A Study on The Prospects and Challenges Faced by Small-

Coffee Planters in Selling Coffee Seeds Through

Cooperatives in Chickmagalur, Karnataka.

Tilak M K1, Prof Nagendra V2, Dr H S Srivatsa2

1
Student of MBA in Business Analytics at Department of Management Studies, Faculty of Management and
Commerce, M. S. Ramaiah University of Applied Sciences, Bengaluru, Karnataka, India,
tilakmk009@gmail.com,
2
Professor at Department of Marketing Management, Faculty of Management and Commerce, Ramaiah
University of Applied Sciences, University House, Gnanagangothri Campus, New BEL Road, MSR Nagar,
Bangalore, Karnataka, India, vnagendra.ms.mc@msruas.ac.in
3
Professor at Department of Marketing Management, Faculty of Management and Commerce, Ramaiah
University of Applied Sciences, University House, Gnanagangothri Campus, New BEL Road, MSR Nagar,
Bangalore, Karnataka, India, srivatsa.ms.mc@msruas.ac.in

ABSTRACT

The aim of this research is to develop a theoretical framework to analyze the consumer
cooperative’s role in coffee market based on the primary research in several villages around
Chickmagalur, Karnataka. A conceptual framework was developed based on the factors identified
from the literature review. Through the cluster sampling method, five areas are identified. With
the help of identified variables, the questionnaire was validated by face-to-face interview and
Google form. The survey was conducted and a structural equational model (SEM) is developed
using the JMP Pro 16. Exploratory factor analysis (EFA) is a multi-layered circumstance where more
than one dormant variable is estimated simultaneously. The development and performance of
structural equational model (SEM) measurement was evaluated using the root mean square (RMS)
error approximation. The author found that the small coffee planters will get better coffee price if
they get an opportunity to sell their coffee crop yield through the cooperative.
Keywords: Consumer cooperatives, small coffee planters, planters’ intention, buyers’ attitude,
economic influence, willingness to adapt.

INTRODUCTION

Indian coffee has a unique historic flavor too!
It all began with a long, arduous journey around
four hundred years ago... when the legendary saint
Bababudan brought seven magical beans from
distant Yemen and planted them in the Chandragiri
hills of Karnataka. The sensations of aroma, flavor,
body and acidity that you enjoy with each coffee
experience is rooted in these mystical beginnings.
In India, coffee is traditionally grown in the
Western Ghats spread over Karnataka, Kerala and
Tamil Nadu. Coffee cultivation is also being
expanding rapidly in the non-traditional areas of
AP and Odisha as well as in the North East states.
Coffee is predominantly an export-oriented
commodity and 65% to 70% of coffee produced in
the country is exported while the rest is consumed
within the country. Indian coffee industry earns a
foreign exchange to the tune of about Rs.4000
Crores. Indian coffee has created a niche for itself
in the international market and the Indian Coffees
are earning high premium, particularly Indian
Robusta which is highly preferred for its good
blending quality. Arabica Coffee from India is also
well received in the international market. Coffee is
an export product with low import intensity and
MATERIALS AND METHOD
Literature review is the summary of the
research conducted on a topic previously.
Literature review surveys scholarly books,
articles, and other author sources related a
particular topic The review of literature is an
essential component of a research
investigation which gives necessary inputs for
the researcher to frame the research study on
the elected topic. The basic objective of this
chapter is to analyze the previous findings so
that it will help to know the gap in earlier
studies and to justify the research problem
Objectives of the study
• To identify factors and variables
affecting sales of coffee seeds for small
planters through cooperatives.
• To analyze the factors affecting the
small coffee planters for selling their
Sources of Data Collection
The researcher has used following sources in
collecting data
• Google forms
• Face-to-face interviews
high employment content. This is evident from the
fact that more than six lakh persons are directly
employed and an equal number of individuals get
indirect employment from this sector.
This research has always been motivated to
make a study on the difficulties faced by the small
coffee planters around Chickmagalur for coffee
marketing and the fluctuating price of coffee which
is purely dependent on the Trade market(non-
government).
To eliminate the middlemen like curers, Agents,
retailers and traders in the market to stop the
coffee price violation in the market.
selected by the researcher for the study
purpose. Keeping in mind the objectives of the
research, the review of related literature is
organized in the following way:
A literature review has been conducted on
scholarly journals of national and international
articles. A research gap has been identified
from the literature gap by critical analysis. The
identified literature gaps are planters’
intention, cost factor, buyers attitude, social
influence, and willingness to adopt.
coffee seeds through cooperatives
using suitable analytical tool
• To develop a theoretical framework to
analyze the consumer cooperative’s
role in coffee market based on the
primary research.
• Observations
• Discussion with the respondents
• Pilot study
• Expert opinion
 Conceptual Model
Conceptual framework is qualitative research
used to show relationships between different
ideas and how they are related to each other.
The conceptual frameworks will link the
concepts between important theories and
empirical research From Figure, this model
was applied to investigate the effects of
planter’s intention, buyer’s attitude, economic
influence and willingness to adapt in the field
of marketing channel of marketing of coffee
through cooperatives. From the factors
gathered and critically analyzed literature the

Fig: Conceptual model above factors contribute to have an impact on

willingness to adapt.

Sample size Calculation the appropriate sample size is one of the most
important factors in statistical analysis.
Sample size is a research term used for
𝑧2 ×𝑝(1−𝑝)
𝑒2
defining the number of individuals included in sample size= 𝑧2 ×𝑝(1−𝑝)
1+( )
𝑒2 𝑁
a research study to represent a population.
The sample size references the total number • Z – confidence level = 90%

of respondents included in a study, and the • Margin of error = 5%

number is often broken down into sub-groups
• Population proportion = 50%
by demographics such as age, gender, and
location so that the total sample achieves • Population size = 1500

represents the entire population. Determining • Sample size = 210

Scope of the Study

The study was conducted in Chickmagalur the small coff planters due to middlemen in
District, Karnataka state during 2022. coffee value chain. from the study the
Chickamaglur was picked mainly because of planters’ intentions and their willingness to
the huge fluctuation in coffee price faced by adopt sales through cooperatives in villages
around chickmagalur. From the research the cooperatives and the benefit of cooperatives
adoption of coffee seeds sales through needs to be analysed.

Research Design
The nature of the study conducted was exploratory
and the place selected for the study to be
conducted was villages in Chickmagaluru area.
Convenience Sampling was the method adopted
for the sampling technique and the sample size
considered for this research was 210 which
included the respondents of all citizens group
residing in Chickmaglauru. Data collection was
done with the help of questionnaire and on those
data various tests were conducted which are
Reliability test (Cronbach’s Alpha),(KMO test),
Factor Analysis , Descriptive analysis. SPSS, JMP
and Excel were the tools used in this study to do
the required tests.

Population 15000
Sample size 210
Sampling Convenance Sampling
technique
Accepted rate 206
Rejected rate Out of 210 samples 206 where accepted and 04 were rejected due to
incomplete information
Tools used JMP, Excel
Targeted area Mallenahalli, Bindiga, Aldur, Mudigere, Gonibedu, Kaimara, Kumargiri, Hospete,
Chikollale, Hebbali, Jannapura, Hanbal, Handi, Amble (Villages in Chickmagalur).

Hypothesis
• Hypothesis1: Planters Intention has a • Hypothesis4: Planters Intention has a
significant influence on Economic significant influence on Willingness to
influence adopt

• Hypothesis2: Buyers Intention has a • Hypothesis5: Buyers Intention has a

significant influence on Economic significant influence on Willingness to
influence adopt

• Hypothesis3: Economic influence has a

significant influence on Willingness to
adopt
Reliability Test factors and what they mean for one another in
In addition to providing data on the
numerous ways. The performance of
correlations between the scale's constituent
structural model and measurement was
items, the reliability analysis technique creates
evaluated using the Root Mean Square Error
a variety of regularly used scale reliability
approximation (RMSEA) Tucker-Lewis’s index
measures, the overall Kaiser-Meyer-Olkin
(TLI), Comparative Fit Index (CFI), Goodness of
(KMO) is 0.948 and Conversion Rate Outcome
Fit Index (GFI), and adjusted goodness of fit
(CRO) is 0. 950.As all the test values are above
index (AGFI). RMSEA, TLI and CFI can be
0.9 therefore, the data collected are most
expressed has. (Ampofo, 2022)
reliable and factor analysis is suitable for all the
RMSEA=√max⁡(𝑋𝑘2−𝑑𝑓𝑘,0) 𝑑𝑓𝑘(𝑁−1)
Kaiser-Meyer-Olkin (KMO).
where RMSEA: -Root mean square error
TEST RESULT The below represents CFI formula
KMO 0.835 CFI=max(𝑋02−𝑑𝑓0,0) −max⁡(𝑋𝑘2−𝑑𝑓𝑘,0)
CRO 0.887 max⁡(𝑋02−𝑑𝑓0,0)
where CFI: -Comparative fit index
The below represents TLI formula
Structural Equational Model
TLI=𝑋02/𝑑𝑓0−𝑋𝑘2/𝑑𝑓𝑥𝑋02/𝑑𝑓−1
Primary condition demonstrating is generally
where TLI: -Tucker-Lewis’s index
involved multivariate procedure for examining
Here (𝑋02, 𝑑𝑓0) and (𝑋𝑘2, 𝑑𝑓𝑘) represent the
the immediate and backhanded impact of
chi-square for the baseline model and fitted
connections among noticed and latent factors.
model, with their corresponding degrees of
In SEM, a noticed variable is a variable that has
freedom.
been straight forwardly estimated and adds to
The GFI and AGFI are given as
the synthesis of a latent variable (Abdel
GFI=1−𝑡𝑟{𝑤−12(𝑠−Σ) 𝑤−12] 𝑡𝑟(𝑤−12𝑠𝑤−12)2
Wahed, 2020). The method clearly determines
AGFI=1-[𝑘(𝑘+1) (1−𝐺𝐹𝐼)2𝑑𝑓𝑘] Where w: -
the relationship between the cause-and-effect
weight, tr: -trace: -covariance matrix, S: -
variables. The SEM plans to sum up a
unrestricted sample variance, k: -observed
Corroborative component investigation model
variables.
to survey the connection between latent
 Descriptive statistics
1.) Current market trends

Mean Std. Deviation N

There is a fluctuation in the coffee price everyday 1.6629 1.1344 210

Are you satisfied with the current coffee price 2.1222 0.9786 209

Do you sell your yield to the same buyer every year 3.7398 0.8797 208

Is the coffee grading transparent to the planters 4.1286 0.9267 210

Are you updated with the coffee prices 3.6379 0.8973 210

2.) Problems and barriers in Coffee processing

Mean Std. Deviation N

Do you get any government support for selling coffee 4.5678 1.1432 210

Required labours are available easily 4.2874 1.2532 210

Do you get any financial support for coffee processing from the 3.7934 1.0283 210
curers
Do you have a proper storage and transport facilities to protect 2.4399 0.9812 209
your dry coffee
Annual rain affects the yield of coffee every year 1.4565 0.9782 209

3.) Economic Influence

Mean Std. Deviation N

Lack of financial resource of the firm to export 2.3467 0.9682 210

Lack of export marketing research and development. 3.4623 1.2634 204

Lack of appropriate technology innovation to export 4.1987 0.9532 204

Problems of pricing policies to obtain competitive advantages 2.3143 1.0542 210

Product quality problems affect export performance. 3.7615 1.0353 209

Problems of placing the product in the right time. 3.9827 1.1243 209

3.) My thesis works

Mean Std. Deviation N

Would you like to eliminate middlemen like agents and curers in 1.7638 1.1234 210
the market
Do you get benefited, if coffee consumer cooperatives involve 3.4325 1.0253 210
into the selling of coffee
 Do you need to price the coffee on the grading basis? 1.3532 1.3542 210

Have you ever sold coffee through cooperatives 4.4213 1.1732 210

If you get the opportunity to sell through cooperatives, are you 1.4585 0.9832 210
willing to sell?

Are you aware that planters at other countries like Indonesia and 3.5372 1.0386 210
Colombia are selling their coffee through consumer cooperatives

Are you getting financial support in the form of loan for 2.3453 1.1833 210
plantation from consumer cooperatives

Consumer cooperatives are providing a good quality of fertilizers 2.5623 0.9873 210

Are you currently being satisfied with the fertilizer support you 2.4723 1.1538 210
are getting from cooperatives

Do you think you’ll get payments on time, if you sell through 1.7345 1.0173 210
cooperatives
Do you think you’ll get a fair price by selling your coffee through 1.2386 0.9346 210
coffee consumer cooperatives

Exploratory analysis
The exploratory factor analysis (EFA) is a
traditional conventional estimation model that
is utilized when both noticed and inert factors
are thought to be estimated at the stretch
level. Normal for EFA is that the noticed factors
are first normalized. EFA is in many cases
utilized in the multi-layered circumstance
where more than one dormant variable is
estimated simultaneously.

Factors Variables Insignificant variables

Planters Intention Profit per produce Equipment availability

Fair price for seeds Producer / Planter
Labour availability
High selling price

Buyer’s attitude Quality test Consumer / Buyer

Regular customers
Agents and curing house
Coffee grading
Adaptation

Economic Influence Government role / support Loan owed

Effects of rain
Yield per hectare
Fluctuation in price
 Commercial crop

Willingness to adapt Comparative advantages

Modernization
Middlemen elimination
Coffee supply chain
Sales through cooperatives
Market Constraints

Path Diagram of SEM

Fig: SEM Mode

The goodness of fit between the data and the
model may be used to evaluate the
effectiveness of SEM. The test includes the chi-
square to degrees of freedom (x2 /df) ratio,
the Goodness of Fit Index (GFI), the Adjusted
Goodness of Fit Index (AGFI), the comparative
fit index (CFI), the Incremental Fit Index (IFI),
the Relative Fit Index (RFI), and the Root Mean
Square Error of Approximation (RMSEA),
According to Table, each of these indices is
above its corresponding general acceptance
level (Kelloway 1998; Hair et al. 2010),
demonstrating that the measurement model
exhibits high agreement the acquired data.
Hence, we can see all the fit indices are
satisfactory and are accepted in the model
Results of Structural Equation Model
Fit indices RMSEA CFI TLI GFI AGFI

Initial 0.097 0.685 0.670 0.890 0.875

model

Final model 0.058 0.973 0.921 0.932 0.916

Acceptable <0.06 ≥0.900 ≥0.900 >0.900 >0.800

value

Remarks Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory

on final
model
Table: Results of SEM

HYPOTHESIS TESTING -
Null Hypothesis: The Null Hypothesis is Alternative Hypothesis: It is denoted by H1 or
generally the hypothesis that will affect the Ha, Alternative hypothesis is the hypothesis
sample observation which will affect entirely that sample observations are impacts by some
from chance. H O is the denotation of the Null non-random phenomena.
Hypothesis.
Alternate Path Standard Path Remarks
Hypothesis coefficient
H1 Planters’ intention → Economic 0.904 Significant
influence
H2 Buyers Attitude → Economic 0.564 Significant
influence
H3 Economic Influence → Willingness to 0.958 Significant
adopt
H4 Planters Intention → Willingness to 0.677 Significant
adapt
H5 Buyers Attitude → Willingness to 0.786 Significant
adapt
Economic Influence-> willingness to adapt is most significant path which shows in SEM model
Findings and Conclusions
The data collected through
questionnaires has been analyzed for the
study. Out of 210 respondents, dominant
portion of the respondents lies in the age
group of 21-39 years old. Descriptive statistics
has been done for the factors and variables.
Cronbach’s Alpha and KMO test has been done
in order to test the reliability of the
Questionnaire & Responses, all the test values
are above 0.8 therefore, the data collected are
reliable. Exploratory factor analysis with a
threshold value of 0.4has been done to
remove the insignificant variables. Also,
alternative hypothesis test has been
performed. Structural equational model has
been developed to measure and analyze the
relationships of observed and latent variables
and its made a satisfactory remark on the final
model.
This research shows that participation in
cooperatives serve to increase the prices
received by small coffee planters
ACKNOWLEDGEMENTS
The management and everyone at M.S. publishing
Ramaiah University of Applied Sciences
(MSRUAS) and respondents of Bangalore, are
gratefully acknowledged by the author for
their encouragement and assistance
Chickmagalur, Karnataka. The results of this
210 study suggest that implementation of new
marketing channels in the segment of
consumer cooperatives should be fostered to
give farmers the opportunity to participate in
these new market developments and increase
the value of their produce
Suggestions for future work
• The study overviews the process of the
eliminating the middlemen like agents
and curers in the coffee market chain and
replacing them by the consumer
cooperatives. The major focus in the
study is the Small coffee planters. Hence
there is a scope for further studies
focusing on the deeper insights of each
actor in the chain.
• Further, the study is confined to one
district with limited sample size. Hence
similar studies can be carried focusing in
in the export markets.
research paper. The author
gratefully thanks to mentor Prof V Nagendra
and Dr H S Srivatsa and all the respondents for
their participation in the study.
in
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