Trader preferences based on primary product attributes of black pepper in Kerala: an empirical study

Abstract

Facilitating integration of primary traders into modern agricultural value chains, known as High-Value Markets (HVMs), presents a promising avenue for improving the sustainability of value chains of black pepper in Kerala. The study entitled “Trader preferences based on primary product attributes of black pepper in Kerala: an empirical study” was undertaken during 2023-24. Analysing the criteria employed by primary level traders for sourcing black pepper and their willingness to participate in high value markets; estimating attribute utility; socioeconomic profiling and constraint analysis of primary level black pepper traders in entering high value markets were the primary objectives of the study. The study area selection focused on the importance of Idukki and Wayanad districts in Kerala's black pepper production. Eight Agro-Ecological Units (AEUs), specifically 12, 14, 15, 16, 17, 19, 20, and 21 were purposively chosen for their extensive pepper cultivation, and 120 primary traders were randomly selected for the research. The survey employed Best-Worst Scaling (BWS) choice experiment in selected AEUs to comprehend the preferences of respondents regarding quality attributes that could promote sustained participation in HVMs. The choice experiment used fractional factorial design to create multiple profiles and balanced incomplete block design to create the survey questions. The results indicated that traders predominantly favour a flexible incentive-based pricing model and long-term formal relationships with buyers. Profile 1(farm owner, spot price, place of origin certificate and sun drying) stands out with a notably high mean BWS score of 3.37. This indicates that it possesses a highly desirable attribute that strongly appeals to respondents, consistently receiving positive evaluations. In addition to Profile 1, Profiles 9 (FPOs, fixed premium price, organic certificate and sun drying), Profile 4 (Absentee owner, spot price, organic certificate and blanching and machine drying), and Profile 3(farm owner, fixed premium price, fair trade and blanching and machine drying) also demonstrated positive BWS scores indicating their effective participation in HVMs. Profile 2 (farm owner, seasonal highest price, organic certificate and machine drying) is the least preferred with BWS score of -2.92. A utility function was developed for the purpose of fitting a conditional logistic model to the attribute level responses. The highly significant coefficient (𝛽1) of 1.10 associated with attribute level D1 (sun drying) indicates a substantial positive impact on preference followed by B1(spot price), D3 (blanching and machine drying) and B3 (fixed premium price). In contrast, attribute levels A1 (farm owner), A3 (FPOs), C2 (fair trade certificate) and C3 (organic certificate) demonstrate significant negative effects on preference with odds ratio less than 1(one) when compared to reference level, indicating that respondents are less inclined to favour these levels compared to the reference level. A questionnaire-based survey was also conducted to throw light on the factors affecting willingness of primary traders to participate (WTP) in HVMs. A percentage analysis of the same showed that the majority (63.33%) of traders were open to participating, while (36.67%) were hesitant. The logistic regression analysis demonstrated that variables such as digital literacy, the number of transactions involving the commodity (green/black/white pepper), and the extent of value chain linkages (intra-state, inter-state, and international) are influencing the WTP in HVMs. Primary traders in the black pepper and spice markets view high market volatility and risk exposure as the major constraints in entering HVMs followed by delayed payment, low production, inadequate financial support from the government for black pepper and other spice crops, insufficient quality testing centres in key production areas, lack of proper machinery for threshing, cleaning, sorting and drying, lack of organised commodity specific associations for primary traders, and lastly lack of proper market information. The research indicated that primary traders have a limited understanding of the factors influencing their entry into HVMs. Focused training in responsible sourcing, international standards, post-harvest handling, branding, data skills, risk management, and group dynamics will equip stakeholders with essential competencies. A pilot project on digital transformation will further help evaluate effective models for industry advancement. It is also crucial to implement robust local audit systems and origin certification, supported by collaborations with private labs and NGOs. Strengthening trader associations, and distinguishing between bulk and direct consumption markets will elevate domestic quality control. Prioritizing participatory research with farmers and traders to develop affordable quality testing, small-scale threshers, and advanced dryers will enhance post-harvest processing and will do wonders in lifting the HVMs of black pepper in Kerala.