African Journal of
Agricultural Research

  • Abbreviation: Afr. J. Agric. Res.
  • Language: English
  • ISSN: 1991-637X
  • DOI: 10.5897/AJAR
  • Start Year: 2006
  • Published Articles: 6576

Full Length Research Paper

Minimum quality standards or quality-improving subsidies: Which one is the most helpful strategy to coffee growers in Peru?

Orly Denisse Calle Roalcaba1 and Su-Ying Hsu2*    
1Department of Business Administration, Southern Taiwan University, Tainan, Taiwan. 2Department of International Business, Southern Taiwan University, Tainan, Taiwan.    
Email: [email protected]

  •  Accepted: 03 May 2012
  •  Published: 26 May 2012

Abstract

The market of Peruvian coffee has faced decreasing exports and diminishing prices due to the country lack of generally recognized quality standards, and the best path is to build quality-recognized standards for the coffee growers. In order to analyze this scenario, a model of vertical product differentiation to discuss the influence of two policy tools on the quality of Peruvian coffee was set up. The first tool in question was to set minimum quality standards for the coffee industry, and the second one was to subsidize the coffee industry for quality-upgrading expenditures. It is shown that the policy effects are equivalent for the minimum quality standards and the quality-upgrading subsidies, which will no doubt help the Peruvian coffee growers raise its product quality.

 

Key words: Peruvian coffee industry, quality, minimum quality standards, quality-improving subsidies.