Essays on global coffee supply chains: improving small-scale producers' income

Many of the world's poor still directly or indirectly depend upon agricultural commodities for their income, most of them as small-scale producers. Price volatility and agro-climatic risks over the past several decades, however, have threatened the efforts of most producers to secure sustainable livelihoods. This is particularly true for small-scale coffee producers who constitute 70\% of the world's coffee production. Recently, there has been renewed focus on producer organizations as important means of linking producers to markets and ultimately reducing poverty. Yet strategies for producer organizations to make better use of what is already produced, such as improving post-harvest marketing and inventory management have not received much attention. Does collective marketing by small-scale coffee producers improve the prices they receive in world trade? How should they hedge the price risk and judiciously decide how much to sell and carry in inventory? What is the impact of such a hedging strategy relative to the current ``selling-all" practice? This dissertation attempts to answer these and other questions by combining empirical and analytical studies. Part I of the dissertation estimates the effect of collective marketing by Kenya Cooperative Coffee Exporters (KCCE) on coffee prices at the auction. We use a `difference-in-differences' approach to compare coffee prices received by small-scale producers with a comparable group (estates) of producers, both before and after the formation of KCCE. We find evidence to suggest that collective marketing tends to increase coffee prices for small-scale producers. We also apply a life-cycle assessment of the coffee supply chain to identify the greatest source of greenhouse gas emissions and suggest strategies for improvement. In Parts II and III, we provide decision support for post-harvest marketing and inventory management for producer organizations in Kenya and Colombia. Based on empirical evidence, we model KCCE as a price taker and Colombia Coffee Growers Federation (CCGF) as a price maker and derive their optimal inventory hedging strategy for various cost structures. Applying the models to empirical data, we show that for KCCE the optimal hedging strategy outperforms the selling-all strategy quite significantly; while for CCGF, the optimal hedging strategy only outperforms the current practice marginally.Ph. D.Includes bibliographical referencesIncludes vitaby Rose B. Karimi Kiwanuk