Household Welfare Impacts of Black Papper Certification in Kerala, India

Organic farming and fair trade certified commodities considered as catering to niche markets is growing rapidly. So far little is known on the welfare impacts of such innovations and it is of particular interest if the joint adoption of both systems adds additional benefits to smallholders in developing countries. Hence, this paper examines the household welfare impacts of an organic and fair trade certification by smallholder black pepper farmers in Kerala, India. We use panel data collected from 300 smallholder rural pepper growers in Idukki district and apply a multinomial endogenous switching regression model along with a coutnerfactual analysis to estimate certification impacts. Results show that both certification systems have a significant impact on income compared to conventional black pepper farming. However, membership in fair trade marketing systems does not increase income of organic farmers, but has positive asset effects