Smallholder farmers are increasingly subject to different types of standards that offer specific conditions for their market incorporation. The proliferation of private and voluntary (civic) standards raises questions regarding their impact on farmers' welfare and their role in the upgrading of value chains. This paper aims to address this issue.
Based on extensive fieldwork and careful matching of 315 farmers in Northern Nicaragua who produce coffee under Fair Trade, Rainforest Alliance and Café Practices labels or deliver to independent traders, the effects on income, production and investments are compared. Moreover, the implications of different contract conditions for risk behaviour, organizational force, loyalty and gender attitudes are assessed.
The paper finds that Fair Trade provides better prices compared with independent producers, but private labels out‐compete Fair Trade in terms of yield and quality performance. While Fair Trade can be helpful to support initial market incorporation, private labels offer more suitable incentives for quality upgrading.
Civic standards exhibit major effects on local institutions' and farmers' behaviour, while B2B standards are more effective for improving production and management practices. Dynamic improvement standards may bridge the gap between both.
Fair Trade standards are useful to provide initial market access to small‐holders, but private standards offer better prospects for subsequent quality upgrading.
This is the first large‐scale comparative impact assessment of coffee standards that delivers unbiased empirical results.
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