Effects of shade and input management on economic performance of small-scale Peruvian coffee systems

Tropical agroforestry systems provide a number of ecosystem services that might help sustain the production of multiple crops, improve farmers' livelihoods and conserve biodiversity. A major drawback of agroforestry coffee systems is the perceived lower economic performance compared to high-input monoculture coffee systems, which is driving worldwide intensification practices of coffee systems. However, comprehensive cost-benefit analyses of small-scale coffee plantations are scarce. Consequently, there is a need to improve our understanding of the economic performance of coffee systems under different shade and input management practices. We provide a comprehensive economic analysis of Arabica coffee farming practices where we compare productivity, costs, net income and benefit-cost ratio (BCR) of 162 small-scale, Peruvian coffee plantations under different shade and input management practices along an elevation gradient. By using a cluster analysis, three shade and three input classes (low, medium and high) were defined. We found similar economic performance for all shade classes, but reduced net income and BCR in the High-Input class. More specifically, there was no difference in net income or BCR between low, medium and high shade classes. The High-Input class had significantly lower net income and BCR, mainly due to increased costs of (hired) labour, land, and fertilizer and fungicides; costs which were not fully compensated for by higher coffee yields. Coffee yield decreased with elevation, whereas gate coffee price and quality, as well as shade levels, increased with elevation. Additional revenues from timber could increase farmers' income and overall economic performance of shaded plantations in the future. Our analysis provides evidence that for small-scale coffee production, agroforestry systems perform equally well or better than unshaded plantations with high input levels, reinforcing the theory that good economic performance can coincide with conservation of biodiversity and associated ecosystem services. Additional comprehensive and transparent economic analyses for other geographic regions are needed to be able to draw generalizable conclusions for smallholder coffee farming worldwide. We advise that future economic performance studies simultaneously address the effects of shade and input management on economic performance indicators and take biophysical variation into account.