Intention, Impact and Commitment in Geographical Indication of Origin: The Case of Kintamani Bali Arabica Coffee

Faculty Economic and Business Airlangga University

Indonesian Ministry of Research, Technology and Higher Education

Agribusiness Management Georg-August University of Goettingen

Indonesia Endowment Fund for Education

Market extension and differentiation strategies that specify products based on the geographical indication of origins (GIs) play an important role in countering the impact of neoliberal policy in the agri-food industry. The World Trade Organisation (WTO) 1994 agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) motivates GIs product development and protection, which are implemented in the multifaceted legal and commercial systems of the scheme. Therefore, GIs scheme aims to protect intellectual property rights based on the territory of origin and to standardize the product quality of the entire supply chain. Given the strong development of consumer preferences for a single-origin product with quality and value assurance, other GIs worldwide have potentially significant opportunities. Despite the success of the global GIs model, there are still some overlapping issues with protection due to unclear interpretation of the institutional, scheme requirements, and policy interpretation in the global market. The sustainability coffee schemes play important roles in supporting sustainable consumption and production in the global agri-food chains. One rising on demand sustainable agricultural product in this regard is from the Geographical Indication of Origins (GIs) scheme of coffee. GIs schemes itself have been established as collective properties that represent the products reputation toward specific region, quality improvement and production method based on assimilation of local community tradition and international standard of sustainable agriculture practices. GIs schemes also show to have economic, social and environmental impacts on farmers’ livelihood and serve to contribution on Sustainable Development Goals (SDGs) in broader perspectives. As the fourth largest producer in the world, Indonesia has ideal geographical and climate conditions for many varieties of GIs coffee plantations. Coffee is an important agricultural commodity that serves as a crucial economical source for smallholder farmers. Indonesia GIs coffee also has a huge potential market due to the changing global consumer preferences for specialty products with particular concern on the single origin and sustainability. Global policies in the agri-food industry have differentiated the Indonesia specialty markets and opened a niche for export with low capacity. Moreover, the Covid-19 pandemic which affected the whole economy has not changed consumer preferences for sustainable coffee products but rather opened a new marketing strategy. For those reasons, Kintamani Bali Arabica Coffee (KBAC) scheme is selected as our case study. KBAC scheme is the first GIs certified coffee in Indonesia and considered as reference model of other GIs development in Indonesia. KBAC was established with an interesting framework, combining local culture, Hindu beliefs and sustainable farming practices. Traditional farmers’ community, Subak Abian, has already established and maintained those local culture and beliefs in their agricultural practices, which technically are coherent with the sustainable agricultural practices. Considering the importance of GIs scheme, it is necessary to have lessons learned from each stage of KBAC scheme development not only to improve future development of itself, but also to motivate many more potential GIs schemes. In early stage, there is an important lesson in regard of farmers’ intention to adopt the KBAC scheme. Following scheme implementation in further stages, the impact of adopting the scheme emerges as one important issue. In the longer stage of scheme implementation, there is also farmers’ commitment to implement the scheme, which is also crucial to scrutinize. The main body of this dissertation consists of three papers corresponding to those three important issues in GIs scheme. The papers are based on primary data collected throughout a farmer household survey in Bangli regency of Bali province in 2019. We interviewed 300 farmers using structured questionnaire consisting of farmer and farm characteristics, production process, farming practices, institutional setting, and economic activities as well as marketing information and farmers’ cognitive responses in regard of KBAC scheme. Several studies have analysed KBAC scheme implementation. However, we identified some gaps that we could complement with the papers in the dissertation. Previous studies on adoption and sustainable impact of coffee schemes have primarily focused on international sustainability schemes. Very few studies analysed the GIs schemes adoption and evaluation, particularly the case of KBAC scheme. In term of the early stage of KBAC scheme implementation, very few studies examined the cognitive perspective of the intention to adopt. In addition, still only a limited number of studies accommodated complex factors of human behaviour. Concerning impact evaluation of GIs scheme, there are only few studies that comprehensively implemented three pillars of sustainability impact assessment. On the longer stage of KBAC scheme implementation, there is a lack of studies that consider farmers’ moral development and psychological attachment in the commitment to sustainable farming practices. After a general introduction, the first main paper of the study aimed to analyse the determinant factors of behavioural intention to adopt KBAC scheme. Partial least square structured equation modelling (PLS-SEM) is applied to solve the objective based on developed behavioural intention integrated model of theory of interpersonal behaviour (TIB) and diffusion on innovation (DOI). The findings imply that perceived relative advantage, habit, evaluation of outcome, norm, self-concept, and perceived trialability consecutively contribute to the intention to adopt Kintamani Bali Arabica Coffee scheme. Further analysis also shows that perceived relative advantage and habit have high positive direct effects towards the intention to adopt KBAC scheme. These findings emphasize some policy implications for supporting productivity and market reputation, validating cost and benefits of participating in the scheme, promoting cultural values and improving farmers’ access to information. The second paper aimed to evaluate sustainability impact of farmers’ participation in KBAC scheme. We focused on evaluating three pillars of sustainability evaluation, including economic, social and environmental impacts. Theory of Change (ToC) was used to determine indicators in each pillar and its pathway through chain of change. For estimating impact evaluation, we established counterfactual analysis method using propensity scoring matching (PSM). Composite indexes of economic, social and environmental impact as well as aggregate sustainability impact were developed to solve the objectives. Overall, our findings indicate that participating in KBAC scheme provide higher economic, social and environmental impact on member farmers’ livelihoods. In term of economic impact, the findings indicate that provided higher coffee yield and cost efficiency contribute to higher profit and income. While in terms of social impact, the scheme contributes to improve capacity building, standard of living, and gender participation of member farmers. The findings also indicate that participating in KBAC scheme contributes to maintain sustainable coffee practices and improve biodiversity and ecosystem related to the environmental pillar of sustainability. However, the findings also prove that sustainability impact of participating in KBAC scheme is all in all weak. The findings led to several policy implications to strengthen the sustainability impacts, including the need for improvement in the inputs, activities and expected output within pre- and post-harvest periods and rearrangement of institutional setting of KBAC scheme. The third paper aimed to analyze the ethical commitment of farmers’ participation in sustainable farming practises implementation. Partial least square structured equation modelling (PLS-SEM) applied based on developed integrated model of Investment Model Scale (IMS) and Interactionist theory was developed to address the objective of the study. Our findings indicate that participation in the KBAC scheme itself not necessarily has significant contributions to farmers’ ethical commitment on sustainable farming practices. In contrast, the findings suggest that investment size, expected relationship, self-identity, satisfaction, locus of control and quality alternative more likely contribute to farmers’ ethical commitment on sustainable agricultural practices. Consequently, redeveloping the partnership and institutional arrangement is prerequisite for supporting and maintaining farmers’ commitment in implementing sustainable farming practices of KBAC scheme. Finally, each stage of lesson learned of this study contributes towards GIs development not only in Indonesia but also other countries. Therefore, this study suggests that the most important foundation on GIs scheme development is revitalisation and legalisation for Community of Geographical Indication Protection (CGIP). To synergy the role of each actor in the GIs value chain, stakeholders and business should optimize GIs partnership through bottom-up partnership. In addition, to validate the product quality, stakeholders and CGIP need to administer and manage the quality of improvement based on Code of Practice (CoP) of GIs product. Following this institution arrangement, it is important for stakeholders and CGIP to promote the accountability and reliability of scheme by providing certainty of its cost and benefits. The stakeholder should support the implementation of traditional knowledge in relation to traditional organisation for implementing sustainable practices. For sustaining the implementation of GIs scheme and increasing market recognition, buffer stock for post-production activities is needed to develop market opportunities. Additionally, the stakeholders and business should actively participate in market promotion activities to strengthen potential marketing strategies.

2023-05-02