Public good contributions among coffee farmers in Costa Rica: co

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.
Questions
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.
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
Turrialba (8% of production)
One private beneficio
Los Santos (30% of production)
One private beneficio and three
Cooperatives
Private
Palmichal
de Acosta
Cooperative
Llano Bonito
Cooperative
Dota
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’
Order of tasks
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
Contribution to public good
Contribution to public good
contribution to public good
p = 0.000
10
8
6,56
5,61
6
4
5,61
3,01
2
0
Cooperative farmers
Farmers selling to
private beneficios
partners are cooperative farmers
partners of own type
partners are farmers selling to private
beneficios
partners of other type
Contribution to public good
contribution to public good
p = 0.000
p = 0.000
10
8
6,56
5,61
6
4
5,61
3,01
2
0
Cooperative farmers
partners are cooperative farmers
partners are farmers selling to private
beneficios
Farmers selling to
private beneficios
Contribution to public good
contribution to public good
p = 0.000
p = 0.000
10
8
6,56
5,61
6
4
5,61
3,01
2
0
Cooperative farmers
Farmers selling to
private beneficios
partners are cooperative farmers
partners of own type
partners are farmers selling to private
beneficios
partners of other type
Contribution to public good: playing with 3 cooperativists
Family in Coffee business
Family at Cooperative
Years in Cooperative
Held an elected post in coop.
Relative implication in Cooperative
Appropriate
Lower than others
Reason to join Cooperative
Better prices
Family tradition
For financial assistance
Social Aid
Cheating
Sold coffee to private beneficio
Observations
R^2
Adjusted R^2
+1.143
+3.309 ***
-0.109 ***
+2.236 ***
2.387 ***
-0.031
-0.861
0.353
-2.177 ***
2.081 ***
-1.388 *
46
0.791
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
p = 0.037
p = 0.131
10
9
9
contribution to public good
10
8
7,66
7
7
5,91
6
6,22
6
5
5
4
3
7,46
8
2,72
2,97
4
2,86
3
2
2
1
1
0
0
Rainforest Certified
(N=18)
3,08
Not Rainforest Certified
(N=36)
Fair Trade Certified
(N=40)
Not Fair Trade Certified
(N=15)
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
proportion choosing control
1
0,9
0,8
0,93
0,83
0,83
0,72
0,7
0,6
0,5
0,4
0,3
0,2
0,1
0
Cooperative farmers
Farmers selling to
private beneficios
partners are cooperative farmers
partners of own type
partners are farmers selling to private
beneficios
partners of other type
Contributions when control chosen
contribution to public good
p =0.086
p =0.000
10
9
8
7
7,26
6,56
6,27
5,57
6
5,61
5,82
5,61
5
4
3,01
3
2
1
0
Cooperative farmers
Farmers selling to
private beneficios
partners are cooperative farmers
part 2: when control is in place
partners are farmers selling to private
beneficios
part 1: when no control in place
Behavior by cooperativists
dependent on real world 'cheating'
p =0.033
p =0.000
contribution to public good
10
9
7,74
8
7
7,16
6,26
6
5
4
3,6
3
2
1
0
selling to private market (N=17)
not selling to private market (N=38)
partners are cooperative farmers
part 2: when control is in place
partners are farmers selling to private
beneficios
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
Private beneficios
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)
Cooperatives
• Coope Dota (Santa Maria de Dota)
• Coope Tarrazu (San Marcos de Tarrazu)
• Coope Llano Bonito (Leon Cortes)
C. Dota
C. Tarrazu
C. Llano Bonito
2600
600
6626,72
5886,42
784
735
Number of associates
769
Size of the canton (ha)
2617,58
Number of Poligonos
366
Accreditations:
Fair Trade
x
Rainforest Alliance
x (15% of prod.) x (30% of prod)
Starbucks CAFÉ Practices
x
x
x
Regarding sociodemographic characteristics (age, education
involvement in coffee business) no differences across cooperatives
Summary Statistics
Cooperatives
All Coops
C. Dota
Age
Sex
(0 man, 1 woman)
Born in the region (percentages)
Yes
No
No but have been there many years
Education (oercentages)
Primary
Secondary
Technical/Professional Studies
University
Unique family member on the coffee business
(0 yes, 1 no)
Coffe as unique source of income
(0 yes, 1 no)
If not, share of income that coffee represents
Less than half family income
Half of family income
More than half family income
Production 2010-2011 (in cajuelas)
Maduro
(std. Deviation)
Verde
(std. Deviation)
Observations
C. Tarrazu
C. Llano Bonito
Private 'beneficios'
All Private
Private 1
Private 2
44.01
53.5
40
40.47
52.67
55.38
50.72
0.09
0.13
0
0.15
0.096
0.15
0.05
87.2
80
95
85
96.77
92.31
100
1.8
6.6
0
0
0
0
0
10.9
13.3
5
15
3.23
7.68
0
63.6
60
55
75
77.42
69.23
83.33
12.7
20
15
5
6.45
7.69
5.56
18.1
20
25
10
6.45
0
11.11
5.45
0
5
10
9.68
23.08
0
0.72
0.6
0.75
0.8
0.51
0.61
0.44
0.32
0.4
0.35
0.25
0.74
0.76
0.72
11.7
11.1
22.2
6.25
19.35
38.46
5.56
35.2
11.1
44.4
43.75
32.23
23.08
38.89
52.94
77.7
33.3
50
48.39
38.46
55.56
2249.9
2380
3719.2
683
1172
836.36
1414.44
2249.9
1746
4231.3
569.95
2249.66
567.99
1398.7
55.96
37.35
117.2
11.68
23.46
133.1
46.35
208.5
23.37
32.72
55
15
20
20
31
13
18