Perceived Equity: An Underlying Mechanism Between Sustainability Strategies Adopted by Businesses and Farmers' Well-Being in Agri-Food Value Chains

Abstract

To promote the well-being of farmers, businesses across coffee, cocoa, and other agri-food value chains are increasingly adopting sustainability strategies that go beyond classical certification schemes. Key strategies include corporate sustainability programs, social entrepreneurship, and farmer self-organization in cooperatives. However, the links between these strategies and farmer well-being vary considerably—and the mechanisms explaining these variations remain insufficiently understood, especially those operating in upstream links of agri-food chains. This paper investigates how perceived equity in farmer–buyer first-mile relationships and farmers' access to extension services differ across sustainability strategies, and to what extent these mechanisms explain well-being differences across Peruvian coffee and cocoa farmers. We rely on descriptive and multivariate statistical analyses performed on a cross-sectional dataset that compiles information on 623 farmers across three production areas. Our results demonstrate that equity as perceived by farmers from their first-mile relationships plays a greater role in explaining well-being differences than access to extension services. These well-being connections vary across demographic groups, decreasing significantly for older and female farmer groups. Furthermore, farmers engaged in social enterprises are more likely to report higher levels of perceived equity compared to those affiliated with corporate sustainability programs or cooperatives. Despite the correlational design of this analysis, its results unveil important implications for business practices: while extension services are relatively standard across all examined strategies, practices aimed at strengthening perceived equity are currently not. Discussing these findings, we examine the challenges of scaling up perceived equity through social enterprises.