What is the benefit of membership in farm producer organizations? The case of coffee producers in Peru

Abstract

Empirical evidence of the benefit of farm producer organizations (FPOs) in the developing world is mounting. There is, however, no work in South America on the relationship between FPO membership and farm-level performance. We address the gap by estimating the treatment effect of FPO membership with respect to three outcomes: quantity produced, quantity sold, and price received. The empirical application focuses on the Peruvian coffee sector, where FPOs may have played an important role during the recent price crisis. A sample of approximately 9,000 survey responses from Peruvian coffee producers during the 2015–19 period is used in the analysis. Results show a positive treatment effect of FPO membership on all three farm-level outcomes. Compared to non-FPO members, FPO members produced 120–295 kg/ha more, sold 118–296 kg/ha more, and received 0.42–1.53 PEN/kg more. We also find evidence of heterogeneity in the estimated effect of FPO membership across time, farm size, and membership probability. The findings yield novel implications in terms of policy support for FPOs.