Chapter 5 Value Chain Integration as an Alternative to Fair Trade for Chiapas Coffee Farmers

Coffee producers typically sell raw coffee beans as the first step in a global value chain. Recently, groups of producers have formed coffee cooperatives that attempt to regain market power by integrating the other steps of the value chain. This study uses matching to estimate the effect of membership in one such cooperative on the household economy of indigenous coffee producers in the state of Chiapas, Mexico. It contributes to the literature by considering new determinants of participation and outcomes of interest. First, social capital at the individual and village level is correlated with cooperative membership more than other demographic factors. Second, cooperative members report an increase in the share of coffee sold and income from coffee sales but not in per-kilo price or total income. These two results reflect particular features of the Chiapas reality and the desires of the indigenous people the cooperative serves. Thus, they reiterate the importance for economic development projects to consider the context of their interventions.