Who Knows What? Market Information Access for Small Specialty Coffee Farmers in Tolima, Colombia | 25, Issue 23
GUSTAVO PEÑA and JHON JAIRO VEGA DÍAZ share the results of a study with 52 smallholder farmers in Tolima, Colombia, exploring the challenges they encounter in accessing market information.
When reading about information asymmetry, you’ll often encounter the concept of “the market for lemons,” a term coined by the economist Akerlof to describe markets where the seller knows a lot more about a product than the buyer.[1] Akerlof’s example involves an old cliché about second-hand car sales: sellers often know more about a car’s true value than buyers, putting buyers at risk of buying a “lemon,” or a “bad car.”
When we prize “transparently traded” products, we’re implying that other, “non-transparent,” goods are traded in a market for lemons, where important information is unavailable to buyers at various points along the value chain. However, for many small coffee producers, the opposite is true: they must make decisions about where to sell their coffee, to whom, and for what price, despite limited access to market information. This is the opposite of a market for lemons.
There’s a lot to celebrate about the desire for greater transparency, but we should also interrogate what “transparency” really means. Rather than presume that certain actors are withholding information, we can ask questions such as: “Do we expect information to flow both ways, or just ‘downstream’ from producers to, ultimately, consumers?”; and “Can coffee farmers easily source accurate and verified information about the value chain and coffee pricing?”
We know that information is important: it helps create value and drive bargaining power, and reduces the risks that come with decision making. In this feature Gustavo Peña and Jhon Jairo Vega Díaz discuss the findings of two surveys that they conducted with small specialty coffee farmers in Tolima, Colombia. They looked at seven types of market information beyond price, including quality expectations, buyers’ payment methods, and the number of potential buyers.
The farmers they interviewed stated they had limited access to vital information. The survey responses overwhelmingly affirmed that information is valuable, with farmers stating that better market information would help them to reduce risk, strategize effectively, and ultimately improve their livelihoods.
This aligns closely with what we’ve learned in our own research into the distribution of value within the coffee system. In a focus group with coffee farmers that we conducted with ANACAFÉ in Guatemala in July 2023, participants identified that increased “access to information about coffee quality and market trends” was key to distributing value more equitably. I was privileged to facilitate a dialogue on gender and equitable value distribution at Bean Voyage’s 2024 Women-Powered Coffee Summit in Mexico. During the conversation, several women farmers shared that despite their broad expertise, they felt that they had poor access to market information, which diminished their bargaining power and sense of autonomy.
As my colleague, Andrés Montenegro wrote in a previous issue of 25,[2] it’s dangerous to presume that everyone agrees on, or has access to, the same set of facts. Reading this feature reminds me that sharing information is not enough; we need to know whether it’s reaching the right people. If it’s not, how can we identify and remove barriers to access? I’m reminded that transparency in the coffee supply system isn’t a destination: it’s an ongoing and collaborative effort to improve how information is shared.
LAUREL CARMICHAEL (they/them)
Publications Manager
The specialty coffee sector, a rapidly expanding segment of the global coffee market, has gained attention for its potential to provide economic benefits to small-scale coffee farmers.
Projected to grow from US$53.67 billion in 2021 to US$152.69 billion by 2030 at a compound annual growth rate of 12.32%,[3] the specialty coffee market has been driven by consumer demand for high-quality, ethically sourced products. However, small coffee farmers—particularly those in remote or economically marginalized regions—often struggle to capture the full economic benefits of this market because of information asymmetry. In this context, information asymmetry refers to a situation where one party in a transaction has more or better information than the other, which creates an imbalance in market power. For small specialty coffee farmers, this asymmetry limits their ability to make informed selling decisions, thereby affecting their profitability and long-term economic sustainability.[4]
In 2019, we conducted a study investigating how information asymmetry impacts decision-making among small specialty coffee farmers in the coffee-growing region of Tolima, Colombia. Specifically, it identified and examined seven key variables that influence pricing and selling decisions: market location, number of buyers, buyer trustworthiness, payment method, quality requirements, transport costs, and distance to markets. Each of these factors represented critical information that farmers needed to make effective, competitive pricing decisions. By exploring these variables, we highlighted how limited access to market data can restrict small farmers’ bargaining power, thus limiting their participation in the specialty coffee market.
Price Setting: Information Theories
According to classic economic models, ideal markets are informationally efficient, meaning all participants have access to relevant data, which allows prices to reflect true market value.[5] Such efficient markets theoretically enable optimal decision-making. However, agricultural markets, especially those involving smallholder farmers in developing economies, rarely meet this ideal because of pervasive information asymmetry. The role of information access in value discovery has been around for quite some time: Nobel Prize recipient George A. Akerlof published his seminal paper on the topic in 1970.[6] In his work documenting the market for "lemons"—a term used for cars that have significant defects, negatively impacting their work and utility—Akerlof demonstrated how unequal information leads to suboptimal transactions, disadvantaging those with less information.
In the specialty coffee market, intermediaries and larger buyers often possess extensive knowledge of market conditions, pricing, and demand trends—information typically unavailable to small farmers. This informational imbalance constrains farmers’ ability to negotiate effectively and limits their access to premium prices. In addition to foundational pricing factors, specialty coffee farmers need specific knowledge of quality standards, buyer demand, and logistical costs, as these characteristics are closely linked to the premium prices that distinguish the specialty coffee segment.[7] Previous studies have highlighted the importance of factors like buyer trustworthiness, payment methods, and market location in agricultural decision-making,[8] but few have examined these issues specifically within the specialty coffee context. We designed our study to fill this gap by examining the impact of information asymmetry on specialty coffee farmers’ pricing and selling decisions in the context of Tolima, Colombia.
Specifically, we wanted to investigate how limited access to data about market location, buyer numbers, payment methods, and other relevant factors affects farmers’ ability to make informed pricing decisions. By identifying the impacts of each variable, we hoped to provide insights into how information asymmetry impacts farmers’ economic outcomes and to suggest potential strategies for reducing these informational gaps.
Study Design
To do this, we applied an observational study approach known as “descriptive design,” which aims to describe a situation rather than intervene or test a hypothesis. In this case, we focused on the experiences of small specialty coffee farmers in Colombia’s Planadas Tolima region, an area well known for high-quality coffee production. The sample consisted of 52 farmers, whom we intentionally selected to ensure they had relevant experience and familiarity with the specialty coffee market.[9] We conducted two related surveys with members of the group, both of which contained multiple-choice (“closed”) and open-response questions. This approach allowed us to collect quantitative data about specific types of information variables as well as qualitative insights into farmers’ perceptions and experiences.
The first survey focused on understanding how important these variables were to their decision-making process.[10] In this survey we asked 36 farmers about how important seven different variables were to their decision-making processes for selling coffee. These variables were: (1) the location of the formal and informal markets and cooperatives; (2) the number of buyers at every market; (3) the trustworthiness of each buyer; (4) the method of payment of each buyer; (5) the quality sought by each buyer; (6) the transport cost of each transporter to different locations; and (7) the distance to each market site.
We used our analysis of the first survey’s results to create a second survey. In the second round we surveyed another 16 farmers, focusing on their perceptions of how easily and where they could access the seven information variables.[11] The second survey helped us gain more in-depth insights into farmers’ information needs, where they potentially could obtain that information, and the barriers that prevented them from accessing it. We conducted all our data collection between August and October of 2019.
From the “closed” questions on each survey, we were then able to analyze the relationship between each independent variable and the dependent variable (price) using statistical tests[12] to assess whether access to information on each variable significantly impacts specialty coffee farmers’ pricing decisions. We also analyzed the responses to open-ended questions thematically to identify patterns in farmers’ responses, providing additional context for the quantitative findings.
Insights from Farmers: Variables that Impact Decision-Making
Survey One: The Importance of Information
The results from our first survey revealed that the farmers we spoke to place a high importance on each of the seven identified variables, which they saw as integral to making well-informed pricing decisions. These factors collectively helped farmers better understand and navigate the market, enabling them to negotiate more effectively and potentially increase their earnings. When we asked the farmers to rate the importance of each variable to their decision-making, all 36 farmers rated each variable as incredibly important.
In this survey’s open-ended questions, we asked farmers—whom we are quoting anonymously to protect their identity—to elaborate on a) how important the seven types of information were to them, and b) how they used this information to inform their decisions. This group shared repeatedly that improved information access was key to increasing their income, making their production more sustainable, and improving their livelihoods.
Nearly all participants highlighted the value of knowing about alternative selling markets, as this would expand their opportunities to negotiate better prices. One farmer explained that discovering new markets for his coffee was essential to enabling him to “aspire to a better income.” Similarly, many noted that information about the number of potential buyers in different markets would boost their bargaining power, offering greater autonomy in choosing buyers, negotiating prices, and mitigating risks. As one farmer shared: “Knowing new buyers is to have better opportunities.”
Information about buyer trustworthiness was, unsurprisingly, a key factor in farmers’ decision-making. A 57-year-old farmer described trust as “the foundation for happy negotiations.” Survey responses highlighted that information about buyer trustworthiness allowed for more collaborative and equal market negotiations. Information about buyer trustworthiness from external sources—as well as their own personal experience—would, our survey respondents shared, help them identify buyers for long-term relationships. It also allowed them to make quicker decisions. As one farmer wrote: “Knowing [who to] trust makes it easier for me to expedite business, making quick decisions.” Additionally, information about buyers’ payment methods was crucial for informed planning. Farmers explained that knowing payment practices helped them “choose a buyer who will pay in a timely manner” and avoid the risks associated with late payments.
While no farmers reported having “easy access” to information about buyers’ quality expectations, they confirmed its importance for decision-making. Approximately one-third of farmers stated that knowing quality expectations would help them find buyers genuinely interested in their coffee’s attributes: 25 of the 36 farmers we interviewed stated that this information would help them specialize their production to align with market preferences.
Finally, knowledge of transport costs and selling location distances was essential for accurate planning and pricing. One farmer explained that knowing transport costs in advance allowed him to negotiate with buyers about who bears the costs and, when necessary, incorporate these expenses into his selling price. When forced to estimate transport costs without adequate information, farmers noted that they risked losing money or reducing profit. Several noted that this information “is critical to negotiating agreements,” because it allows them to plan their production and calculate in advance if “on-time delivery is possible.”
Figure 1. In our second survey, none of the 16 farmers reported that they had “easy access” to any of these seven key types of information, all of which are important to their decision-making. Their most common responses were that they had “rare” or “some” access to this information. Please note that these data represent farmers’ perceptions about information accessibility. In some instances, this information may have been available but was perceived as completely or partially inaccessible.
Survey Two: Who Owns the Information?
In the second survey, where we asked 16 farmers to rate their access to the information variables and identify their sources of information, none of the respondents reported that they had “easy access” to any of the seven types of information, with “rare access” the most common response for all variables. It is important to note that these data represent farmers’ perceptions about information accessibility; in some cases, the information may have been available but was still perceived as partially or entirely inaccessible.
Figure 2. This figure is a summary of 16 survey responses to a question asking who holds market information. Our survey results showed that farmers overwhelmingly believed that the FNC holds comprehensive market information, as do private entities: cooperatives, buyers, and roasters.
Farmers themselves stated that they have only partial access to this information, usually limited to the local market context. Please note that these data represent farmers’ perceptions about information accessibility. In some instances, this information may have been available but was perceived as completely or partially inaccessible.
We identified several key themes across the open-ended responses in the second survey. Farmers noted that they acquire information from community leaders, radio, and television. Many noted that they learn about market opportunities at local fairs, but this information is often incomplete—it is insufficient for effective decision-making. The farmers consistently stated that the information they could access was specific to local markets and they perceived that they had reduced bargaining power because of limited knowledge about alternative selling markets. Our survey respondents believed overwhelmingly that the Federación Nacional de Cafeteros (FNC) had access to vitally important information, as well as private actors in the value chain, including cooperatives, buyers, and roasters (see figure 2).
They mentioned that they lacked access to centralized platforms, such as a market directory, which might communicate market trends and information about buyers’ preferences. They also noted the lack of information about commercial and personal banking. Farmers cited several factors that further exacerbated these challenges, including technological barriers, the monetary cost of accessing information, and the geographical distance from their farms to markets. They also did not necessarily see cooperatives and associations as transparent partners, and many perceived that intermediaries see information as their business strength and therefore do not share it.
Farmers noted that they acquire information from community leaders, radio, and television. Many noted that they learn about market opportunities at local fairs, but this information is often incomplete—it is insufficient for effective decision-making.
Farmers’ perceptions of information accessibility highlight examples of information challenges. In practice, some market information is publicly available but widely dispersed, making it difficult to access quickly, efficiently, and reliably. The farmers we surveyed reported knowing little to nothing about accessing international sales points, as they believe this information is held privately by exporters and intermediaries. While individual farmers accumulate private knowledge about buyer trustworthiness through experience, this information is often not centrally accessible. Farmers’ valuable insights about buyers—at least within the group we interviewed—are widely distributed across the community but rarely shared publicly.
What Next?
The study highlighted that specialty coffee farmers often lack easy access to essential market information for each variable, which constrains their ability to make fully informed decisions. Most farmers rely on cooperatives or intermediaries for market data, which are often limited in scope and timeliness. The farmers we surveyed receive some baseline information about coffee prices from organizations, particularly the FNC. While this information is valuable, it doesn’t capture all the variables that the farmers we surveyed consider important, such as buyer trustworthiness, alternative markets, or transport logistics. This dependency on partial information limits farmers’ options, reinforcing their reliance on intermediaries who have greater access to market data. Looking forward, we must consider whose responsibility it is to provide access to more detailed and useful information, and how locally specific information—such as transport costs or the location of market sites—can be combined with more macro-level data, supplied by organizations like the FNC. Are there ways to help farmers share the valuable information that they’ve gained through individual experience, such as the trustworthiness of buyers, and what factors are currently hindering them from sharing this?
The responses to the surveys underscored the substantial impact of information asymmetry within the specialty coffee market. The farmers we surveyed perceived that intermediaries benefit from a superior knowledge of market trends, demand, and pricing structures. This (perceived or actual) informational advantage means that even well-intentioned intermediaries may negotiate terms that are favorable to them but less favorable to farmers.
Small specialty coffee farmers, particularly those in isolated regions, are left economically vulnerable, as they lack access to critical information needed to negotiate and participate effectively in the specialty market.[13] While it may be difficult to identify the exact cause(s) of the information asymmetry, this research suggests that collaborative work is needed to ensure that farmers have realistic access to information they currently perceive as inaccessible. This improved access could help farmers to make informed choices and increase their economic resilience, enhancing the quality of partnership for all involved in the market. ◊
GUSTAVO PEÑA is an electronic engineer and a doctoral candidate in Applied Sciences, researching specialty coffee market optimization through emerging technologies with a focus on social innovation and social development goals. JHON JAIRO VEGA DÍAZ holds a PhD in Applied Sciences, and works as researcher in image processing, data science, and machine learning, with a focus on the agro-industry.
References
[1] Akerlof, George A. “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism.” The Quarterly Journal of Economics 84, no. 3 (1970), doi.org/10.2307/1879431.
[2] Andrés Montenegro, “A Point of Tension: What We Know (and Think We Know) about Equitable Value Distribution,” 25, Issue 21 (2024), sca.coffee/sca-news/25/issue-21/a-point-of-tension-what-we-know-and-think-we-know-about-equitable-value-distribution.
[3] The Brainy Insights, Specialty Coffee Market Size, Trends Report [2033], 2022, thebrainyinsights.com/report/specialty-coffee-market-12699.
[4] Jean-Philippe Bouchaud, J. Doyne Farmer, and Fabrizio Lillo, “How Markets Slowly Digest Changes in Supply and Demand,” Microeconomic Theory eJournal (2008), arxiv.org/pdf/0809.0822v1.
[5] E. Stiglitz, “Information and Competitive Price Systems,” American Economic Review 66, no. 2
(1976): 246–253.
[6] Akerlof, George A. “The Market for ‘Lemons’
[7] Donnet et al., “What Adds Value in Specialty Coffee? Managerial Implications from Hedonic Price Analysis of Central and South American E-Auctions,” International Food and Agribusiness Management Review 10, no. 3 (2007): 1–18; Specialty Coffee Association, Towards a Definition of Specialty Coffee: Building an Understanding Based on Attributes, 2021,
sca.coffee/attributes-whitepaper.
[8] J. T. Ndoro, M. Mudhara, and V. G. P. Chimonyo, “Determinants of Market Participation and
the Institutional Constraints: Case Study of Smallholder Farmers in Zaka District, Zimbabwe,” African Journal of Agricultural Research 10, no. 10 (2015): 1099–1110; Asrat Demissie and Mekonnen Diro, “Factors Affecting Coffee Farmers’ Market Outlet Choice in Sidama Zone, Ethiopia,” International Journal of Economics, Commerce and Management 4, no. 4 (2016): 828–841.
[9] The sample was drawn from a project conducted by Tolima’s government and Ibagué University
(2017–2021) focused on post-harvest innovation in the specialty coffee sector. The project identified 3,787 coffee farmers in Tolima, of which 551 were involved in specialty coffee farming. From Planadas municipality, 129 specialty farmers were selected, of which 36 were chosen for the first stage of the study. In the second stage, 16 community leaders with technical expertise were selected because of their potential to meet specialty market standards and lead the sector.
[10] The first survey included three questions, paraphrased here: How important is knowing this variable when making your selling decision? How do you use the information about this variable to make your decision? Is there anything else about this variable that impacts the commercialization of coffee that we haven’t considered?
[11] The second survey included four questions, paraphrased here: How much information do you have about this variable? Where do you find this information? Is there related information that is also helpful to know? Who holds this information, and why is it difficult for you to obtain it?
[12] We used chi-squared tests conducted in IBM SPSS. The chi-squared analysis confirmed that all seven variables are significantly related to price (PRI), with a p-value of 0.046. This result validates the hypothesis that each variable significantly impacts specialty coffee farmers’ pricing decisions, further illustrating the effects of information asymmetry on farmers’ economic outcomes.
[13] Jookoo Lee, Gary Gereffi, and Janet Beauvais, “Global Value Chains and Agrifood Standards: Challenges and Possibilities for Smallholders in Developing Countries,” Proc. Natl. Acad. Sci. U.S.A. 109 (2020), doi.org/10.1073/pnas.0913714108.
We hope you are as excited as we are about the release of 25, Issue 23. This issue of 25 is made possible with the contributions of specialty coffee businesses who support the activities of the Specialty Coffee Association through its underwriting and sponsorship programs. Learn more about our underwriters here.