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The Impacts of Organic and Fair Trade Certifications in the Coffee Sector and the Sustainable Development in Lao

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The Impacts of Organic and Fair Trade Certifications in the Coffee Sector and the Sustainable Development in Lao PROMOTING ORGANIC AND FAIR TRADE CERTIFICATION IN THE LAO PDR COFFEE SECTOR: BENEFITS AND CHALLENGES FOR FARMERS AND LOCAL ECONOMIES By VONESILI SAYSANA Bachelor of Economics The National University of Lao PDR Vientiane, Lao PDR 2002 Bachelor of Agricultural Science The University of Melbourne Victoria, Australia 2007 Submitted to the Faculty of the Graduate College of the Oklahoma State University in partial fulfillment of the requirements for the Degree of MASTER OF SCIENCE July, 2011 i PROMOTING ORGANIC AND FAIR TRADE CERTIFICATION IN THE LAO PDR COFFEE SECTOR: BENEFITS AND CHALLENGES FOR FARMERS AND LOCAL ECONOMIES Thesis Approved: Dr. Michael R Dicks Thesis Adviser Dr. Art Stoecker Dr. Jeffory A. Hattey Dr. Mark E. Payton Dean of the Graduate College ii ACKNOWLEDGMENTS I would like to acknowledge my major advisor, Dr. Michael R. Dicks for his supervision, constructive guidance and friendship with sincere gratitude and appreciation. My appreciation extends to other committee members, Dr. Art Stoecker, and Dr. Jeffory A. Hattey who provided valuable ideas, assistance, and collaboration. Their constructive and invaluable advice helped refine this study. Also, I would like to thank the Department of Agricultural Economics for supporting during these years of study. Moreover, I would like to thank Fulbright Program for given me this valuable opportunity through financially support and advising me in living in the United States. Also, I would like to take time to sincerely thank to all coffee famers, coffee producer groups – AGPC (on the Bolaven Plateau), related stakeholders and everyone who had assisted me during my short visit in Laos. And finally, and most importantly, to my family and friends, especially my husband and son for always being supportive of my goals and encourage me throughout my education and help in making it possible and achievable, a simple thank you is not enough. iii TABLE OF CONTENTS CHAPTER 1....................................................................................................................1 1. INTRODUCTION .......................................................................................................1 1.1 Background .......................................................................................................1 1.2 Problem Statement ............................................................................................3 1.3 Objective ...........................................................................................................5 1.4 Scope of Study ..................................................................................................6 1.5 Outline of the Study...........................................................................................7 CHAPTER 2....................................................................................................................8 2. LITERATURE REVIEW .............................................................................................8 What is sustainable agriculture? ...................................................................................8 2.1 The Global Overview of Organic and Fair Trade Agriculture.............................9 2.1.1 Organic Agriculture .......................................................................................9 2.1.2 Fair Trade Agriculture ................................................................................. 11 2.2 The World Coffee ............................................................................................ 14 2.2.1 The Variety, Production, Products and Markets ............................................ 14 2.2.2 The Coffee Prices and Crisis ........................................................................ 17 2.2.3 Organic and Fair Trade Coffee ..................................................................... 21 2.2.4 The Benefits and Costs of Organic and Fair Trade Coffee ............................ 28 2.2.5 Current Study Methods and Tools of Organic and Fair Trade Coffee ........... 33 CHAPTER 3.................................................................................................................. 36 3. ORGANIC AND FAIR TRADE COFFEE IN LAO PDR........................................... 36 3.1 The Organic and Fair Trade Agriculture in Lao PDR ....................................... 36 3.2 The Lao PDR Coffee Sector ............................................................................ 39 3.2.1 The Coffee History and Evolution ................................................................ 39 3.2.2 Coffee Harvested Area and Production......................................................... 40 3.2.3 The Bolaven Plateau .................................................................................... 42 3.2.4 Current Coffee Developing Trends ............................................................... 45 3.2.5 Coffee Varieties Grown ............................................................................... 47 3.2.6 Cropping Systems ........................................................................................ 49 3.2.7 Processing Systems ...................................................................................... 51 3.2.8 The Coffee Stakeholders .............................................................................. 52 3.2.9 The Laos Coffee Export Supply Chain ......................................................... 67 3.2.10 The International Laos Coffee Markets ........................................................ 69 3.2.11 Organic and Fair Trade Coffee ..................................................................... 71 iv CHAPTER 4.................................................................................................................. 73 4. RESEARCH APPROACH AND METHODO ........................................................... 73 4.1 Survey Design and Data Collection Method .................................................... 73 4.1.1 Stakeholders Identification and Data Collection Method .............................. 73 4.1.2 Field Work ................................................................................................... 74 4.1.3 Sample Size, Site and Case Study Selection ................................................. 75 4.2 Field Work Rising Issues ................................................................................. 77 4.3 Economic Estimation and Financial Indicators................................................. 78 4.3.1 Conceptual Framework ................................................................................ 78 4.3.2 Empirical Model .......................................................................................... 82 4.4 Assumptions, Variable Selection and Analytical Techniques ........................... 84 4.5 Hypotheses ...................................................................................................... 85 CHAPTER 5.................................................................................................................. 87 5. FINDINGS AND DISCUSSIONS ............................................................................. 87 5.1 Non-Empirical Findings and Discussion from Secondary Reports ................... 87 5.1.1 The Social-Economics Impacts of Laos Coffee Sector at National Level ...... 87 5.1.2 Local Social-Economics Impacts ................................................................. 89 5.1.3 Coffee and Food Security in Laos ................................................................ 97 5.1.4 The Rising Challenges and Issues for Laos Coffee Sector .......................... 100 5.2 General Information and Findings of the Study Area ..................................... 106 5.2.1 Geography ................................................................................................. 106 5.2.2 Demographic ............................................................................................. 107 5.3 Socio-Economic of Paksong District and Sample Villages-the Study Area .... 109 5.3.1 Livelihood ................................................................................................. 109 5.3.2 Income and Expenditure of Sample Villages .............................................. 110 5.3.3 Wealth Status and Food Security ................................................................ 113 5.3.4 Education and Language ............................................................................ 116 5.3.5 District and Villages Infrastructure ............................................................. 117 5.3.6 Land Use and Allocation ............................................................................ 119 5.3.7 Land Use Issues ......................................................................................... 121 5.3.8 Coffee Production Area and Yield in the Sample Villages .......................... 122 5.3.9 Coffee Production Method in the Study Area ............................................. 128 5.4 Working as a Cooperative under AGPC ......................................................... 139 5.4.1 AGPC Operation and Its Members ............................................................. 139 5.4.2 Benefits and Constraints of becoming members of AGPC .......................... 140 5.4.3 Rules and Regulations ................................................................................ 141 5.4.4 Products and Markets ................................................................................
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