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

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].

Automated summary

Contrary to common belief, this study finds that production of fine and flavor cacao varieties has no association with the price received by small-scale producers, primarily due to low productivity and absent price premiums. However, the use of postharvest practices of fermentation and drying may lead to significant price responses, regardless of the variety grown. These findings have implications for program interventions aiming to increase farmer revenue, suggesting that training in modern processing techniques can improve outcomes regardless of the variety produced.