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Abstract

This paper analyses the adoption of organic farming under fair trade marketing practices and its impact on household income of black pepper (piper nigrum) farmers in India. We use a set of panel data, collected from 300 smallholder farmers who plant black pepper as their main crop in 2010 and 2011.The aim of the paper is to investigate the use of panel data for adoption models using the case of organic and fair trade certified black pepper in Idukki district, Kerala, India. We compare two adoption models: (i) a multinomial cross-section logit applied for both survey years separately and (ii) a panel multinomial random effects logit model. The panel adoption model which allows capturing unobserved heterogeneity in adoption decisions was found to be superior over the cross section models. We find that farm size and market distance are the major factors that influence adoption. To measure the differential gain of adop-tion, we applied propensity score matching with multiple treatment effects accompanied by sensitivity analysis to test robustness of impact results. Results show that certified organic farmers have a significantly higher income but participation in fair trade regimes does not generate additional monetary benefits.

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