Prices, specialty varieties, and postharvest practices: Insights from cacao value chains in Ecuador

Abstract

Efforts to improve cacao value chains often assume that production of fine and flavor varieties will raise smallholder incomes. Undertaking postharvest practices of fermentation and drying is another exercise assumed to increase value‐added capture by smallholder producers. This study employs household data from 340 cacao farms in 15 villages in coastal Ecuador during 2018 to empirically assess these assumptions. Contrary to the common belief of the international development community, we find that the production of fine and flavor cacao varieties has no association with the price received by small‐scale producers. This is mainly due to (i) low productivity and (ii) nonexistent price premiums. Findings also suggest that the use of postharvest practices of fermentation and drying may lead to substantial price responses irrespective of the type of variety grown. The results presented here have implications for program interventions aimed at increasing farmer revenue. Programs promoting the use of fine and flavor varieties alone might be misguided and can be improved by training in modern processing techniques, regardless of the variety produced. [EconLit Citations: O12, Q01, Q12, Q13].

Cacao value chains and credence attributes: lessons from Ecuador

“…However, due to flavor and aroma characteristics, CCN-51 is considered to be of lower quality than Nacional (Castillo, 2013). Interestingly, this difference in quality does not always translate to better prices for Nacional (Villacis et al. , 2022).…”

“…The limited ability of small-scale farmers to meet these market challenges has disincentivized investment in maintenance and renovation of plantations, especially of Nacional (Villacis et al. , 2022).…”

“…2. For example, intercropping practices with plantain and orange trees are common among Nacional producers while CCN-51 is more densely planted due to not needing shade for its development (Villacis et al. , 2022).…”

“…Nacional trees require protective shade for their correct development during the early years. In contrast, CCN-51 does not to need shade for its development (Villacis et al. , 2022).…”

Understanding constraints on private irrigation adoption decisions under uncertainty in data constrained settings: A novel empirical approach tested on Ecuadorian Cocoa cultivations

“…Second, market uncertainty is accounted for by including spatially heterogeneous market conditions such as local cocoa prices and labor costs. Villacis et al (2020) 4 Spatially explicit raster datsets from this repository can be downloaded from http://www.worldclim.com/version2 up to 30 second spatial resolution. Bio-climatic variables are imputed to each farmer record from monthly temperature and rainfall values used to generate biologically meaningful variables that represent annual trends, seasonalities and extreme or limiting environmental factors.…”