moral behaviour
among coffee farmers and other particular covariates (control
variables), vector X=(x1………..xn) are associated with the
incidence of moral hazard. The proxy for onset change in the
regulatory framework is whether a particular cooperative had
a contract with a private investor. In this case, it is assumed
that those changes created the loophole for farmers to reduce
the quantity of coffee collected through cooperative services.
3.2.2. Formalizing the Counterfactual Approach
Given the explanation above, the Difference-in-Differences
(DID) method was found to be an appropriate method for
impact evaluation. DID explores the time dimension of the
data to define the counterfactuals. It requires having data for
both treated and control groups, before and after the treatment
takes place. It estimates the impact of the intervention by
comparing the difference in outcomes between treated and
control groups in some period after the participants have
completed the programme with the difference that existed
before the programme [43, 44]. It acknowledges the presence
of unobserved heterogeneity in the selection into treatment,
ensuring the estimation of the true ATT if this selection bias is
constant over time as it is differenced out [45]. Longitudinal
data, in which the same individuals are followed over time, is
usually used but it can also be applied to repeated
cross-sectional data. Compared to cross-section estimators it
has the advantage of controlling for differences in
unobservable characteristics that are fixed over time, i.e. a
specific form of selection on unobservable. For this case two
groups indexed by treatment status T=0,1 where 0 indicates
coffee farmers/cooperatives who/which is not likely to be
affected in trust behaviour by government decree on coffee
marketing (control group-elders farming households) and 1
indicate youth farming households assumed to become
dishonest due to change in regulation (treatment group).
Assume that we observe individuals in two time periods, t=0,1
where 0 indicates a time period before the treatment group
receives treatment (pre-treatment) and 1 indicates a time
period after the decree (post-treatment). Every observation is
indexed by the letter 1,…., N; individuals will typically have
two observations each, one pre-treatment and one
post-treatment. For the sake of notation let and be sample
averages of the outcome for the treatment group before and
after treatment, respectively, and be the corresponding sample
averages of the outcomes for the control group. Subscripts
correspond to time period and subscripts to the treatment
status. The difference in difference or double difference
estimator is defined as the difference in average outcome in
12 Rogers Andrew et al.: Impact of Agricultural Policy Fluidity on Trust Among Youth Coffee Farmers in
Tanzania: An Application of Difference in Difference Method
the treatment group before and after treatment minus the
difference in average outcome in the control group before and
after treatment [42].
ATT #$
= Y − #%$ )
Y #&
− Y − #%&
Y (4)
The difference estimator for the pre-period is used to
estimate the permanent difference â, which is then subtracted
away from the post-period estimator to get δ.
3.2.3. Assumptions
1. The unobserved heterogeneity is time invariant and is
cancelled out by comparing the before and after situations;
2. Difference-in-difference (DID) estimators assume that
in absence of treatment the difference between control
(B) and treatment (A) groups would be constant or
‘fixed’ over time. Identification based on DID relies on
the parallel trends assumption, which states that the
treatment group, absent the reform, would have
followed the same time trend as the control group (for
the outcome variable of interest) [46].
3.2.4. Econometric Modeling of the Outcome
Policy indicates the year (2017/18) when the policy is
implemented, and variable of our interest is
cooperatives/farmers affected by the policy.
E Y % ⃓D = 1) − E Y%% ⃓D = 1) = α + σ% + Y − α − Y = σ%
P Q % ⃓R = 0) − P Q%% ⃓R = 0) = S + T % − S = T %
i.e. the pre and post period differences in baseline
outcomes is the same (δ0) regardless if individuals are
assigned to the treatment group (D=1) or control group
(D=0).
Another important assumption is the Stable Unit Treatment
Value Assumption, which implies that there should be no
spillover effects between the treatment and control groups, as
the treatment effect would then not be identified [46].
4. Results and Discussions
4.1. Impact of Agricultural Policy Fluidity on Coffee
Collection at Cooperative Level
Before 2018, coffee collection and marketing were largely
dominated by farmers groups and they sold coffee to private
traders. After the 2017/2018 coffee season, the government
institutionalized establishment of cooperatives, whereby most
of the farmer's groups were transformed to cooperatives. The
fieldwork revealed that many cooperatives were at an infant
stage with the exception of very few cooperatives in Ruvuma
and Mbeya. With this regard, the cooperative had remained
very fragmented, fragile in the coffee collection and very risky
if financed. During their establishment, different companies
and financial institutions contracted them to supply different
services like inputs and money for operations. After then,
farmers received such inputs and first installment for coffee
sales. In the next season, while farmers used inputs, say from,
= 0 before decree 2017/18)
GDCM )
(5)
= 1 after decree 2018/19)
= 0 elders farming households
GDCM ) (6)
= 1 youth farming households
where by GDCM is Government decree on coffee marketing.
The outcome Yi is modeled by the following equation
Y = α + βT + γt + ρ T ∗ t ) + ∑ Iβ X +ε (7)
Where the coefficients given by á, α, β, γ and ρ are all
unknown parameters and ε is a random, unobserved "error"
term which contains all determinants of Yi which our model
omits. By inspecting the equation you should be able to see
that the coefficients have the following interpretation, α =
constant term, β = treatment group specific effect (to
account for average permanent differences between
treatment and control), βIKL = where Xi denotes the other
observable factors (control variables) affecting the farmers
decision to default from selling coffee to the cooperatives
where they obtained inputs on loan, γ = time trend common
to control and treatment groups and ρ = true effect of
treatment.
Following [47], it can be expressed in terms of potential
outcomes:
(8)
(9)
they then decided to supply coffee to other cooperatives
leaving the cooperative with the inability to pay back the loan.
For example, Table 2 indicates the trend collection of some
cooperatives which experienced huge coffee collection
defaults and those experienced a tremendous increase in the
coffee collection just in a year. With this kind of coffee
collection trend, it implies that the determination of coffee
collection does not indicate the capacity of the cooperatives.
Consistently, it was found that many farmers had remained
with the concept of having farmer groups. As indicated in
Table 2, changes in coffee collection at cooperative level were
observed with increase in quantity of coffee collected at the
cooperative which had no contractual arrangement with
private investors while cooperatives which had contractual
arrangement experienced decline in coffee collection. Albeit
not statistically significant, before the enactment of changes,
cooperatives with contractual arrangement used to collect
more coffee compared to cooperatives without contractual
arrangement with mean difference of about 4,801kg before
baseline (first point for parallel trends assumption) and 4,665
(at the baseline). However, after implementation of the
government decree on coffee marketing, coffee collection at
cooperatives with contractual arrangement was reduced
significantly to reduce the capacity of these cooperatives
paying back the loan from private investors. As indicated in
the table below, coffee collection declined by 20.13%. On the
other hand, cooperatives without contracts with private
investors experienced an increase in coffee collection by 30%.
 International Journal of Economic Behavior and Organization 2022; 10(1): 7-16
It should be noted that, all coffee cooperatives in Tanzania are
allowed to collect and market coffee of the non-member and
hence creating the loophole for non-truthful farmers to sell
coffee to other cooperative albeit he/she knows that it is
important to collect to the respective cooperative to enable it
payback the services receive from private investors. Generally,
the onset change in coffee marketing created a moral hazard
among coffee farmers whereby cooperatives which had served
their members with inputs and other services like processing
experienced huge decline in collection of coffee on average of
Table 2. Difference in Difference Results at Cooperative Level.
2016/17 (Parallel 2017/18 Before enactment
trend point of the decree
Cooperatives with contract 56,146 48,150
Cooperatives without contract 51,345 43,485
Difference 4,801 4,665
P Value 0.000 0.000
P Value (parallel trend pre and
0.2742
baseline data
4.2. Econometrics Results on the Impact of Agricultural
Policy Fluidity on Trust Among Youths
Table 3, Panel A provides the estimated overall impact of
agricultural policy fluidity on trust among youth coffee
farmers relative to elders counterparts in Tanzania. The results
for OLS model with the interaction term and other covariates
as independent variables, and coffee collected by farmers at
their respective cooperatives as dependent variable indicate
that on set change of government policy through government
decree on coffee marketing of 2017/18 promoted mistrust
behaviour among youth coffee farmers relative to elders by
collecting less coffee to their cooperatives which they had
provided them with inputs and other services with expectation
of repaying such loan after selling their coffee.
Based on the output of the regression model, the estimate of
DID (Average Treatment effect on the Treated (ATT) statistic
is 18.2kg of coffee parchment and is significant at 5% level i.e.
since P-value=0.000. In other words, changes in coffee
marketing due to government decree caused mistrust
behaviour of decreasing quantity of coffee collected to the
cooperatives with contract with private investors by 18.2kg of
coffee parchment over 1 year period, relative to elders coffee
farmers. This affirms [48] who found that some farmers do not
trust millers as they complained millers deliberately record
low levels of sucrose in their cane as a strategy to reduce the
payment to producers. This doubt by farmers implies that they
have no confidence in the millers and therefore suspect
opportunistic behavior by the millers. The perceived
opportunistic behavior and associated power position of the
millers is not conducive to strong cooperation between the
actors in the chain [48]. This perception often leads to acts of
“counter opportunism” by growers. In addition, [49] report
that a pervasive lack of trust is reported between actors and
institutions throughout the agricultural innovation system,
hindering the potential for collective action. In addition, [50]
13
9,694kg of coffee parchment. On the other hand cooperatives
which had not provided inputs on loan experienced an
increase in coffee collection on average of 13,115kg. This
implies that farmers with loans from their respective
cooperatives decided to sell coffee through other cooperatives
leading to their own cooperatives’ problems of failing to pay
back loans from private investors. Based on the DID approach,
changes in coffee marketing impacted cooperatives with
contracts with private investors by Average Treatment effect
on the Treated (ATT) of 22,809kg.
After the % change in P Value
Difference
decree coffee collection (DID)
38,456 -9,694 -0.201
56,600 13,115 0.301
18,144 22,809 0.000***
revealed that trust among young farmers in an exemplary rural
area of Greece was very low.
Further, interaction between treatment on treated and time
significantly influenced farmers to reduce the quantity of
coffee collected to their respective cooperatives by 2.6kg
coffee parchment relative to coffee farmers whose
cooperatives had no contract private investors. Besides, [51]
concluded that pro-enforcement reforms play a significant
role in signaling conditions of level playing field with
organization and indeed, the lack of trust calls for the
introduction of formal rules of the game, i.e., the
enforcement of regulation to prevent opportunistic behaviors.
With specific to trust among youth farmers, contracts results
by [52] farmers trusted investors regardless of age, years
working, or even the reputation. Both coffee farming
practices (coffee farm size, cost of input used, coffee
varieties and at least four Good Agricultural Practices (GAP))
and household characteristics (education level of the
household head (years), marital status of the household head,
household size, distance to coffee collection centres, level of
income from other sources, relative/friend with cooperative
leaders, access to extension services) were found not
influencing farmers moral hazard behaviour of defaulting
from collecting coffee to their cooperatives. However, some
covariates were co-founders. This implies that such
covariates were found influencing youths’ decisions to
default from collecting their coffee to the respective
cooperatives. For examples, youth used to practice at least
four GAP defaulted from collecting coffee to their respective
cooperatives in relation to those who were not practising
GAP were relative to elders. Table 3 indicates that farmers
form cooperatives with contracts with private investors and
whose coffee were processed at CPUs maintained collecting
coffee to their cooperatives relatives to the farmers whose
cooperatives had no contractual arrangement with private
investors.
14 Rogers Andrew et al.: Impact of Agricultural Policy Fluidity on Trust Among Youth Coffee Farmers in
Tanzania: An Application of Difference in Difference Method

Table 3. Impact of agricultural policy fluidity on trust among youth coffee farmers.

Variables Coefficients Pr(>|t|)

Panel A: Impact of agricultural policy fluidity on trust
Average Treatment Effect on the Treated (ATT) -18.2 0.000***
Time -2.6 0.81019
Government decree*Time -2.7 0.0585*
Intercept -673 0.000***
Panel B: Heterogeneous impacts by farming practice
Coffee farm size -0.003 0.1625
Cost of input used 0.232 0.157
Coffee varieties 0.274 0.414
At least four Good Agricultural Practices (GAP) 0.122 0.030**
Panel C: Heterogeneous impacts by socioeconomic variables
Education level of the household head (years) 0.179 0.445
Marital status of the household head −0.004 0.183
Household size 0.014 0.873
Distance to coffee collection centres −0.001 0.852
Distance to economic centre −0.001* 0.011
Level of income from other sources 0.009 0.438
Relative/friend with cooperative leaders 0.016 0.344
Access to extension services 0.010 0.467
Coffee processing method (CPU=1, HP=0) 0.035 0.000***

*p < 0.10, **p < 0.05, ***p < 0.01, R2=0.6325, F-statistic: 13.97 p-value: 0.000***.

investors are maintained. It is recommended that since

5. Conclusion and Recommendations
Through a thorough and in-depth econometric analysis of
cooperative based data and household survey data, it was
found that the 2017/2018 government decree on coffee
marketing ameliorated mistrust among youth farmers owed to
repay loan relative to elders. The research shows that stability
of policies/ institutions are binding factors to sustain existing
trust among youth farmers and traders develop cooperation or
draw on existing networks, allowing them to enter into new
markets and increase incomes. Understanding the effect of
policy fluidity on trust is very important in understanding how
farmers can improve their well-being through stabilizing or
increasing income, and increasing access to key resources
while making a win-win condition between them and
investors. This has attempted to answer one of the unanswered
questions in the literature of trust; the linkage between trust
and policy fluidity. The current conceptualization of the
quantitative measurement of trust by looking at the true
outcome of the trust of farmers in terms of the quantity of
coffee collected to private investors or farmers groups in the
realm of coffee marketing regulatory framework fluidity is
novel. Albeit, aimed at determining trust among youths, yet
has revealed understanding that policy fluidity created
opportunistic behaviour among farmers but youths to large
extent. That underpins the importance of stable policies in
reducing risks to investors aiming at supporting farmers. It is
explicitly that the formal legal system is very crucial to
strengthening trust and hence sustaining farmers-investors
relationships. This new perspective moves rather towards the
direction of revisiting the role of the state in the rural
development policies. With this regard strong and stable
policies are paramount for sustained trust and honest among
farmers so as the existing synergies between them and private
agricultural investments are long term, any change in
agricultural policies, laws and regulations has to have
preparatory phase to allow investors, cooperatives, farmers
and government units participating in the value chain to
determine possible negative effects and develop strategies of
mitigating such effect. Cooperatives have to work with
responsible department at district level to institutionalize
mistrust measures restricting farmers from selling coffee to
other cooperatives. One of the measures will be restricting
cooperatives from receiving coffee from non-member farmer.
They should help them to produce and use social capital
efficiently as an instrument for development, thereby
strengthening competitiveness since society is the only actor
capable of generating social capital especially in times like
those that rural areas are nowadays facing in Greece, during
which the social dimension of an overall economic
development cannot be ignored.
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