Fair Trade, Agrarian Cooperatives, and Rural Livelihoods in Peru

302 Pages·2014·5.16 MB·English

by  Noah Enelow

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Open Access Dissertations
5-2012
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Noah Enelow
University of Massachusetts Amherst
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FAIR TRADE COFFEE, AGRARIAN COOPERATIVES, AND RURAL
LIVELIHOODS IN PERU

A Dissertation Presented

by

NOAH HILLEL ENELOW

Submitted to the Graduate School of the
University of Massachusetts Amherst in partial fulfillment
of the requirements for the degree of

DOCTOR OF PHILOSOPHY

May 2012

Department of Economics
©Copyright by Noah H. Enelow 2012
All Rights Reserved
FAIR TRADE COFFEE, AGRARIAN COOPERATIVES, AND RURAL
LIVELIHOODS IN PERU

A Dissertation Presented

By

NOAH HILLEL ENELOW

Approved as to style and content by:

____________________________
James Boyce, Chair

____________________________
Mwangi wa Githinji, Member

____________________________
Frederique Apffel-Marglin, Outside Member

_______________________
Michael Ash, Department Chair
Economics
DEDICATION
To the peasant farmers and artisans of the world, whose everyday labor is greatly
undervalued.
ACKNOWLEDGMENTS

I have an overwhelming number of people to thank for their assistance in
researching and writing this dissertation. First and foremost, I am deeply grateful for my
supportive committee. My chair, James K. Boyce, provided invaluable support,
encouragement and patience during a lengthy and difficult process of research, writing
and editing. Mwangi wa Githinji, my second committee member, provided important
insights on the nature of cooperatives and encouraged me to think critically about fair
trade. Frederique Apffel-Marglin, my outside member, connected me with the Oro Verde
cooperative, which became my primary fieldwork site, and provided valuable perspective
on the indigenous culture of the Lamas region. A number of professors outside my
committee also provided expert guidance: Melissa Gonzalez-Brenes with my survey
design, Michael Ash and Deepankar Basu with my empirical model, and Peter Skott with
my theoretical model.
This dissertation has also been informed by the expertise and experience of
numerous professionals working in the growing field of fair trade. Coffee roaster Dean
Cycon provided me with an important critical perspective on the FLO system and showed
me the potential for relationship-based, international, inter-cultural trade. Paul Rice, the
founder and CEO of Transfair USA, and his executive team including Kimberly Easson,
Mark Magers, Steve Sellers, Daniel Stokes, and David Funkhouser, provided me with my
first experiences with fair trade and certification, encouraged my research, and facilitated
my initial contacts in Peru.
In Peru, I have an even larger number of people to thank. Lorenzo Castillo, Cesar
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Barria, Amilcar Buleje and the entire team at Junta Nacional del Cafe demonstrated to me
the importance of organizing among small farmers and introduced me to the complex
social and political dynamics of Peruvian coffee. At Cooperativa Agraria Cafetalera
Pangoa, I thank general manager Esperanza Dionisio Castillo and all the agronomists for
giving me my first tour of a coffee cooperative. At Cooperativa Agraria Cafetalera Oro
Verde, I am grateful general manager Hiderico Bocangel, agronomists Mariluz Zevallos
and Hildebrando Cardenas, and all of the other agronomists and technicians who
welcomed me into their organization and their homes, and introduced me to the numerous
coffee-growing communities I visited. Last but not least, I thank all of the coffee growers
who welcomed me into their homes, especially Ronal Salas Salas and Betty Marichi
Iñapi, my compadres, who introduced me to the great Lamista village of Alto
Shambuyacu.
Back in the United States, there are many more people to whom I am grateful.
First and foremost, I am grateful to my parents, David and Deborah Enelow, and my
sister, Shoshana Enelow, for all their love and support. Second, I thank my cousins,
Cotton Cleveland and John Garvey, for all their love, support, and delicious
Thanksgiving and holiday dinners and hikes. Third, I am grateful to my fellow students at
University of Massachusetts Amherst who provided moral support, including Sue
Holmberg, Adam Hersh, Phil Mellizo, and Alejandro Reuss. Fourth and finally, I thank
my research assistant at Hampshire College, Ellen Green, who went above and beyond
the call of duty, providing important assistance with data organization, as well as a large
amount of enthusiasm for the topic. Without the support of all of those listed above, this
process may never have been completed.
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ABSTRACT
FAIR TRADE COFFEE, AGRARIAN COOPERATIVES AND RURAL
LIVELIHOODS IN PERU

MAY 2012

NOAH HILLEL ENELOW, B.A., YALE UNIVERSITY

M.A., UNIVERSITY OF MASSACHUSETTS, AMHERST

Ph.D, UNIVERSITY OF MASSACHUSETTS, AMHERST

Directed by: Professor James K. Boyce

This dissertation analyzes the fair trade (FLO) certification system for agricultural
commodities in the context of the global coffee crisis and its deleterious effects on rural
livelihoods, focusing on the northern Peruvian Amazon. I begin the dissertation in my
introduction by outlining my theoretical framework, which analyzes markets as bundles
of institutions. The dissertation proceeds to analyze the key institutions of the fair trade
coffee chain: certifications, commodity trade, cooperatives, and smallholder farming
communities. In my second chapter, I explain the history of the FLO certification system,
examine the dynamics of certifications in general, and point out the incentive problems
therein. My third chapter provides a value chain analysis of the global coffee trade,
outlining the key differences between conventional and fair trade value chain structures
and identifying the key forces that have increased inequality in incomes along the coffee
value chain. My fourth chapter examines existing theories and empirical evidence on the
efficacy of cooperatives in improving the welfare of their members, and critically review
the debate about the role of cooperatives in rural development. My fifth chapter examines
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empirically the relationship between cooperatives and their member farms, based on
fieldwork I conducted in Peru in 2006-7. My empirical analysis reaches the exciting
result that farms are better able to access cooperative benefits when they engage in non-
market labor exchanges between households. I conclude the dissertation by arguing that,
despite the limitations inherent in the fair trade certification movement, it has
successfully expanded economic opportunities for participating growers, and that
cooperative relationships among the growers improve access to these benefits.
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TABLE OF CONTENTS
Page
ACKNOWLEDGMENTS...............................................................................................v
ABSTRACT..................................................................................................................vii
LIST OF TABLES........................................................................................................xii
LIST OF FIGURES......................................................................................................xiii

CHAPTER
1. INTRODUCTION.......................................................................................................1
1.1. Fair Trade, Neoliberalism, and the Coffee Crisis....................................................1
1.2. Theoretical Framework: Double Movement, Instituted Market..............................7
1.1.1. Karl Polanyi: The Double Movement..............................................................8
1.1.2. Barbara Harriss-White: Institutionalized Markets............................................9
1.3. Plan of the Dissertation........................................................................................12
2. FAIR TRADE: A REVIEW OF THE EVIDENCE....................................................15
2.1. Chapter Introduction............................................................................................15
2.2. The Growth of the FLO system: Some Key Facts.................................................24
2.3. Overview of the FLO Certified Supply Chain......................................................25
2.3.1. Farming Households.....................................................................................25
2.3.2. Producers’ Organizations..............................................................................26
2.3.3. Certifiers.......................................................................................................27
2.3.3.1. Standards Setting....................................................................................28
2.3.3.2. The FLO Registry..................................................................................31
2.3.3.3. Organizational Support...........................................................................32
2.3.3.4. Trade Auditing.......................................................................................33
2.3.4. International Traders.....................................................................................34
2.3.5. Roasting Firms..............................................................................................37
2.3.6. Auxiliary Organizations................................................................................39
2.4. Certification Systems: Market-Driven Governance..............................................40
2.5. Economic Theories and Fair Trade.......................................................................45
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