Promoting Organic and Fair Trade Certification in the Lao Pdr Coffee Sector: Benefits and Challenges for Farmers and Local Economies

Abstract

The concept of certifying coffee as organic and Fair Trade are new to Laos. The difference in economic impacts between conventional grown and coffee grown organically and marketed as Fair Trade has not been determined. The purpose of this research is to investigate the social-economic impacts of both Fair Trade and organically certified coffee and traditionally produced commercial coffee. The research focuses on measuring the financial impacts on small-medium scale producers and the contribution of organic production practices to sustainable development in Laos. The investigations of impacts were accomplished through interviews and field study of coffee producers on the Bolaven Plateau, mainly in the Paksong district. Both certified and non-certified coffee production has contributed to the local economies. For those families that are directly involved in coffee production, household income has more than doubled. For those who are not farmers, the coffee sector has provided employment opportunities and increased economic activity, particularly through the promotion of the agro-ecotourism industry and the establishment coffee shops. Empirical results suggest that the financial performance of both the organic, free trade coffee and the non-organic coffee is positive. The organic and Fair Trade farmers were found to be slightly more profitable than the non-organic farmers. The results also indicate that to enhance profitability farmers need to focus on increasing yield as high as possible and improving coffee quality.