public good contributions among coffee farmers in costa...
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Public good contributions among coffee farmers in Costa Rica:
co-operativists and private dealers
Astrid Hopfensitz & Josepa Miquel-Florensa
(Toulouse School of Economics) Workshop on The Cognitive Foundations of Group Attitudes and Social Interaction
Cooperatives in the coffee market
Two different organizations in the coffee market:
• Cooperatives: farmers manage the institution democratically, a share of profits returns to the community, …
• Private: multinationals or local private companies
Strong social ties in each group: long-term relationships.
Cooperatives offer financial, technical and ‘social’ support , but private beneficios can offer higher prices. Cooperative farmers have incentives to shirk to get the better prices.
1. We study contributions to a public good game in 3 situations:
• with 'unknown' cooperativists
• with 'unknown' private market members
• with people present in the room (that are of same 'type')
2. Choice of a control mechanism in the public good game
And how do these choices relate to:
• Group membership
• Certifications of the cooperative (Fair Trade), Certifications of the farmer (Rainforest)
• Real world behavior with respect to the Cooperative rules: Cooperative farmers selling coffee to private beneficios.
Questions
Coffee in Costa Rica: ICAFE Regulation
Producers: • Must bring their coffee cherries to a beneficio within 24 hours
of harvesting • Are given an ‘anticipo’ when depositing; final prices are
regulated (as function of NY price) Beneficios: • Receive coffee and are responsible for the processing of the
beans into ‘cafe oro’ and for the financing and selling of the coffee.
• Can be either privately managed or Procuder’s Cooperatives • Contracts and profits subject to ICAFE regulations
Exporters and roasters
Los Santos (30% of production)
One private beneficio and three
Cooperatives
Turrialba (8% of production)
One private beneficio
Cooperative
Dota
Private
Palmichal
de Acosta
Cooperative
Llano Bonito
Cooperative
Tarrazu
Experimental design
• Anonymous pen-and-paper experiment.
• Location: cooperative meeting room or habilitated space at private beneficios
• Average payment: half-day salary of an agricultural worker.
Additional information:
• self report questionnaire on production and quality
• information from beneficio on farmer’s production in last three harvest seasons
Public good game
• One shot, public good game
• Initial endowment 10 points
– keep in private envelope
– transfer to public envelope (multiplied by 1.5)
• 4 players interact, three others are:
– participants in room
– from a cooperative
– from a private ‘beneficio’
public good game:
i with players in room
ii with members of a cooperative
iii with players that bring their coffee to a private beneficio
controller decision:
iv for each of the games previously played, decide whether to introduce a controller or not
v Repeat (i) to (iii) with or without controller as choosen in 4
No information revealed on contributions until the end of all stages
Order of tasks
Contribution to public good
Contribution to public good
Farmers selling to private beneficios
partners of own type
partners of other type
6,56
5,61
3,01
5,61
0
2
4
6
8
10
Cooperative farmers
con
trib
uti
on
to
pu
blic
go
od
partners are cooperative farmers
partners are farmers selling to private beneficios
p = 0.000
Contribution to public good
6,56
5,61
3,01
5,61
0
2
4
6
8
10
Cooperative farmers Farmers selling to private beneficios
con
trib
uti
on
to
pu
blic
go
od
partners are cooperative farmers
partners are farmers selling to private beneficios
p = 0.000 p = 0.000
Contribution to public good
6,56
5,61
3,01
5,61
0
2
4
6
8
10
Cooperative farmers Farmers selling to private beneficios
con
trib
uti
on
to
pu
blic
go
od
partners are cooperative farmers
partners are farmers selling to private beneficios
partners of own type
partners of other type
p = 0.000 p = 0.000
Contribution to public good: playing with 3 cooperativists
Family in Coffee business +1.143
Family at Cooperative +3.309 ***
Years in Cooperative -0.109 ***
Held an elected post in coop. +2.236 ***
Relative implication in Cooperative
Appropriate 2.387 ***
Lower than others -0.031
Reason to join Cooperative
Better prices -0.861
Family tradition 0.353
For financial assistance -2.177 ***
Social Aid 2.081 ***
Cheating
Sold coffee to private beneficio -1.388 *
Observations 46
R^2 0.791
Adjusted R^2 0.609 Note: *** 1%, ** 5%, * 10% significance; Regression controlling for age, education, size of production
Contributions by certification
• Rainforest alliance: – individual
– objective evaluation and enforcement
=> cheating not possible
• Fair trade: – on cooperative level
– hard to evaluate and little enforcement
=> cheating 'common'
Contributions by certification
7,66
5,91
2,72 2,97
0
1
2
3
4
5
6
7
8
9
10
Rainforest Certified
(N=18)
Not Rainforest Certified
(N=36)
6,22
7,46
3,08 2,86
0
1
2
3
4
5
6
7
8
9
10
Fair Trade Certified
(N=40)
Not Fair Trade Certified
(N=15)
con
trib
uti
on
to
pu
blic
go
od
p = 0.037 p = 0.131
partners are cooperative farmers
partners are farmers selling to private beneficios
Results ii: Choice and reaction to control
Experience with control:
• Private beneficios:
follow ICAFE rules strictly, objectively verifiable (ex. limits on 2% green enforced)
• Cooperatives:
exceptions to rules (ex. green percentages), democratic decisions on surplus division, external rules (Certifications).
Control
• Decision by participants whether they want to have control or not
• Control by independent entity, has a cost of 1 point.
• Leading to fines of players:
– Contributing less than the average of their group
– Fine size relative to distance to average
Decision to chose control p
rop
ort
ion
ch
oo
sin
g co
ntr
ol
0,83 0,83
0,72
0,93
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
1
Cooperative farmers
partners are cooperative farmers
partners are farmers selling to private beneficios
partners of own type
partners of other type
Farmers selling to private beneficios
Contributions when control chosen
con
trib
uti
on
to
pu
blic
go
od
7,26
5,57 6,27 5,82
0
1
2
3
4
5
6
7
8
9
10
p =0.000 p =0.086
Cooperative farmers Farmers selling to private beneficios
6,56
5,61
3,01
5,61
partners are cooperative farmers
partners are farmers selling to private beneficios
part 2: when control is in place
part 1: when no control in place
Behavior by cooperativists dependent on real world 'cheating'
p =0.000 p =0.033 co
ntr
ibu
tio
n t
o p
ub
lic g
oo
d
6,26
7,74
3,6
7,16
0
1
2
3
4
5
6
7
8
9
10
selling to private market (N=17) not selling to private market (N=38)
partners are cooperative farmers
partners are farmers selling to private beneficios
part 2: when control is in place
part 1: when no control in place
Conclusions
• Contribution to public good related to real world choices (possibility to verify cheating through cooperative information)
• Cooperativist contribute more when playing with their own type than with private market. Private market participants do not react to type of partner.
• Control leads to higher contributions by cooperativists – especially for those that are 'honest'
Thank you
Beneficio 1: Palmichal de Acosta
• Multinational company, selling to national and international markets (1600 growers, 25 receiving stations in the area)
Beneficio 2: Santa Rosa (Turrialba)
• Family beneficio, selling to the national market and to the international market (‘foam coffee’ due to soil conditions)
Private beneficios
• Coope Dota (Santa Maria de Dota)
• Coope Tarrazu (San Marcos de Tarrazu)
• Coope Llano Bonito (Leon Cortes)
Regarding sociodemographic characteristics (age, education involvement in coffee business) no differences across cooperatives
Cooperatives
C. Dota C. Tarrazu C. Llano Bonito
Number of associates 769 2600 600
Size of the canton (ha) 2617,58 6626,72 5886,42
Number of Poligonos 366 784 735
Accreditations:
Fair Trade x x
Rainforest Alliance x (15% of prod.) x (30% of prod)
Starbucks CAFÉ Practices x x
Summary StatisticsCooperatives Private 'beneficios'
All Coops All Private
C. Dota C. Tarrazu C. Llano Bonito Private 1 Private 2
Age 44.01 53.5 40 40.47 52.67 55.38 50.72
Sex 0.09 0.13 0 0.15 0.096 0.15 0.05
(0 man, 1 woman)
Born in the region (percentages)
Yes 87.2 80 95 85 96.77 92.31 100
No 1.8 6.6 0 0 0 0 0
No but have been there many years 10.9 13.3 5 15 3.23 7.68 0
Education (oercentages)
Primary 63.6 60 55 75 77.42 69.23 83.33
Secondary 12.7 20 15 5 6.45 7.69 5.56
Technical/Professional Studies 18.1 20 25 10 6.45 0 11.11
University 5.45 0 5 10 9.68 23.08 0
Unique family member on the coffee business 0.72 0.6 0.75 0.8 0.51 0.61 0.44
(0 yes, 1 no)
Coffe as unique source of income 0.32 0.4 0.35 0.25 0.74 0.76 0.72
(0 yes, 1 no)
If not, share of income that coffee represents
Less than half family income 11.7 11.1 22.2 6.25 19.35 38.46 5.56
Half of family income 35.2 11.1 44.4 43.75 32.23 23.08 38.89
More than half family income 52.94 77.7 33.3 50 48.39 38.46 55.56
Production 2010-2011 (in cajuelas)
Maduro 2249.9 2380 3719.2 683 1172 836.36 1414.44
(std. Deviation) 2249.9 1746 4231.3 569.95 2249.66 567.99 1398.7
Verde 55.96 37.35 117.2 11.68 23.46
(std. Deviation) 133.1 46.35 208.5 23.37 32.72
Observations 55 15 20 20 31 13 18
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