Side‐selling in coffee cooperatives: Insights from cooperative and non‐cooperative farmers in Mexico

Abstract

This study investigates side‐selling in Mexican coffee cooperatives, seeking to answer what drives side‐selling, what drives the expected share side‐sold and what non‐cooperative farmers perceive about side‐selling. Our conceptual framework, a contribution to this literature, proposes that farmers’ economic pressure, coffee quality and commitment to cooperatives explain side‐selling through utility maximization, transaction cost economics and attitude–behaviour theory. Our logit and fractional logit models find that delayed payments and cash shortages are the main economic drivers of side‐selling, suggesting that growers who need immediate cash at harvest and those who perceive their cooperatives as slow to pay are more likely to side‐sell. Regarding coffee quality, farmers growing speciality shade‐grown coffee and those growing coffee at higher elevations are less likely to side‐sell, and when they do, they side‐sell a smaller share. Regarding the farmer‐cooperative relationship, side‐selling is less likely to occur―and if it occurs, the share side‐sold is likely to be lower―among farmers with longer cooperative membership tenure and in larger cooperatives. Finally, as a second contribution, the study provides a descriptive analysis of non‐cooperative farmers’ perceptions of side‐selling. Insights from non‐cooperative farmers helped to validate some of the variables included in our models.