Economic Impact of Fair-Trade Certification on Small-Scale Coffee Producers in Ethiopia

Abstract

In Ethiopia coffee production is one of the most important sectors of livelihood, and the largest portion of coffee production comes from smallholder farmers. Small-scale coffee farmers producing for fair-trade market outlets are commonly considered to benefit from enhanced prices and established market channels. Nevertheless, some empirical studies are validating this conception adversely. This study, consequently, tried to assess the impact of fair-trade certification on the economy of small-scale coffee producers using both descriptive and econometrics techniques for the selected 383 respondents in Jimma zone of south west Ethiopia. According to the finding of the study; educational level,  status of household head, fair-trade membership position, market and infrastructure access variables are statistically significant and determine income of smallholder coffee farmers positively. Logistic regression result indicates that, the coefficient (or parameter estimate) for the variable fair-trade membership position is 3.383. This means that for every one-unit increase in fair-trade membership, we expect a 3.383 increase in the log-odds of the income increment, keeping all other independent variables constant. Therefore, leeway of fair-trade certification ought to be reflected as one of poverty and susceptibility reduction implements among economic strategists and practitioners.