Bio-based and Applied Economics 8(3): 279-295, 2019 ISSN 2280-6180 (print) © Firenze University Press ISSN 2280-6172 (online) www.fupress.com/bae Full Research Article DOI: 10.13128/bae-9448 Small-holders perception of sustainability and chain coordination: evidence from Arriba PDO Cocoa in Western Ecuador Carlos Moreno-Miranda1,*, Hipatia palaCios2, daniele raMa3 1 Wageningen University & Research, The Netherlands 2 Technical University of Ambato, Ecuador 3 Universita Cattolica del Sacro Cuore, Italy Abstract. Protected Denominations of Origin (PDO) refer to the adoption of pro- ducers’ voluntary standards to highlight the quality to consumers and improve the socio-economic sustainability of small-holders. Usually, in agricultural circuits, these focus on aspects of production systems and intrinsic features of agricultural raw mate- rials. In agri-food clusters, PDO labels focus globally on market recognition of sen- sorial elements of farming and agroindustrial products. The study’s objective was to analyze socio-economic and governance components to understand the PDO Cocoa Arriba (Theobroma cacao) chain and its sustainability to bring forward potential strategies in Ecuador. The information employed comes from the observation of two strings (Arriba PDO and CCN-51) by interviewing 450 respondents. Principal Com- ponents Analysis was introduced to contribute with relevant insights. The framework applied accounts with a revision of primary and support activities and coordination mechanisms identification. The study clustered pre-production, production, and post- production tiers. According to the results, Arriba PDO production systems represent a disadvantage for farmers because, from the production point of view, the premium price paid for product certification is debatable. Finally, the enhancement of national regulation to assist chain actors and the stimulus of young producers and associations empowerment is an urgent requirement. Keywords. Socio-economic, agricultural regulation, family farming, governance structure. JELCodes. Q18, N56, L17. 1. Introduction Cocoa (Theobroma cacao L.) is a historically strategic agricultural sector in Latin Amer- ica and constitutes an important crop worldwide for processed and raw material markets (Krauss, 2018)which fail to mention one of the actual key drivers: the need to shore up pro- *Corresponding author: carlos.morenomiranda@wur.nl 280 Carlos Moreno-Miranda, Hipatia Palacios, Daniele Rama duction in the long term in an embattled sector. Consequently, representations also down- play the need for systemic change, reproducing the power asymmetries they claim to change. The research seeks to establish to what degree public-facing communication differs from un- derlying priorities in terms of forefronting altruism over necessity, and whether this is prob- lematic for the initiatives’ overall outcome. Through semi-structured interviews, focus-group discussions, documentary analysis and participant observation in Latin America and Europe, it reviews relations in two cocoa sustainability initiatives with environmental foci. Crucially, the research establishes a link between representations, underlying priorities and the degree to which they (re. The FAO’s latest estimates point out that the world’s production of cocoa is more than 4,600,000 tons per year (1,200,000 ha) (Alemagi et al., 2015; FAO, 2018). Ecuador, with an output of 270,000 tons/year, placed ninth in the world ranking producing countries (Saravia-Matus et al., 2020; Williams, 2019). In recent years, the Ecuadorian cocoa chain faced problems such as price fluctuation and low production yield (on average 304 kg/ha) in contrast with direct competitors (e.g., Perú – 634 kg/ha, Colombia- 450 kg/ha) (Kozicka et al., 2018). Besides, its PDO Cocoa is marketed without adequate mechanisms leading to low market performance (Pino et al., 2018). The low coordination and commercialization strate- gies and biased public policies are unable to differentiate variety-based markets (Marette, 2016; UNDP, 2020). Therefore, specific instruments promoting sustainable chains are vital. Nevertheless, the Ecuadorian Government, led a process of Cocoa revaluation, through the project “Production and Improvement of the Quality of National Cocoa” (MAG, 2015). The purpose was to improve yields of CCN-51 cloned variety and target national and in- ternational markets of PDO cocoa (MAG, 2018). The Ecuadorian PDO cocoa is known as “Cacao Arriba” and characterized by a deep floral-fruity aroma (Benitez, 2018). In 2007, Ecuador submitted the designation of origin (DO) application for Cocoa Arriba, and it was approved in 2013 (IEPI, 2019). Today, Ecuador has the most significant world market share of Cocoa Arriba (63%) (Pino et al., 2018). PDO Arriba production is a clear alternative to promote sustainability and rural development. Various authors argue that studies have only addressed agronomic aspects (Tuesta et al., 2017). An integrative perspective includes a se- ries of variables such as standards application, economic evaluation, and social implications, which underline existing shortcomings (Corsi & Salvioni, 2017). For such reasons, it employs a Principal Components Analysis to reduce a large set by emphasizing variation and bring out strong patterns of social and economic sustainability between Arriba PDO and CCN-51 cocoa chains. In such a context, the present article aims to contribute by addressing two research ques- tions. The first RQ is how the Cocoa Arriba PDO chain is different from the CCN-51 cocoa chain in terms of socio-economic performance? The last RQ is what kind of governance mecha- nism does the Cocoa Arriba PDO chain describe, and what sets it apart from the CCN-51 cocoa chain? As such, the study hopes to further our understanding of the socio-economic sustain- ability assessment and the relevant insight regarding the cocoa PDO chain. It focused on Los Ríos province since it covers most of the Cocoa Arriba production in Ecuador. 2. Background Cocoa has been linked to Ecuador’s economic performance and is one of the most priced agricultural products on the international market. The geographical structure and biodiver- 281Small-holders perception of sustainability and chain coordination sity of Ecuador allow the cultivation of PDO Arriba cocoa (Figure 1). The production takes place in the equatorial zone at an altitude between cero and 1,200 meters above sea level (Estupiñán, 2018). This zone locates between latitudes 01°27‘06“N and 05°00’56”S and lon- gitude 75°11’49“W to 81°00’40”W (Villamar et al., 2016). Also, it has a humid climate with rainfall of 2,000 to 4,000 mm and slight variations due to the small mountain ranges (AN- ECACAO, 2017). This native variety is the most appreciated in the international market by representing about 5% of total cocoa production worldwide (MAG, 2018). However, at the local markets, unsuitable mechanisms for the identification of cocoa varieties are largely af- fecting the chain development. Despite this challenge, Ecuador plays a crucial role because it is responsible for 63% of PDO Arriba cocoa exports at the world level. The responsible actors of PDO Arriba Cocoa production are associations and export enterprises. Besides the PDO Arriba Cocoa, Ecuador grows a cloned variety CCN-51 (Castro Naranjal Collection) for the industry. The agronomic performance of CCN-51 characterized by its resistance to disease and its relatively high productivity. 2.1 Transition of certifications and agricultural policies The cocoa production certification in Ecuador has a direct connection with the quality of the variety and agriculture practices. In 2008, the Ecuadorian cocoa achieved UTZ (Rain- forest Alliance) certification that focuses on attaining ecological agriculture and sustainabil- ity principles. In 2012, Organic certifications (USDA / BCS ÖKO) were obtained by cocoa producers, which requires constant revision of agronomic practices. The Fair Trade certi- fication of the Ecuadorian cocoa started to be visible at the end of 2015. Besides, there are Figure 1. Map of geographical area of Arriva cocoa cultivars in Ecuador. 282 Carlos Moreno-Miranda, Hipatia Palacios, Daniele Rama national players such as the Ecuadorian Service of Standardization – INEN and the Agency of Phytosanitary Regulation and Control – AGROCALIDAD, focus on certifications related to Good Farming Practices. The lack of regulations of protected denominations of origin – PDO is evident in the subsector of Cocoa (IEPI, 2019; IICA, 2014; Ogus, 1992, 1994). The International Regulations Agreement on Trade-Related Aspects of Intellectual Prop- erty Rights – TRIPS –. R.O. No. 977, June 28/1996 and the Paris Convention for the Protec- tion of Industrial Property. R.O. No. 244, July 29, 1999, supported the process of Cacao Ar- riba PDO legalization (IICA, 2014). Also, the Andean regulations Normative Decision 486 of the Cartagena Agreement of the Common Regime on Industrial Property R.O. No. 258, February 2, 2001, assisted in recognizing Arriba PDO Cocoa at the international level. After- ward, the Ecuadorian Institute of Intellectual Property (IEPI) established the Cacao Arriba PDO standard (Table 1). “The standard technique allows an activity to take place without any ex-ante control, but the supplier who fails to meet the standards perpetrates an infringement” (Ogus, 1994). The existing standards of Cocoa Arriba are INEN 176 and 177. However, the Inter-American Institute for Cooperation on Agriculture argued this Cocoa Arriba PDO standard requires a specific rule to guarantee the quality of the four types of the Ecuadorian Cacao Arriba (Aidoo & Fromm, 2015). The Plan for the Agro-industry Development of the Cocoa-Chocolate Chain (PMC Ca- cao) – 2019 is the most recent supporting policy launched by the Government. It seeks the Ecuadorian leadership as producer and exporter of cocoa and derivatives worldwide. This plan is a joint work between the public and private sectors. Its fundamental pillars are in- creasing quality and production, promoting national and foreign investment, and strength- ening associativity. The plan also highlights the generation of new jobs with a growth rate of 15% per year and public investment - private with an amount of USD 600 million. The European Union – a strategic partner for the project – provides technical assistance in the socio-productive evaluation of the chain. Recent Government reports show an enhancement of productivity thanks to training and agronomic practices. It accounts for a traceability sys- tem to support certification efforts and improvement of marketing margins by adequate price incentives. However, the marketing and commercialization of Arriba PDO still present in- Table 1. Standards of Cacao Arriba PDO and CCN-51. Requirement Unit Cocoa Arriba CCN-51 ASSPS ASSS ASS ASN ASE Fermentation One hundred of grains g 135-140 130-135 120-125 110-115 105-110 135-140 Good % 75 65 60 44 26 65*** Slight* % 10 10 5 10 27 11 Total % 85 75 65 54 53 76 Biophysical Violet % 10 15 21 25 25 18 Slaty % 4 9 12 18 18 5 Mould % 1 1 2 3 4 1 Total number of defects (over 500 g) % 0 0 1 3 4** 1 Source: Ecuadorian Institute of Intellectual Property - IEPI, (2010). 283Small-holders perception of sustainability and chain coordination conveniences in price transparency and signaling in the local cocoa market. Therefore, there is a challenge to clarify its socio-economic sustainability and propose integrated strategies aimed to support the development objectives. 3. Methodology 3.1 Study Zone The present empirical assessment is based on qualitative and quantitative data collected in 2017-2018 from beneficiaries engaged in the project “Production and Improvement of the Quality of National Cocoa.” Babahoyo district, located in the coastal region, was selected for several motives. First, this zone is the leader in cocoa production, accounting for 15% of the national share, and with up to 8000 farmers. Second, its agricultural conditions, such as the location above sea level, a temperature between 12 to 25 °C, and climates from tropi- cal humid to semi-humid make a proper ecosystem for cocoa production. Third, producers are ahead of other cocoa zones in adopting sustainability practices to protect the Arriba PDO. Fourth, the Babahoyo location is a dynamic point of Arriba and CCN-51 cocoa trade between producers, intermediaries, processors, and exporters. As such, this study arguably presents a more enriched view of socio-economic performance. The methodology applied includes phases and tools detailed below. 3.2 Questionnaire modeling and sampling The study segmented producers by using the last Agricultural Census Data. Next, it interviewed professionals from the Ministry of Industries to section the post-production actors. Then, we executed a workshop with stakeholders to select variables from a predeter- mined list – the list considered social variables to determine the condition of people within the chain (Feschet et al., 2013) we design a pathway for social LCA impact assessment. This pathway may be used to explain or predict the potential impact caused by the modifica- tion of one product sector upon the health of a population. The Preston relationship usually is calculated for a cross section of countries. We assess whether the Preston relationship is valid when a single country is considered alone. Drawing from scientific literature regard- ing development, we define the context where the use of the Preston relationship is justified. We describe the general design of the Preston pathway, using a recalculated (panel based. Production attributes showed aspects related to the agronomic models. Economic factors described sustainability in terms of costing, associativity, and margins (Barrera-Mosquera et al., 2010). The experiment contemplated a one version survey, Cronbach’s alpha index validated the questionnaire, and wording was changed to reflect the use of cocoa over other types of products. Each study was pilot-tested with at least three interviewees, who assisted with confusing and ambiguous items, as well as survey layout and flow. The final question- naire consisted of three major sections, socio-productive and respondents’ perceptions of how economic and agronomic issues impact their product performance. The information obtained from the Ministry of Agriculture-MAG, and Ministry of Pro- duction-MIPRO resulted in a list of 450 chain actors. Then, it applied the Sukhatme formula (Sukhatme, 1954), at a 95% confidence level, and employed the variable “number of produc- 284 Carlos Moreno-Miranda, Hipatia Palacios, Daniele Rama ers registered by MAG” to target 420 cocoa producers (farmers and cooperative representa- tives). We contacted post-production actors to participate in the study through interviews and know the information of local cocoa markets. Beforehand, we refined the respondent data set of post-production to eliminate irrelevant remarks. For instance, the study blocked fruit, vegetable, and cereal producers, since they focused on different issues. The final group of participants consisted of 70 post-production participants (cocoa traders and entrepre- neurs). Overall, information gathered confirmed a reasonable basis for developing the gov- ernance analysis, using the Gereffi Framework (Gereffi et al., 2005). Governance typologies in value chains showed the mechanism for coordinate actors, activities, and stages. 3.3 Fieldwork Database Analysis The study examined socio-demographic data obtained from surveys by applying sta- tistical descriptions. The descriptive information includes averages for Arriba and CCN-51 respondents, as well as two-population t-tests to examine means’ differences. This procedure allowed the characterization of Arriba and CCN-51 chains. The analysis provided a chain mapping by employing the Hawke scheme (Hawkes & Ruel, 2011) and the Dotoli approach (Dotoli et al., 2005). The mapping showed a graphical description of stages, linkages, and connections. Also, it displays vital chain elements, such as value-trajectories, information, and financial flows. Analysis of producer perception used a scale similar to that of Melnyk (Melnyk et al., 2003). Here, the study asked respondents about the relevance of economic and agronomic factors to their crops. The variables were measured on the relative frequency of a five-point scale: 1, extremely irrelevant; 2, irrelevant; 3, neutral; 4, very relevant; and 5, extremely relevant. Then, we employed Principal Component Analysis (PCA) (Jolliffe, 1982) to assess crop constructs (e.g., land tenure, cultivation technique), economic constructs (e.g., costs and yields), and associative measures. The method includes a correlation analysis and standardization of variables. Once orthogonal variables (Z-scores) were obtained from PC analysis, we unified them by using the following expression: xij – μjΖij = σj where: xij z-score of i observation, j variable μj mean of j variable σj standard deviation of j variable Ζij z-score ij ajusted 4. Results 4.1 Actors’ segmentation and value-chain characterization Table 2 shows the data provided by the Ministry of Agriculture about the production stage. The data accounted for 10.5 % of cocoa-producing families. 285Small-holders perception of sustainability and chain coordination 4.1.1 Socio-economic Profiles Table 3 states the socio-demographic profiles of respondents. Most of the CCN-51 chain actors were between 26 and 40 years old (55.3%). The Arriba chain actors were between 41 to 55 years old and represented 65.8% of the respondents. There was a difference concerning the education level, since a high proportion of participants (38.5%), belonging to the CCN-51 chain reported a college education. However, more than 50.3% of Arriba producers only re- ported a high-school level of education. It is noteworthy that interviewees responded to crop management questions with a high level of knowledge. This aspect is because a large proportion (more than 50%) of producers of both Table 2. Number of producers and cocoa production area. Province District Number of producer families Area of production (ha) Los Rios Babahoyo 1250 1955.5 Ventanas 750 1040.2 Vinces 520 840.7 Source: Ministry of Agriculture - MAG, (2015). Table 3. Socio-economic characteristics of cocoa-producing families. Variable Proportion Mean CCN-51 Arriba p-Value Gender (n = 250)   Female 54.0 62.0 Male   46.0 38.0 Age (head of family) (n = 250) < 18 años 17 2.5 1.4 0.058* 19-25 años 23 14.2 4.2 0.045** 26-40 años 34 55.3 8.2 0.028** 41-55 años 46 17.3 65.8 0.039** 56-65 años 59 9.2 12.2 0.025** >66 años 68 1.5 8.4 0.437 Education (head of family) (n = 250)     Primary 13.4 22.5 Secondary   48.1 50.3 College 38.5 27.2 Associativity (households) (n = 250)     Members 44.9 57.4 Non-members   55.1 42.6 Montly household income (n = 250) < 700 USD 625 11.4 14.6 0.001*** 701-1000 USD 830 19.6 36.2 0.021** 1001-1300 USD 1220 25.2 29.7 0.027** 1301-1700 USD 1580 37.5 17.8 0.032** >1700 USD 1950 5.5 3.4 0.001*** Note: Difference (p) represents the p-value significance of two population t-test with unequal sample sizes and unequal variances: **** for < 0.001, *** for < 0.01, ** for < 0.05, and * for < 0.1. 286 Carlos Moreno-Miranda, Hipatia Palacios, Daniele Rama chains followed agricultural science programs (Díaz-Montenegro et al., 2018). Regarding monthly income, most of Arriba producers reported a range between 701-1000 USD (36.2%) and CCN-51 producers presented a range between 1301-1700 USD (37.5%). The average number of household members was 3.6 in both chains, and 63% of respond- ents reside in Babahoyo district. According to the National Institute of Statistics and Census (INEC, 2010), the average number of members per household is 2.9. (in the coast region). Besides, during 2018, the monthly income was USD 450, on average (Viteri-Salazar et al., 2018). Therefore, the sample showed better representativeness in terms of the average salary of a household member. 4.2 Chain Actors: Influencers/Enablers Outcomes showed the intervention of chain influencers, such as public entities, advi- sors, and private agro-centers. These actors aimed to provide a technical assessment to crop management. Peasant families were the first enabler cluster identified and were responsible for channeling the harvest to collection points and wholesalers. The main difference detected was the crop volume of Arriba cocoa, which is 20% of the CCN-51 cocoa volume. Also, exports of dried CCN-51 Cocoa are above 35% of Arriba cocoa exports. However, exports of liquor are the opposite; Arriba liquor exports are 21% greater than CCN-51 liquor. Pro- cessors, the second enabler cluster, transform the raw material (dried cocoa) into liquor or paste. Outcomes also detected dealers (third enabler cluster) strategically located in areas close to the plantations. Dealers aimed to link processors and producers, thus dynamizing the trade by transferring the raw material ata the national level. The primary goods sold by the CCN-51 chain are dried cocoa and nibs, while the Arriba chain sold mainly cocoa paste. The Central Bank (external influencer) established the reference prices of liquor and dried- fermented cocoa, based on the International Cocoa Organization–ICCO and the New York Stock Exchange (see Figure 2). 4.3 Chain Roles and resources’ streams Outcomes of the pre-production stage showed the presence of private greenhouses as the main responsible for the supply of seedlings. Due to an increase in rainfall and temperature, respondents pointed out December and May as the best cultivation time. It is noteworthy that crops require a daily shade-period to achieve an optimum level of production. Another essential requirement is surface cleaning – the elimination of pests and weeds, while bush pruning is necessary after the first year of crop life. Producers plan the harvest stage in two phases, the first to collect Arriba cocoa in winter, and the second to harvest CCN-51 cocoa in summer. Producers performed the harvest at intervals of 10 to 15 days. Subsequent stages are fermentation and grain bagging, thanks to the sector’s humidity and temperature. Then, pro- ducers dried cocoa beans by using solar energy and collection points employed gas dryers. Roasting and shelling are the main steps in the transformation of cocoa beans. Roasting potentiates aroma and flavor, and husking separates the crust from the almond. The final product is called the nib, which is ground to obtain a thick paste. The paste is refined and later distributed as a semi-processed product. The confectionery sector highly demands the 287Small-holders perception of sustainability and chain coordination cocoa paste, and its price ranges between 10.00 and 15.00 USD/kg in the case of CCN-51 cocoa, and between 13.00 and 20.00 USD/kg in the case of Arriba cocoa. The pastry, baking, and catering sectors are the principal applicants for the refined paste. Production cost ranges between 8.00 and 10.00 USD/kg in the case of CCN-51 cocoa, and between 11.00 and 15.00 USD/kg in the case of Arriba cocoa. At the marketing stage, small intermediaries promote cocoa trading and supply the grain to SMEs and artisans. Concerning the key streams of resources, outcomes identified two types classified as high and low importance. The cocoa trajectories used the high-relevance streams (HRSs) and connected production, fermentation, and drying activities. The Ecuadorian Standardization Service (INEN) set up a high-quality cocoa standard (see Table 4), which plays an essential role due to local market requirements. The commerciali- zation and transformation are the last HRSs within the chain. Besides, the social, environmental, and political interests of cocoa derivatives are increasing; however, their quality standards, established by INEN through standards 175, 176, and 177, need revision, to boost their market growth (2.2 to 3.5 percent per year). The low-relevance streams (LRSs) connected sup- porting activities. The first stream was the financial one. Public and private banking entities and credit unions per- form financial support. Observations showed financing programs with access to microcredits. Besides, the flow of information was also an essential supporting stream. Figure 2. Monthly averages prices (USD/TM). Source: New York Stock Exchange, (2019). Table 4. Biophysical standards of cocoa. Type of grain Standard Degree I Degree II Moldy Max. 3% Max. 4% Slaty Max. 3% Max. 8% Affection by insects Máx. in total 3% Máx. in total 6% Source: Ecuadorian Standardi- zation Service - INEN, (2006). 288 Carlos Moreno-Miranda, Hipatia Palacios, Daniele Rama Technical and marketing information streams were in high demand from actors. Ministry of Agriculture and the Institute of Agricultural Research (INIAP) were the leading providers. However, there were also private organizations focused on disseminating aspects of prices and marketing opportunities. Figure 3 shows the mapping of all the components contained herein. 4.4 Chain Coordination The study examined the coordination mechanism, information coding, the complexity of the inter-firm information transfer, and the level of competence of actors. Therefore out- comes are as follows: 1. Market coordination. The CCN-51 chain characterized by governing bodies, such as farmers (suppliers) and dealers (intermediaries). Repetitive transactions easily codi- fied within exchange environments, such as local markets, are the main feature. The most common district markets close to Babahoyo are Quevedo, Ambato, and Guayaquil. Cash payments or contracts with short credit periods, no more than eight days, were the primary business co- ordination mechanisms (See Figure 4). 2. Modular coordination. The Arriba chain showed a setting whose transactions codi- fied a relatively high level of complexity. The study observed a sort of power mar- ket imposed by governing bodies, such as processors and dealers. These actors set product specifications, credit periods, and buying prices through contracts. Besides, Figure 3. Mapping of the Cocoa Chain at Babahoyo District. Figure 4. Coordination mechanism at CCN- 51 cacao chain. 289Small-holders perception of sustainability and chain coordination liquor and nibs processors acquired ge- neric machinery, to reduce the risk of investment. The most common acquisi- tions are refiners, molders, and peelers. The relationships between actors is based on local and global market information and technical procedures (See Figure 5). 4.5 Producer Perception and Comparative Analysis The experiment examined the cocoa pro- ducers’ performance in both chains, to eluci- date socio-economic and production aspects. We applied a Principal Components Analysis on the 12 primary variables. The details of the variables studied are in Table 5. The com- ponents (KMO = 0.818, Bartlett’s test χ2 sig. 0.000) arose with values greater than 1, satis- factorily explaining 70.22% of the variance. Results in Table 5 reveal that for producers’ performance evaluation, plant production factors are the most relevant. Outcomes classified this component as agronomic. Variables in the agronomic part were cocoa variety, land tenure, cultivation technique, number of crops, and post-harvest practices. Cocoa variety is a factor that had the most impact on producer performance. Thus, we performed a PCA by producer group, i.e., Arriba and CCN-51, to investigate differences between both chains. In the case of Cocoa Arriba producers, the first component is noteworthy on account of its impact. The variables included land tenure, cultivation technique, associativity, and post- harvest practices, i.e., factors inherent to crop development (see Table 6). Most of the vari- ables represented strategic information for excellent production performance. However, it is essential to emphasize that the results presented the associative variable as a crucial aspect for this group of producers. Besides, the price variable captured little interest, possibly because the cocoa market is expanding its quotas and business opportunities (Scherer & Ross, 1990). In the case of Cocoa CCN-51 producers, the second component had the highest score. The variables included production cost, financing, yields, cocoa acreage, and acreage, i.e., factors inherent to economic and management planning (see Table 7). Most of the vari- ables represented strategic financial performance. However, the results showed the associa- tive variable as having little impact on producers’ perception. The price variable also had little effect, possibly because international markets have already established the price of CCN-51. Finally, Figure 6A distinguished two distinct segments – non-association members and associated members – by considering agronomic and financial components. We observed that most Cocoa Arriba producers opted to be part of associations. Respondents pointed out benefits, such as reducing economic risk, because representatives addressed production by following strategies formulated by consensus. In Figure 6B, the interpretation is differ- Figure 5. Governance mechanism at Arriba chain. 290 Carlos Moreno-Miranda, Hipatia Palacios, Daniele Rama ent because CCN-51 producers did not tend to be part of associations; they opted to make independent decisions. Table 5. Producers’ perception of the relative importance of productive performance aspects. Variable Relative frecuency Aggregate score Fully no relevant No relevant Neutral Very relevant Extremely relevant Mean S.D Acreage 2.2 1.5 14.3 38.1 43.9 4.31 0.85 Cocoa acreage 2.1 3.7 19.2 40.3 34.6 4.27 0.77 Production cost 2.5 4.5 28.2 38.9 25.9 3.69 0.89 Yields 3.1 4.9 33.7 36.2 22.1 3.55 0.92 Financing 2.5 5.9 38.1 32.5 21.0 3.69 0.91 Land tenure 2.9 5.7 40.2 34.9 16.3 3.62 0.88 Price 1.5 3.2 38.7 36.5 20.1 3.66 0.91 Cocoa variety 1.3 9.8 32.6 38.2 18.1 3.63 0.95 Cultivation technique 9.4 12.5 26.3 30.7 21.1 3.58 2.47 Additional crops 4.5 10.2 31.8 34.3 19.2 3.58 0.77 Post harvest practices 2.5 19.7 38.1 25.9 13.8 2.98 0.84 Associativity 18.2 22.2 30.2 18.1 11.3 2.74 1.35 Table 6. Matrix of extracted components from PCA analysis of Arriba cocoa producers. Component 1 2 3 Variable Land tenure .961 Cultivation technique .855 Associativity .827 Postharvest practices .818 Acreage .875 Production cost .862 Cocoa acreage .795 Yields .761 Financing .733 Additional crops .725 Price .772 Eigenvalue 4.422 1.524 1.102 Statistical factors Variance % 38.471 15.218 16.531 Cumulative variance % 38.471 53.689 70.220 Cronbach alpha 0.891 0.895 0.758 Mean 3.11 2.53 2.89 291Small-holders perception of sustainability and chain coordination 5. Discussion and Conclusions Improving the sustainability performance of agri-food circuits from the socio-econom- ic point of view implicates structural changes. Cocoa producers, traders, processors, and distributors are agri-food sub-clusters and have responded to rural development problems, associativity, and cost-efficiency. Market opportunities, together with certification, such as Table 7. Matrix of extracted components from PCA analysis of CCN-51 cocoa producers. Component matrix 1 2 3 Variable Additional crops .824 Cultivation technique .811 Land tenure .752 Postharvest practices .623 Production cost .951 Financing .983 Yields .845 Cocoa acreage .839 Acreage .712 Price .753 Associativity .694 Eigenvalue 4.277 1.671 1.215 Statistical factors Variance % 35.522 18.196 14.112 Cumulative variance % 35.522 53.718 67.830 Cronbach alpha 0.866 0.899 0.761 Mean 3.05 2.73 2.71 Figure 6. (A) Scatter plot of Arriba producers and associativity; (B) Scatter plot of CCN-51 producers and associativity. 292 Carlos Moreno-Miranda, Hipatia Palacios, Daniele Rama PDOs and supporting policies such as the Plan for the Agro-industry Development of the Cocoa-Chocolate Chain, look for synergy to supporting agricultural activities. Environmen- tal aspects related to soil conditions of crops, pest-management plans, and deforestation practices have been examined extensively. However, social and economic factors have re- ceived little attention. This paper aimed to provide an initial comparison between two differ- ent chains, CCN-51, and Arriba PDO. The emphasis was on highlighting the socio-economic conditions and their effect on the sustainability of the PDO chain, which is widely recognized worldwide. While two research questions tackled this aim, the results showed marked dif- ferences between both cocoa chains. We also faced a scarcity of indicators of a holistic sus- tainability assessment. Such findings highlight the complexity of evaluating sustainability conditions, encourage future discussion, and motivate frameworks for assessing the cocoa chain comprehensively. Results suggest that the Arriba PDO chain shows a disadvantage in the age profile of its population, which constitutes a possible threat. The education level of Arriba workers, as well as their associativity, have fundamental weaknesses. Regarding academic formation, actors required an integrated perspective to make decisions effectively. Likewise, differences in monthly income pointed out a drawback for Arriba cocoa PDO producers. Thus, our findings conclude with the need for public intervention aimed to promote training programs on topics such as sustainable farm management and incentives to linkage young producers. Most public bodies’ response has focused on production and market price monitoring. In- stead, private institutions, such as ANECACAO has led various projects aimed to coach pro- ducers on cultivation techniques and the use of technology in crops (ANECACAO, 2017). Furthermore, public entities engaged in manage local and international market intelligence systems have focused on on-demand detection. For instance, PRO ECUADOR is a public in- stitution aimed to connect buyers and sellers of high-value products (PROECUADOR, 2018). Also, it provides webinars on specific topics such as market strategy and market niches informa- tion. However, the effectiveness of market participation requires a profound accompaniment aimed to differentiate, recognize, and re-evaluate Arriba PDO at the local and international levels to address cost efficiency and improve margins for producers, SMEs, and entrepreneurs. In 2016, FEDECADE, a private association of cocoa producers, performed a national study investigating the Arriba PDO cocoa market (IICA, 2010). It concluded that small-holders do not possess sufficient resources to invest in promoting the Arriba PDO cocoa and derivatives. Based on these events, the government launched the public policy Plan for the Agro- industry Development of the Cocoa-Chocolate Chain (PMC Cacao) – 2019. With the aim for underpinning both circuits, CCN-51, and Arriba (MAG, 2019). CCN-51 cocoa was assessed for mass markets and the industrialization of comparable products, such as nibs, cocoa pow- der, and degreased chocolate for toppings, among others. Cocoa Arriba is a good whose sensory potential is exploited in products with high quality and differentiation, that is, in exclusive market segments. Consequently, we confirm that the execution by public bodies of equal strategies for both chains in terms of market orientation is a severe error. Thus, coordination mechanisms play a crucial role in correcting the affection at the market level and improving the PDO chain performance. The PDO chain showed little interest in the price mechanism, since the world market is expanding, and actors are looking for a significant transition towards a sustainable chain. The modular governability of the PDO chain shows the need for design and strength- 293Small-holders perception of sustainability and chain coordination ening precise information flows that aim to achieve high value-added consumer goods. 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