cc  >> Kevin Check: Good afternoon  and welcome to today's  Global Hot Spots lecture.  My name is Kevin Check.  I'm Senior Director of School  and College Relations at the  Wisconsin Alumni Association.  We're very pleased to continue  to bring this great programming  to you in partnership with the  Division of International  Studies and PLATO  and Continuing Studies.  Today we welcome as our speaker  Jeremy Weber who graciously  agreed to step in for our  originally scheduled speaker,  Brad Barham, a professor of Ag  and Applied Economics who  happens to be starting a new  project in Bolivia.  And Jeremy tells me that he was  communicating with him  this morning in Bolivia.  Jeremy is a PhD candidate  in the Agricultural and  Applied Economics Department  here at UW Madison.  His research covers development  and conservation themes and has  involved projects in Mexico,  Brazil and Peru.  He began studying fair trade  organic coffee arrangements with  a Fulbright grant in Peru in  2005, and has since continued to  explore economics issues  surrounding coffee growing  households.  His dissertation studies the  uneven diffusion of an  innovative pruning practice  among coffee growers in central  Peru. 

 Please join me in welcoming  Jeremy Weber as he presents  "Is Organic Fair Trade  Agriculture Sustainable?  Observations of Coffee Growing  in Mexico and Peru."  (applause)  >> Jeremy Weber: Thank you,  Kevin, and thank you all  for coming out.  What I'm going to present draws  on several different projects  that have involved a number of  people.  And those projects have been  more narrowly focused.  Brad and I and some others have  looked at schooling outcomes in  coffee growing households in  southern Mexico.  I'm looking at technology in  Peru.  But Brad's a big picture guy,  and he said why don't we take  this opportunity to take a step  back from our narrow focus and  look at some of the broader  themes, some of the comparative  differences between the areas  that we're working and try to  draw some conclusions and  comment on those differences.  So that's the fruit of this  lecture.  The topic of economic scarcity  and economic growth and its  relationship to the environment  is certainly a relevant one  today and that's, I think,  brought out by this quote that  Bill Gates made a couple weeks  ago at the World Food Symposium.  He says, "Environmentalists are  standing in the way of feeding  humanity through their  opposition to biotechnology,  farm chemicals and nitrogen  fertilizer."  I think what this quote really  says or what it shows is the  status of the debate surrounding  economics and the environment.  And I think that the structure  of that debate is one where you  have two poles, one where people  have significant faith in the  ability of technology to resolve  problems of scarcity and also  environmental problems as they  may arise, and then at the other  pole, a group of people that are  very wary of technology and are  environmental purists in  thinking that there's really  only one platform or one way of  producing that's compatible with  environmental sustainability. 

 And what I'm going to talk about  today and the information that  I'm going to bring to bare on  this argument I think presents a  much more nuanced perspective  and says both of those camps  probably don't have it quite  right and that the details of  these problems that we're  talking about are going to show  why those two ways probably  are not a good way of thinking  about this problem.  Coffee is a great product to  look at when thinking about  issues of the environment and  issues of economics and welfare  and livelihoods.  Latin America, in particular,  has many households, rural  households, that depend upon  growing coffee for their  livelihoods.  And those coffee farms are  located in areas that often are  biodiversity hot spots.  Think of cloud forests, think of  this is the transition zone from  the highlands of the Andes  Mountains into the lowland  tropical area.  In between is this area called,  in some regions, the brow of the  jungle.  This is elevations about 1,000  to 2,000-meters above sea level.  Because slight changes in  elevations are associated with  different microclimates,  different plants and animals.  And this is where coffee is  being grown.  I'm going to start out focusing  on Peru and looking at two  different platforms for growing  coffee both of which have  environmental concerns  integrated into them. 

 And this is going to be a  broader picture of two different  approaches to growing  sustainable coffee, and then I'm  going to focus in on the  economic side of it.  That is, the economics driving  the livelihoods that households  are able to earn by growing  coffee and I'm going to first  look at southern Mexico and, in  particular, fair trade and  organic growers there,  and then go back into Peru.  The organic certification, and  here I'm just going to focus in  on organic and not fair trade,  but the organic certification is  one where I think many consumers  associate it with, if you want  to be environmentally  responsible, you buy a product  that has an organic label.  Other things are maybe not going  to get the job done.  There's a lot of faith placed on  organic being the best way to  maintain the integrity of the  ecosystems where the product is  being produced.  But there are a number of  competing certifications out  there, especially in the case of  coffee, and some of these  certification may be  complementary to each other and  others may be competing in a  sense that they're offering a  different way, a different set  of standards to ensure the same  outcomes.  So we have the fair trade  certification which is a little  more socially oriented and  that's paired recently with the  organic and in the market now  you see a lot of fair trade  organic labeled coffee.  But they are separate  certifications with different  standards and norms.  But then we have the Rainforest  Alliance is a group that has  created the sustainable  agricultural certification, and  you can see this in your  supermarkets oftentimes,  especially in the coffee aisle,  when a bag that has a label with  a little green frog on the  label.  And then Utz Kapeh, which  I think is good coffee in Mayan,  is again another approach,  another certification out there  that says these norms are  consistent with environmental  sustainability. 

 The Smithsonian Institute  oversees a bird-friendly  certification, and then there's  an industry set of practices  known as cafe practices that's  another label that's thrown on  coffee.  So a natural question is are  these labels all doing the same  thing?  Does organic, is that really the  only way to go to maintain the  integrity of ecosystems in  coffee growing communities?  To answer this question or to  discuss it a little more  thoroughly, I'm going to look at  a case of certified growing in  central Peru, we're in the  department of Junin.  "Department," maybe I should  have translated that,  and just put state.  But department is equivalent  to a state.  So in the state of Junin.  This is in central Peru.  If you can see on the coast of  Peru, here we've got this  different colored, this  geographic map here that shows  the Andes Mountains and then  coming down into the eastern  side of the Andes Mountains in  this lighter green area is where  that brow of the jungle, that  cloud forest area, and that's  where most of coffee is produced  in Peru.  And this specific region of  central Peru is the coffee  growing region, the capital, the  coffee capital of Peru.  Coffee is also grown in the  south coming down from Cusco,  it's also grown in the north.  But the industry is the best  organized and the strongest and  there's most production from  central Peru and specifically  this region. 

 It's a beautiful region.  In fact, Brad took this photo  this summer as we were kind of  wandering through the area  visiting these different  growers.  In this area, two privates  companies got together and  decided to fund a coffee  development project.  The two companies were Lavazza,  which is a large Italian  roaster, and Volcafe, which is a  coffee and trading company, and  they had the goal of, a very  broad goal, of improving the  economic and environmental  sustainability of these  communities of small scale  coffee growers in several  communities in Junin.  One of the components of the  project focused on certifying  growers and integrating them  into markets, export markets,  that would pay premiums for that  certification.  And the main certification that  they've been working with is the  Rainforest Alliance sustainable  certification, but they've also  worked with the organic norms  and with Utz Kapeh, and so it  provides a good case study of  comparing these different  platforms for growing coffee.  Now when we go to compare these  different certifications,  it's a bit tricky because  if you go, say, to the website  of one organic certifier,  there are several,  many certifiers,  and you look well what are the  norms that I would have to abide  by to be certified, and you  would find a document that would  look like something that a  lawyer wrote for other lawyers.  Very complicated language,  large document, many pages, and  growers don't read these  documents when they go to enter  certification programs.  There are extension agents,  either as part of a coffee  cooperative or in this case an  NGO, that try to translate these  norms into activities that  they're going to promote among  farmers, and they're going to  say after kind of reading this  document and talking with this  certifier these are basically  the things that you need to do  in order to receive this  certification.  And that's a little bit  different from kind of taking  the document and analyzing it  from a legal perspective as  could you get away with this or  not. 

 And this comparison is based on  not going to the document but  going to the extension agents  who work with the growers and  say what are the main  differences when you're  implementing the sustainable or  organic program.  I'll start first with the  sustainable.  The norms are very much applied  to the entire property.  So if you've only got coffee on  a corner and on a far other  corner you've got something else  going on, it doesn't matter, all  of that falls into the norms.  And there is equal focus on all  of those areas.  It's not that we look at your  coffee and we kind of pay  attention to the rest, but not  really.  In the case of sustainable, it's  very important, the entire  property.  No forbidden agrochemicals.  So some agrochemicals are  permitted.  There's a green colored band of  products that Rainforest had  said that these, when used  right, have no environmental  negative effects. 

 So of course a key word is used  right, so there's significant  standards that deal with how  those chemicals are applied,  where they're stored, do the  people applying them know how to  apply them.  And then socially Rainforest  is pretty robust.  They want to make sure that the  coffee growing household has a  working latrine.  They want to make sure that  workers who come to work on that  farm also have access to a  latrine.  For women in the household that  are working in the kitchen also  cooking over wood, there needs  to be a chimney.  There needs to be good  ventilation within the kitchen  so that the health of women is  not being affected.  Clean water, the household needs  to be getting potable water  into it.  Workers, if they're hiring in  workers, there needs to be wage  policies and what to do if  somebody gets sick.  There needs to be a formal  policy of what to do in  different situations.  Waste water is a big deal and  improper treatment of it is a  sure way to not get the  certification. 

 And that's waste water that's  coming from processing coffee  but also waste water that's  coming from the house.  Reforesting is a big issue.  If coffee on one corner and on  the far other corner, you've  clear cut that a couple years  ago and it's degraded, the  certifier's going to say we need  to come up with a reforestation  plan to recuperate or recover  that degraded area.  And water sources, this is a big  deal, as coffee growing  households or coffee farms are  oftentimes located in the higher  reaches of watersheds,  Rainforest certifiers pay much  attention to nearby creeks and  is there erosion that's  happening, is there proper  buffers to protect against  kind of heavy rains,  or anything like that.  Now moving over to the organic  side, and again right now  I'm only talking about organic,  not the joint organic fair trade  arrangement that is common  to see.  The norms are primarily focused  on the crop that's being  certified.  The other crops also fall into,  the norms apply to the other  crops.  But it varies a bit.  You can have a conventional  field nearby and you have plans  to eventually convert it to  organic and that needs to be  explicit, but the focus is on  if we're going to certify your  coffee this year, that this  coffee is free of agrochemicals  which is the second issue here.  And then the third issue, and  this is really, I think, a core  aspect of the organic  certification, and that is  contamination of foreign  materials either from other  activities on the farm or from  neighboring farms. 

 There's a transition period  between when I enter an organic  program and when I can start  selling my coffee as certified  organic.  Again this is dealing with the  idea that if you've applied  agrochemicals in the past,  we want to give time for them  to be processed through the soil  and to disappear before we're  going to allow you  to sell your coffee as organic.  Traceability is also a big  issue.  When the coffee leaves your  field, where is it being stored  when it's harvested,  and on the farm.  Is that a clean environment?  When it goes to a processing  plant, what treatment is it  getting there?  So I think it comes out clear  that a big focus is kind of  keeping coffee clean, keeping it  from being contaminated by other  sources.  Whereas with the sustainable,  it's a much broader set of goals  and standards.  The entire property,  reforesting.  And it's not that the organic  and the norms doesn't mention  not cutting down forests and  these other issues, but again,  this is coming from people who  work with, translate those  complicated documents into  advice, recommendations for the  farmers what want to get  certified.  What is it that you most need to  pay attention to for the  certifier at the end of the day  to say okay, looks good enough  or it fulfills the most critical  requirements for certification.  Because the sustainable norms  are much broader, they can serve  as a base for then launching  into an organic program, with  the only exception being that if  you're applying the permitted  agrochemicals under the  sustainable, you would have to  change that to go organic. 

 It would be much more difficult  to be certified organic and then  expect that you would just need  to do some paper work to get the  sustainable certification.  Most likely you wouldn't be  treating the waste water from,  or in the case of this group of  growers in central Peru, you  wouldn't be treating the waste  water from the house.  You wouldn't have a chimney.  May or may not have  an acceptable latrine.  So there would be a lot of  things that you would need to do  to go from organic to  sustainable.  But not so much the other way  around.  What are some of the possible  issues that extension agents and  people working on the ground and  agronomists have noticed with  the organic norms?  One concern is that the amount  of organic fertilizer that's  available at any given time or  when the farmers need it,  is oftentimes very limited  or costly.  And so farmers, oftentimes, are  not appropriately or providing  enough fertilizer to replace the  nutrients that are being taken  out from the plant.  And so you have this what's been  known as soil mining where over  time, the rate at which  nutrients are being taken out  is exceeding the rate  at which those nutrients  are being replaced.  And one reason is that organic  fertilizer, for example, the  pulp that comes from processing  the coffee cherries, that's used  as an organic fertilizer, that's  not the same as getting a  synthetic pellet that has just  the right mix of nitrogen,  phosphorous and potassium. 

 This is a much more specific  targeted input.  Whereas with the pulp, there's  organic material there and  there's some nitrogen, but is it  enough, is it in the right mixes  so that it's going to be  efficiently utilized by the   plant?  Probably not.  And then this issue,  substituting herbicides with  other capital inputs, came up  when I was visiting a farmer in  Peru this summer and he had  bought a weed whacker to deal  with the weeds that would grow  up, and this is a major task for  coffee growers to keep their  fields clean.  And so instead of applying a  herbicide, which would break  down in the soil and which would  keep the ground free of weeds,  he was going through with his  weed whacker every now and then.  And I'm thinking well I'm not  convinced that we've come out  ahead with this, because that  weed whacker is using, it's not  very clean, there's certainly  noise pollution associated with  it.   It doesn't do as good a job  as the herbicide would.  So are we better off  environmentally?  And that's a question I want to  leave you with and that's a  question that needs a lot of  research that has not been done  in a thorough, rigorous way.  And that is, given these  different norms, what type of  environmental outcomes  are we seeing?  And this is a point that I want  to hit on more in the  conclusion, and that is,  it's not enough just to say  we've certified growers, we've  certified so many growers in the  head waters of the Amazon so  we're protecting the ecosystem.  Well, I want to know,  well what's changed?  If before they weren't certified  and now they are, does that mean  that we could go and see that  the quality of the water that's  coming out of those watersheds  is better?  Does that mean that there's more  bird species because of the  shade cover?  I want to see some quantitative  evidence that there's  improvements as opposed to just  saying, well, they're certified  so we know everything's okay.  This is a picture that I think  this is the only time Brad's  going to appear in this  presentation. 

 Here he is, we're meeting with a  grower that is under the  sustainable group or working  with the sustainable  certification in Peru.  And this is a what it says here  in Spanish is a biological  micro-corridor conservation of a  water resource.  Now this is a creek that runs  along the side of this  gentleman's property, and you  can see that there's quite a bit  of vegetation here.  And that wasn't the case a  couple of years ago.  And this is a change that's been  brought about because the  certifier says you have a  waterway over there, we need to  see that that buffer zone around  it is there and is protecting.  And also, for example, the steps  going up from across the creek  and then up over the hill are  terraced.  Before, without those there, you  get a heavy rain and that water  has nothing to slow it down and  it's going to carve a big ravine  right down into the creek.  So that would be something else  that he would probably do  as part of fulfilling  the sustainable norms.  Uh-oh, I'm cut off  up at the top.  Anyway, so that's a very broad  brush picture of the organic,  sustainable or other  certifications issued. 

 And I think the thing to keep in  mind is that it's not clear that  organic is promoting  environmental sustainability  better than alternative  programs.  And that's really something that  needs to be researched better.  Because there certainly are  alternatives that may be doing a  better job.  We're not sure.  Moving on to the economic side.  What do growers get out of  participating in these certified  programs?  So you have to not use  agrochemicals or maybe you have  to put a chimney in, or do  any number of things, how is  that fitting in to your overall  economic well-being?  To look at this for the case of  fair trade organic markets,  we're going to southern Mexico.  Southern Mexico is a region  that's been at the forefront of  the growth and fair trade and  organic markets from the  beginning.  We're using information from a  survey of 845 coffee growing  households randomly selected  from Oaxaca and Chiapas, these  are two states in southern  Mexico.  The data collection was  supported by the Rockefeller  Foundation.  In this data set, if you're  participating in fair trade, you  generally are also participating  in organic markets and you are  also a member of a cooperative. 

 So these three kind of concepts  are merged together in the case  of southern Mexico.  We have in the sample  357 conventional growers.  These are growers who are  generally not a part of a  cooperative, they're not a part  of fair trade organic.  And then within fair trade,  we have 417 organic, this is  they've passed that transition  period, generally three years,  and now can sell their coffee  as certified organic.  And then there's 71 growers who  are in transition to receiving  organic certification.  And again, both of these groups  would be working under the fair  trade, working with fair trade  arrangements.  To give you a sense of  the economic contents of these  households, the percents on the  outside of the circle represent  the number of households that  are deriving some income from  that income source.  For example, 96% of households  have some positive income from  coffee.  Which isn't surprising because  we're sampling coffee growing  households.  About a third of households are  having remittances. 

 They're participating in this  exodus of labor northwards,  sending a family member there  and getting remittances in  return.  Subsidies are also something  that's prevalent for many  households, as well as  nonagricultural activities.  This would be working for a wage  in a local job.  Now the inside percents  in the distribution of the pie  represents how important,  for the average household,  is that income source.  So we see here remittances are  by far what dominate the incomes  for these households.  Which is interesting because  there are only 35% of the  households that are getting any  remittance.  So that means those households  that are getting remittances  are getting quite a bit.  And then next we have subsidies,  these would be several kind of  support programs for coffee  growers that the Mexican  government has and that's on par  with the amount of actual income  that coffee growers make  by growing and selling coffee.  And then just behind is  nonagricultural activities.  So a point that I want to drive  home is that these households  have a lot going on. 

 They're participating in  migration networks, they're  participating in government  programs, they're participating  in the non-coffee local economy.  And I'm going to later contrast  this with the case of central  Peru.  How much are these growers  earning from coffee?  So if we look at what's the  average net revenue, this is  their total sales of coffee  minus their cash costs, that  would be either for hired labor  or for any purchased inputs.  If we break that down by  certification status, we see  that these conventional growers,  things are not going well  for them.  Certainly in comparison to the  transition growers who have more  than double the net revenue of  conventional growers per  hectare.  And then organic growers are  slightly behind the transition  growers.  What's driving these  differences?  This is a big question because  if we think about why are some  coffee growing households poor,  and some less poor,  or maybe doing all right,  we've got to understand  where these differences  are coming from.  Are they coming from the prices  that these growers are receiving  for their coffee?  Or are they coming from how much  coffee that household is able to  produce on their given land  with their given plants?  If we look at prices received  we see, as we would expect, that  the conventional are getting  slightly lower prices than the  transition who have access to  the fair trade but cannot yet  sell their coffee as organic.  And they're not doing as well  as the organic, which can sell  their coffee with fair trade  certification and with the  organic certification.  So the differences are about,  we've got 67 cents  for the conventional,  about 78 cents,  and then about 83 cents  for the organic growers. 

 Productivity.  This is how many kilograms of  coffee these growers are getting  out of their land.  The conventional growers  are lagging far behind.  They're only about 175 kilos  per hectare.  And the transition growers have  about twice that and then the  organics again are a little bit  behind that.  A key question, as I mentioned  before, what is causing these  productivity differences?  Is this because the organic  norms, there's something about  them that raises the  productivity of coffee growers?  Or perhaps, the type of growers  who decide to go organic and  participate in cooperatives,  they had higher productivity  beforehand, that's the type of  growers, and so then higher  productivity growers are the  ones who select into the organic  and fair trade markets.  So in other words, the organic  and fair trade markets are  drawing in the more progressive,  more productive farmers.  We're not sure.  In other words, we can't say  that participating in a  cooperative or participating in  organic fair trade causes  increases in productivity.  All we can really say is that  this productivity difference  exists, and the point that this  next slide makes, it's what's  causing differences, most of the  differences, in income among  groups of growers. 

 This is a thought experiment to  help drive that point home.  Conventional coffee grower  net revenue on average  is about $203.  If we keep everything else the  same and we just say  conventional grower we're going  to give you the price that a  transitional grower receives,  how much will your net revenue  per hectare increase?  And it's going to increase  to $247.  So yes, there's an income  increase associated with selling  to fair trade.  That's clear.  But let's say now we give you  the conventional market price,  you as a conventional grower,  but we're going to give you the  productivity of a transition  grower.  Suddenly, still getting the  conventional price but getting  the productivity of a transition  grower, the income goes up  by up to $398.  Basically doubles their income.  Whereas it's only increasing it  by about 20% in the case of the  prices.  And then this is the actual  transition net revenue. 

 So if we just gave them the same  productivity as the transition  group we would bring them pretty  close to making about the same  amount of money as the  transition growers.  If we go back to this question  of fair trade organic,  is this improving livelihoods  in southern Mexico?  It's difficult to say because  we're not sure if that's the  cause of these productivity  differences.  But what we can say is that  coffee is really just one  activity in the mix of several  that these households are  pursuing.  Including migration networks and  getting remittances, subsidies  and non-ag income.  We can also say that the higher  prices from fair trade and  organic markets, which is  something you often hear about  in the popular press, getting  higher prices, getting a fair  price through fair trade,  is not having that big  of an effect on income.  Or at least it's not having  nearly as big of an effect  as productivity is having.  But an important question is how  generalizable are these results?  Do we observe this finding  that the productivity effect  dominates the income effect  from certification premiums?  Do we see that  in other countries?  And to answer that question  we're going to dive now, we're  going to return to central Peru,  where in the sample of growers  that we're looking at,  they had, this is pounds  of coffee per hectare.  So the top row is for our sample  of about 200 growers, how many  pounds of coffee were they  producing per hectare?  And this is for the state of  Junin, and the two match  each other pretty well.  And then here, we see our sample  from Oaxaca, our sample from  Chiapas, and then later what are  the state numbers for those  areas.  And it should stand out right  away that both the department of  Junin and the growers in our  sample have doubled the  productivity of growers  from the Mexico sample. 

 And the Chiapas growers are  under the average for their  state, whereas the growers from  Oaxaca are about on par.  Now if we go forward in time,  that's in 2005 when the Mexico  data was collected, if we go  forward in time, we don't have  data for 2008 from these  specific growers in Mexico,  but we do have from those states  and we can see that Junin and  the Peruvian sample is now  four times, in the case of  Oaxaca versus central Peru,  central Peru is growing four  times the amount of coffee for  the same amount of land.  And if we compare from 2008 to  2005 in different places,  the differences are striking.  And those circles draw that out.  So now let's take a little more  detailed look at these different  growers and different countries.  So here in this column  we're looking at  just the organic growers.  Now these are organic and also  fair trade growers because  the two are joined together  in the case of southern Mexico.  And then these are the  sustainable growers in Peru.  Sustainable growers are a little  bigger, that's not super  interesting.   This is an interesting  statistic. 

 The coffee growers, the organic  coffee growers in Mexico are  only getting about a third of  their income from coffee.  Again, it's just one activity  in the mix of many.  In the case of the Peru, they're  getting most of their income  from coffee.  Coffee is what determines what  they can consume in a year.  Now, let's take a look at  incomes.  In terms of productivity, we're  seeing that growers in Mexico in  2005, organic growers, have a  much lower productivity than the  sustainable growers in Peru.  Sustainable growers in Peru have  about four times that  of the organic growers.  Correspondingly, growers in Peru  have about four times the net    revenue per hectare as  the organic growers in Mexico.  So this is consistent with our  comparisons between transition  and organic growers in  conventional grower incomes, and  we're finding that really it's  about productivity, that's  what's driving differences  in net revenues.  And when we compare between the  organic growers in Mexico  and the growers in Peru  we also find that. 

 That the differences in income  between these groups is  an artifact of how much coffee  they're able to get  out of a given amount of land.  How much are these growers in  Peru, how much of their increase  in revenue comes from getting a  premium for being certified?  Here we see this is the premium  in US dollars per pound in 2007  and 2008 for growers that sold  to their cooperative in the  project.  It's about 7-cents in 2007  and about half that in 2008.  And that translated in 2007  about an additional $147  in income for those growers.  But that additional, that  increase in income from selling  to a higher valued market  per hectare was pretty small and  really only represents about 3%  of the net revenue per hectare.  So it's really not about prices.  At least for these growers.  And it seems to be the case  in Mexico as well.  That it's not prices that drive  the differences in income,  it's productivity.  And productivity is something  that this project in central  Peru focused on. 

 The project, Proyecto Teirra,  Project Land,  didn't just focus on, we want  to certify you to get a higher  price and that will solve your  livelihood issues.  They also said you know what,  it's really important that these  farmers are managing their  resources well, that they're  getting the most out of their  plants, that they're keeping  track of their costs, keeping  track of productivity and  managing it like a business.  And one practice that they  introduced to further these  goals was systematic pruning.  This is where a grower  cuts his tree off,  now a coffee tree can grow  up about--  If you let it go, it can grow  quite tall.  And he cuts it off  at about a meter in height  or about waist height,  and he does that to a section of  his farm each year in a rotating  fashion.  And the idea is that you can  stabilize production  through that practice.  Stabilize and increase because  when you prune the plant  it stimulates the plant to fill  out, to produce more branches  and leaves from which then  lots of berries come forth.  And this is very important  because the growers in central  Peru, they had older trees.  And as trees get older, their  productivity drops dramatically.  Systematic pruning, in effect,  gets an older plant to produce  like a new one. 

 But growers, before I get into  this, the growers in this  project were initially  very skeptical of this idea.  They're deriving their  livelihoods, most of their  income, as I showed before, is  coming from coffee growing.  What happens if I cut my plants  down?  This is ludicrous they said.  In one case, the agronomist in  the project came into a  community and said we're going  to cut your plants down and they  kicked him out.  They wouldn't let him finish the  meeting.  They said this is crazy.  In another case, it's a great  story that some growers like to  tell, is that there was one guy  who was thinking this might  work.  He was thinking about it.  And his wife said if you cut our  plants down I am leaving you.  You do not touch our plants. 

 And I think that gives you the    sense these are households that  are dependent on coffee, this  idea seemed very risky.  You're cutting your plant down.  And, in fact, you don't get  production from the plant in the  following year, it's only  in the year afterwards  when it comes back.  So there is that year in which  if you don't have much savings  to go on maybe you can't make  that jump; maybe you can't deal  with that short drop in income.  How much production or how does  the pruning affect yields?  This is just a statistical  exercise that I did where I  looked at changes in yield,  that's kilograms of coffee per  hectare, between 2008 and 2009,  controlling for what your change  in yields were last year and  then whether or not you pruned  in 2006, 2007 and 2008.  The way to interpret these  numbers is that if I pruned in  2006 and then didn't do anything  in the following years, the  immediate effect is to decrease  my production, I'm taking that  plant out of production.  But then the following year I'm  going to get some of it back,  in fact most of it back.  And in the year afterwards  I'm going to get it back  in a big way,  about 865 kilogram increase  is what's associated with that.  So the key note here is that  this is a method that although  it lowers production initially,  it brings it back in a big way.  So I think one of the  conclusions that we can draw  or perhaps a better way to say  that is one thing that these  observations suggest is that  environmentally sound  alternatives to organic may  exist. 

 In fact, there may be  environmentally superior methods  but that this really needs more  evaluation of connecting  specific practices  with outcomes.  If farmers aren't allowed to use  herbicides or they're not  allowed to use synthetic  fertilizers, does soil quality  fall?  Does productivity fall?  Is there contamination?  Is there really negative effects  to using any type of  agrochemical?  Or is that perhaps a knee-jerk  extreme reaction to synthetic  inputs in general?  It comes out pretty clear.  On this side, I think that's  where Brad and I have the least  concrete information to go on.  But this is a conclusion that we  can stand behind quite firmly,  and that is the effect of  productivity on income dominates  the effect of higher prices on  income.  And now this is a provocative  point.  A passive low-intensive  management of crops, and you  could think of having an organic  system that's intense, but you  could also think, and I think  it's true for a lot of cases in  Peru especially, that organic is  associated with a passive  management of the crop.  No inputs or low inputs,  some labor spent on cleaning,  on weeding, but we're not going  to buy fertilizers, we're not  going to buy synthetic inputs,  herbicides.  That may have negative effects  on both ecosystems  and livelihoods.  Why could that be?  Why would one think that?  Well, lower productivity means  that there's less goods coming  out on the market, less coffee  on the market, that's going to  raise the price of the final  good, but it's also going to  increase demand for the raw  materials that go into making  coffee, particularly land.  If you have very low  productivity, you're getting  little coffee out of the land  that you have, to produce a lot  of coffee, you need a lot of  land. 

 So you bring more coffee land  into production.  So that's one mechanism  through which the organic  may have some negative  environmental consequences.  And if a household is getting  very little coffee out of the  hectares that they have,  to reach some adequate income to  meet their basic needs they may  need to expand the scale of  their operation.  Again, bringing more land into  coffee production.  Which, in the cases of, I don't  think in the case of Peru,  but in the case of Mexico,  it may mean cutting down  virgin forests or expanding  into areas where coffee  previously was not grown.  What are some recommendations or  some thoughts going forward for  what people and organizations  that are working with rural  coffee growing communities  should keep in mind?  I think an important role that  nongovernment organizations and  cooperatives could play to  increase incomes and  livelihoods, improve  livelihoods, is to perhaps shift  their focus, in some cases  obsession, on getting certified  and getting a higher price to  more on management, innovation,  using the best practices, best  agronomic practices, because I  think currently that's something  that's been superseded by this  obsession with let's get you  certified and let's get you  selling, exporting, to a higher  value market.  And in some cases, cooperatives,  their extension agencies are the  people that work with their  member growers have now been  turned into agents of  certification.  All their time is spent taking  the norms that are handed down  from the certifier and going,  running around and making sure  that they can check off the  boxes.  And so they're not spending time  thinking about what are better  ways of producing, what are  agronomical practices that are  going to raise productivity.  Instead, they're thinking  what do we need to get people  to do, so that the certifier  is going to say, okay  he can sell to this market. 

 This role for NGOs and  cooperatives to improve the  management of coffee farms,  promote the best practices and  in that way improve the  livelihoods and the ecosystems  of these areas could be critical  because, in Latin America  especially, after the mid-'80s  the state governments in these  countries have really retreated  from extension services.  So they've, in many cases,  kind of let the especially  smaller-scale farmer  to face his fate by himself, and  that these extension services  that connect and spread  innovations and best practices  are not there anymore.  And so there needs to be some  vehicle or agents in the rural  areas that are promoting these  innovations that are going to  allow for coffee growing  households to get more out of  the plants that they have, more  out of the land that they have  and do so in a way that's not  degrading to their ecosystems.  Thank you.  And I'm looking forward  to questions.  I'm sure you have many.  (applause)