Organic and Fairtrade certified coffees have become very popular among socially
environmentally and health conscious consumers in recent years. As consumers pay higher prices
for these certified coffees it is commonly assumed that compared to conventional coffee
better producer prices are paid and that higher shares of the added value in consuming
countries trickle down to the producers. Coffee certifications are thus supposed to benefit the
coffee producers. Coffee is an important export good for many developing countries. The
majority of global coffee production comes from around 20-25 million smallholder families in
developing countries. As individual certifications are too expensive smallholders have to
participate in farmer organizations e.g. cooperatives in order to access cheaper group
certification. Governments and international donors support coffee certification schemes and
assume that these link farmers to high-value markets increase producers¿ incomes change power
and information asymmetries in value chains and contribute to poverty reduction. Yet there is
only weak empirical evidence that justifies this support. There are few quantitative studies
which applied random sampling techniques and analyzed the effects of certification schemes in
regard of gross margins profits income shares and poverty levels of certified smallholder
coffee producers. The role of cooperatives for the success of certification schemes has been
neglected by research. The available studies have methodological limitations for example they
are based on qualitative methods only include no more than one cooperative or one
certification standard or cooperatives are non-randomly sampled. This research seeks to fill
the identified knowledge and methodological gaps. Through a combination of qualitative and
quantitative research the production and marketing strategies of small-scale coffee producers
in northern Nicaragua are compared based on producers that are organized in conventional
organic and Organic-Fairtrade certified cooperatives. The analysis addresses (i) the
smallholders¿ household level and (ii) the organizational and institutional level with regard
of the cooperatives and respective coffee value chains. The study aims at first identifying
the socio-economic costs and benefits of participation in organic and Organic-Fairtrade
certified coffee chains with respect to level of coffee and household incomes as well as
household poverty. Second it is examined which role the farmer organizations their respective
business models and upgrading strategies play for the success or failure of certification
schemes. Third the integration of coffee farmers and their cooperatives into the coffee value
chain the structure and functioning of the value chains and the value adding effect of
certification is examined. The survey was conducted in the northern Nicaragua departments
Madriz Nueva Segovia and Matagalpa on coffee farms situated between 900m and 1300m a.s.l. The
coffee of all farmers was classified as `Strictly High Grown¿ the species is Coffea Arabica.
The sample design ensured that the research region was homogeneous with respect to living
conditions socio-economic level as well as coffee growing characteristics driving performance
of coffee farmers. After having randomly selected the cooperatives 327 coffee producing
households were also randomly selected and surveyed with a structured questionnaire.
Qualitative data collection consisted in total of 58 key-person interviews 67 semi-structured
farmer interviews and 24 focus group discussions with coffee farmers. The primary data was
collected during two research stays in 2007 and 2008. This research analyzes gross margins
accounting and economic profits of coffee production. The household income is measured and a
poverty headcount index elaborated. Principal component analysis is used to determine current
relative poverty levels and the development of relative poverty over time. A SWOT analysis
identifies the strengths weaknesses opportunities and threats of cooperatives. Through a
value chain analysis information on the actors power and information flows as well as price
shares is gained. For identifying the farmers¿ experiences with coffee certification schemes a
thematic analysis is applied to the qualitative data by developing an individual code system
for datareduction. In the research region the coffee yields of conventional and certified
coffee smallholders are usually 40% to 50% lower than national average due to limited
maintenance activities and inadequately managed coffee plantations. Highest yields (on average
around 480kg ha) are achieved by organic producers but yield levels vary like for conventional
and Organic-Fairtrade certified producers between the cooperatives (ranging from 293kg ha to
516kg ha). In comparison to conventional prices Organic-Fairtrade certified coffee achieved on
average 11% and organic coffee 8%
