The conditions brought about by neoliberal policies represented challenges, but also opportunities, for smallholder coffee cooperatives (SCCs) and their farmers to change practices. This study focuses on the production, processing, marketing, and organizational innovations that result from coffee farmers taking the decision to form cooperatives for the purpose of marketing their coffee as a specialty crop (Fair Trade/organic) rather than simply as a commodity. These innovations are examined at both the level of the cooperative and the individual farm. Field research was conducted in the Córdoba-Huatusco corridor from July to October 2013, where six coffee cooperatives and an independent group of seven conventional farmers agreed to participate in this study. For SCCs, challenges, such as increasing production costs, stagnant coffee prices, and lack of low-or moderate-interest credit options, have reduced their opportunities to make a living through their participation in the coffee value chain. Chapter 2 examines how changes in agricultural policies, particularly government financial support programs for the coffee sector, have influenced the responses of SCCs to changes in the market.

Since market liberalization occurred in Mexico, the Mexican government implemented several economic policies to comply with the rules and regulations imposed by international organizations. Multinational corporations vertically integrated in the value chain have become principal actors in international coffee markets. Within markets, cooperatives that received Fair Trade payment for their coffee production attributed their increasing incomes to the following factors. 1) Farmers received more training to improve record keeping; 2) Cooperative leaders are more familiar with procedures and paperwork to obtain certification and re-certification annually on time; and 3) Investments in infrastructure, training, and professionals hired have led to an increase in the quality of their production. Chapter 3 examined how access to training programs, governance and infrastructure investments contribute to marketing and production/processing innovations in SCCs. Main contributions included improving organizational skills, involving youth and professionals, improving decision-making processes (participation of all members in the SCC), promoting diversification (production and marketing strategies), and investing scarce resources in infrastructure (primarily processing equipment). By providing training to leaders and members of the cooperatives, many of these changes are advanced. Chapter 4, which examines innovations in production members of SCCs have adopted as a result of shifting from conventional to Fair Trade and organic production.

Some innovations were mandated by Fair Trade and organic requirements, and farmers made others on their own as they adjusted to the new regimes. Farmers explained how practices have changed since they have incorporated themselves into the alternative (Fair Trade and organic) markets. SCC farmers implemented the following innovations: composting, especially using organic residues previously considered waste; various techniques to replace old coffee trees that take into account the size of their farms, the quantity of coffee needed annually to obtain a decent income, and the financial resources available; pest management strategies derived from hands-on experiments with natural low-cost remedies; and diversifying the range of crops that could be sold as organic and, subsequently, increase farmers’ incomes. Still, there is a lot to learn, but SCC farmers participating in alternative markets have a better chance to succeed and continue working in the coffee sector than most independent conventional farmers.