Tuesday, January 28, 2014

8. Impact of Microlot Premiums - new research published

Jan. 27, 2014
The "microlots" topic hits several issues that are extremely relevant to resiliency in coffee.  So it is significant that today, Counter Culture Coffee posted Phase II of their research to understand the impact of microlots.

Click here to read their helpful introduction to this phase of the project and click here to see the full report, also posted on Artisan Coffee Imports website. Artisan Coffee Imports assisted with the analysis of the data collected in this phase of their project -- a wonderful collaboration that provided learning for all sides.

Resiliency issues, and reasons why this type of research is important are:
"Direct Traders" claim they are benefiting producers, they even claim they are benefiting producers more than the Fair Trade system. Is there evidence to support it? Do all "direct traders" operate the same way?

Resiliency has to do with bio-diversity. Are there ways incentive systems, like those employed by Virmax and discussed in this report, can be used to encourage bio-diversity and thereby improve producers ability to absorb shocks?

Research issues also came to light with this report:
1. A pilot run of the questionnaire, or even several pilots run with producers could help fine tune the questions. Also, the pilot data (both quantitative and qualitative) could have been assembled so that it was clear which types of analysis the full data (once collected) would enable.

2.  A control group or baseline data would help to verify that the impacts and benefits of the microlot program can be attributed to the microlot program.

3. Cupping data collected on all the coffee included in the study (microlot and the control group) would enable more conclusive insights one which growing practices may be having an impact.

Going Further and Farther With This Research:
There is much more that can be done with the data Counter Culture has collected. Even more could be done if Virmax continues to collaborate and find value in understanding which of their innovative processes are doing the most to improve producer livelihoods. The following are questions that could be pursued in phase III:

Does paying microlot premiums increase the volume (quantity) of 86+ coffee produced in a region? Another way to ask this question is, 'at what level of premium payment, does the premium actually change a producer's decisions on the quantity vs. quality trade-off?'

Does paying incrementally higher premiums for incrementally higher scoring coffees impact the average cup quality of all coffees receiving microlot premiums in a given region? In other words, does a roaster's investment in incentive programs actually "pay off" in terms of creating more higher quality coffees than would otherwise be the case?

Add controls for exogenous factors that occurred over the three years of this study -- price volatility, Federation policies to encourage planting Colombia varieties, etc.

We will look at more of these types of questions in the upcoming blogs.


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