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Socially-Responsible Certification Schemes for Smallholder Coffee Farmers: Economics of Giving and Consumer Utility

Author

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  • Verteramo Chiu, Leslie J.
  • Gómez, Miguel I.
  • Kaiser, Harry M.
  • Yan, Jubo

Abstract

We study consumer preferences for socially-responsible certified coffee based on alternative ways to distribute the price premium of the product. We use Becker, DeGroot, and Marschak (BDM) auctions in an experimental setting to elicit consumer willingness to pay for two socially-responsible certified coffee systems: the existing Fair Trade and a hypothetical certification called Sustainable Trade. These certification schemes differ in the way the price premium is given to producers. In the Fair Trade certifications growers receive a cash transfer whereas in the Sustainable Trade certification a portion of the premium is allocated to a social project in the grower’s community. We segment consumers as donors and non-donors and show that individuals who donate have strong preferences for certification systems that support social projects relative no non-donors. We also find that consumer attitudes toward donating have a strong effect on their willingness to pay for certified coffee. This effect is higher for consumers that donate a higher part of their income to charities.

Suggested Citation

  • Verteramo Chiu, Leslie J. & Gómez, Miguel I. & Kaiser, Harry M. & Yan, Jubo, 2014. "Socially-Responsible Certification Schemes for Smallholder Coffee Farmers: Economics of Giving and Consumer Utility," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170551, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea14:170551
    DOI: 10.22004/ag.econ.170551
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    Cited by:

    1. Hernandez-Aguilera, Juan N. & Gómez, Miguel I. & Rodewald, Amanda D. & Rueda, Ximena & Anunu, Colleen & Bennett, Ruth & Schindelbeck, Robert R. & van Es, Harold M., 2015. "Impacts of smallholder participation in high-quality coffee markets: The Relationship Coffee Model," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205650, Agricultural and Applied Economics Association.
    2. J Nicolas Hernandez‐Aguilera & Miguel I Gómez & Amanda D Rodewald & Ximena Rueda & Colleen Anunu & Ruth Bennett & Harold M van Es, 2018. "Quality as a Driver of Sustainable Agricultural Value Chains: The Case of the Relationship Coffee Model," Business Strategy and the Environment, Wiley Blackwell, vol. 27(2), pages 179-198, February.

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    Keywords

    Consumer/Household Economics; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety; Marketing;
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