Working paper 47-The Impact of Certification on Smallholder Coffee Farmers in Kenya: The case of UTZ program

Author(s):  Mercy Kamau, Lawrence Mose, Ricardo Fort and Ruerd Ruben

Introduction:

Over 98 percent of the coffee produced in Kenya is exported (with an annual export output of approximately 1 million bags) and only 1 to 2% is consumed locally. Six million people are employed in the coffee industry (CBK, 2010) and because it is a labour intensive crop enterprise, it remains an important source of employment in rural Kenya. In spite of the central role it has played in the county's development, coffee production has steadily declined over the years; from an all time high of about 130,000 metric tons in 1987/88 to a low of about 40,000 metric tonnes of green coffee in 2008, partly due to a declining productivity.

However, the increasing demand for quality coffee, which Kenya produces used in blending other coffees, is likely to yield benefits for smallholder farmers who are able to match this demand. Increased awareness among coffee consumers of the impact of their consumption habits on the people and environment of coffee producing countries has resulted to development of initiatives in the coffee sector which seeks to assure consumers of good practices in production.

Such certification programs in Kenya were first introduced in the floriculture and horticultural industries and more recently in the tea and coffee (the last 5 years) industries. Certification programs advocate for good practices in an endeavor to protect the consumer, the environment as well as the producer. The UTZ certificate was the first to be introduced in the Kenyan coffee industry. Currently there are four other certification programs that are being implemented namely, Fair Trade, 4Cs, Nespresso and Café Practices. However, it is not clear what benefits have accrued from these certification programs and to what extent. Therefore, this study sought to estimate the impact of UTZ certification on the welfare of coffee farming households.

The specific objectives of the study are to (1) estimate the impact of certification on income, wealth and expenditures of farm households, and (2) assess changes in farm household's perception of their economic situation, willingness to invest, risk attitude and loyalty to their coop that is arising from certification programs. The paper applies the propensity score matching (PSM) approach in two case studies of smallholder coffee in the central region of Kenya. The remainder of this paper is structured as follows: Section 2 details the methodology used in impact evaluation including the sampling strategy. Results of the two case studies are presented in section 3 while section 4 provides a general discussion of the results from the two case studies and conclusions.

The Impact of Certification on Smallholder Coffee Farmers in Kenya: The case of UTZ program