Monitoring and Evaluation of Nespresso AAA Sustainable Quality TM Program in Colombia. First follow-up

Transcription

1 Monitoring and Evaluation of Nespresso AAA Sustainable Quality TM Program in Colombia First follow-up Carlos Ariel Garcia Romero Researcher CRECE New York, 14 th of May 2013 CRECE M & E Team: Gustavo Adolfo Ochoa, Julián García, Marly Tatiana Celis, Juan Carlos Mora

2 What we want to know through this study? What difference the AAA Program is making in terms of sustainability? Do environmental practices make a difference in the results? Do AAA farmers get an increase of income and better productivity? Do small farmers receive also any marginal benefit? 2

3 Monitoring & Evaluation Methodology and Timeline Monitoring Evaluation CRECE adapted the COSA methodology to Colombia Design of M & E study to assess AAA Program in Colombia AAA Program Baseline survey deployed AAA Program First Follow-up survey deployed AAA Program Second Follow-up survey deployed Year 2008 / / / Baseline Arbol de vida project COSA Project assess the impact of seven sustainable schemes Nespresso support the project by giving the AAA s farms data from Nariño and Cauca Feedback from Nespresso Feedback from Nespresso 3

4 Sample size Regional samples by cluster and project Department Projects No. farms Antioquia Central Mill 77 Caldas Certification & Fertilization 474 Cauca Certification 166 Huila Certification 142 Nariño Certification 363 Total AAA Control 563 4

5 M&E Methodology: Key ideas The CRECE study analyses the impact that the Nespresso AAA Sustainable Quality TM Program has had in the lives of coffee farmers in Colombia during the period 2009 to 2011, using data collected by CRECE in Nespresso clusters (Antioquia, Caldas, Cauca, Nariño, Huila), for 1,222 AAA farmers and 563 control group farmers. The methodology used has been based on COSA. The COSA approach consists of the development and application of an internationally-recognized methodology and data gathering process so that farmers and other stakeholders can more effectively measure, and predict, the outcomes, including costs and benefits, of the adoption of one or more sustainability initiatives. 5

6 The context: coffee sector conditions have been mostly adverse Variable Production Prices (ex-dock ) Productivity (Kg/ha) Share of total area with resistant varieties (ha) Share of total area with young trees -9% (11,7) Favorable 1.45 USD/lb Favorable 1,034-32% (7,8) Favorable 1.77 USD/lb % (8,9) Favorable 2.25 USD/lb % (7,8) Favorable 2.84 USD/lb 671 * -2% (7,6) 2.10 USD/lb % 30.8% 29.5% 44.4% n.a 56.9% 58.6% 65.0% 72.4% n.a CBB** Favorable Low level 1.4% Favorable Low level 2.2% Favorable Low level 2.2% Favorable Low level 1.3% Favorable Rust infestation % n.a n.a 30,3% 14,5% n.a Fertilization Low level & High prices Low level & High prices Improving PPP support Improving PPP support Improving PPP support Climate La Niña El Niño + La Niña La Niña La Niña La Niña * Last twelve months on October ** CBB = Coffee Berry Borer Source: FNC Databases 6

7 The Context: Key ideas Production in Colombia has been adverse since 2008, with an overall production fall of 35%. Prices were favourable in Colombia until Since then, prices have fallen nearly 50% at the C coffee futures in New York and worsened due to the Colombian peso appreciation Productivity has decreased for all farmers in Colombia, mainly due to the renovation program and harsh weather conditions. Coffee area, number of renovated trees, as well as fertilization levels in the country increased significantly for AAA farmers. The impacts of these improvements in productivity are expected to appear on 2013 s crop. 7

8 Sustainability indicators Although a wide set of indicators is available, aggregate indexes were performed to measure the components of sustainability. Principal Component Analysis (PCA) for categories were used to build indexes for social, environmental and economic performance: Social index, it includes indicators that reflect good working practices, economic and social aspects of the household and coffee farmer s social perceptions. Environmental index, it includes good agricultural practices (GPA), soil and water conservation measures and agrochemical handling. Economic index, it includes variables that are associated with market knowledge, land productivity, production costs and income, and coffee farmer s economic perceptions. 8

9 Social index: Better living conditions suggest that AAA is impacting positively at farm level Components Farm crop production for family consumption Revenues from sales of other farm crops Extra-earnings due to certification of other farm crops +22.6% difference in social index for AAA farmers in 2011 Average social index Score ` AAA Control 65*** Possession of household assets Number of protective gear items used by the workers 46 54*** 53 Living conditions of the workers Occupational safety and health Perception of the household s quality of life Perception of relationships with the employees Source: CRECE, coffee growers surveys, 2009 and 2011 **The indexes were performed with principal component analysis using polychoric and polyserial correlations. See Kolenikov, S., and Angeles, G. (2004). 9

10 Social conditions: Key outcomes AAA farms show better social progress than control farms in living conditions for workers, occupational health and family living conditions. 10

11 Environmental index: AAA farmers improved their environmental conditions Components The farm has recycling program Soil conservation practices Average environmental index Score 68*** *** AAA Control Positive agrochemical practices Farm s environment care perception Village s environment care perception The farm has an environment map/plan Trained in environment topics Source: CRECE, coffee growers surveys, 2009 and 2011 The change in environmental index for AAA farmers was +38.8% with respect to control group in 2009, rising to +52.1% in **The indexes were performed with principal component analysis using polychoric and polyserial correlations. See Kolenikov, S., and Angeles, G. (2004). 11

12 Environmental practices: Key outcomes Environmental practices to improve conservation on Nespresso AAA farms have increased compared to conventional farms. AAA farms have better handling of waste waters generated on the farm during the post-harvest process and domestic activities. AAA farmers have been adopting at least 4 soil conservation practices in their farms, compared to 3.2 practices in control farms. 87% of the AAA farms have now a recycling program versus 43% of the conventional farms. 12

13 AAA farmers improved their overall economic conditions Components The farmer tried to find new customers Trained in marketing topics Trained in management and traceability Less than 3% of C.B.B. affectation Less than 10% of Rust affectation Less than 3% of coffee sold as low quality Keep records of fertilizer s application Performs soil analysis Applies organic fertilizers Fertilize under technical recommendation Knows the average price of the zone Knows the domestic price Knows the sale price of the buyer Knows the international price Income perception Perception of the farm s economic situation Perception of the business opportunities Net income categories Yield categories Average economic index Score 49*** Source: CRECE, coffee growers surveys, 2009 and *** AAA Control The change in economic index in 2009 for AAA farmers was +22.5% with respect to control group, while in 2011 this difference rose to +41%. **The indexes were performed with principal component analysis using polychoric and polyserial correlations. See Kolenikov, S., and Angeles, G. (2004). 13

14 Economic benefits are reached by AAA farmers across all farm sizes Income (cents/kg green) Net income (cents/kg green) Cost (cents/kg green) 540** ** *** 237 *** 311*** *** *** *** *** AAA Control AAA Control AAA Control <1 Ha 1-5 Ha 5-10 Ha Source: CRECE, coffee growers surveys, 2011 AAA farmers net income has increased by +80.0% A higher net income is related to greater productivity levels and AAA premium 14

15 Farm economics study outcome Getting higher net income and productivity, despite unfavourable conditions of the coffee sector, Net income increased of 80% from 2009 to % income versus control group in Increasing volume at quality at higher price AAA farmers proportion of overall production sold to Nespresso has increased from 47% in 2009 to 78% in % of the coffee produced by AAA farmers is sold as high quality coffee, while only 23% of the coffee produced by the control group is sold as such. Improving farm management skills AAA farmers receive 30% more training in coffee market topics and 39% more training in traceability, which helped them improve their farm management skills. 15

16 Results are related to technical assistance: AAA farmers have been receiving more training and support than controls Average training hours per farmer by year 33.6 *** 27.4 *** A farmer in the Program receives 40% more technical support than a control farmer in Colombia AAA Source: CRECE, coffee growers surveys, 2009 and 2011 Control 16.6 This implies better technological and economic differences. (More rust resistant coffee trees, better use of fertilizers, higher renovation rates, more productivity) 16

17 AAA farmers have been upgrading their technological level faster than conventional farmers thanks to trainings and technical assistance Variable AAA D Colombia D Total area (ha) Area coffee (ha) Share of coffee of total area (%) 72.5% 62.4% Coffee age (years) Trees per hectare 5,049 5,128 Resistant varieties (%) 64.4% 55.6% Leaf rust (%) 33.3% 45.7% CBB (%) 2.5% 3.3% Renewed trees (%) 24.1% 23.5% Fertilization (kg/ha) 1, Source: CRECE, coffee growers surveys, 2009 and 2011 Colombia information comes from CRECE surveys in six Departments Compared to baseline, AAA farmers have improved key variables to optimize farm productivity: Younger trees, higher shares of rust resistant varieties and improved levels of fertilization Fertilization increase are leading levels to local standards Fertilization costs are compensated by more net income. 17

18 Technical assistance and training: Key outcomes A farmer in the Program receives 40% more technical support than a control farmer in Colombia with direct impacts on: More rust resistant coffee trees have been planted in AAA farms. Better use of fertilizers helped prevent the fall in productivity in their farms. The state of the AAA farms has remarkably improved with higher renovation rates than non AAA counterparts The continuity of technical assistance strategy is crucial to maintain the positive direction of the impacts especially on productivity levels of small farms (credit and fertilizers) 18

19 AAA Program early impacts 19

20 Impact indicators Impact variables were defined from the Program theory of change. Economic Sustainability Land Productiv ity Net Income Nespresso AAA Impacts Social Sustainability Environmental Sustainability Water consump tion 20

21 By first follow-up measurement, AAA are over-performing control group Econometric estimations of AAA impacts (scores) Environmental conditions (score) Social conditions (score) Farm economic (score) Net Income (US cents /kg) Productivity (kg/ha) Fertilization Impacts AAA 1 AAA Water consumption (Lt of water to produce 1 kg of parchment) 8.7 *** 2.3 ** 6.3 *** 46.3 * *** Central Mill AAA farmers 4.3 *** 1 Dif-in-Dif estimator, comparison between AAA and control group Source: CRECE, coffee growers surveys, 2009 and 2011 Effects of Program on main impact indicators are even positive and significant 21

22 Mid-term impacts are being focalized on small farmers Econometric estimations of AAA impacts (scores) Impacts AAA 1 <1 ha 1-5 ha > 5 ha AAA Environmental conditions (score) 9.4 *** 9.1 *** *** Social conditions (score) 5.0 ** 4.4 *** ** Farm economic (score) 7.6 *** 5.7 *** *** 1 Dif-in-Dif estimator, comparison between AAA and control group *** p<0.01, ** p<0.05, * p<0.1 Source: CRECE, coffee growers surveys, 2009 and

23 AAA Program key findings The Program is achieving technologic and economic differences between AAA and conventional farmers based on extra technical support Promoting environmental practices among the beneficiaries have implied extra support leading to technological change for farmers involved Despite unfavorable conditions of the coffee sector, AAA farmers are getting higher net income and productivity. Benefits have been focalized in small farmers 23

24 In Summary Rust resistant varieties and renovated trees increased significantly for AAA farmers Productivity has decreased for all farmers, but the decrease has not been as sharp for AAA farmers AAA farmers proportion of overall production sold to Nespresso has increased AAA in Colombia Farmer's net income is increasing to expected rates. Perceptions on the Program are high for premium and benefits and help components for all regions. Economic, Social and Environmental impact indexes are higher for AAA farmers than control farmers. Prices for AAA farmers are higher than non AAA AAA farmers express strong loyalty to Nespresso AAA farmers have a better economic situation Farmers are getting more opportunity to reinvest extra money in their coffee crop 24

25 Challenges to Program sustainability The continuity of technical assistance strategy is crucial to maintain the positive direction of the impacts Providing support to farmers intended to continue increasing the productivity levels of small farms (credit and fertilizers) 25

26 Acknowledgements Coffee growers committed with the CRECE M & E surveys Nespresso team Cafexport FNC - Departmental Committes of Cofffee Growers of Antioquia, Caldas, Cauca and Nariño Cenicafé 26