Identification and Use of Latent Variables in the Analysis of The Effects of Certification on Cocoa Farms in the Transamazon

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Objective: The goal of this research was to identify and to analyze the effects of certifications on the value-adding in all links of cocoa supply chain, with special focus on the productive efficiency, training and inclusion of human capital, and the use of good sustainable practices. Theoretical framework: We applied the Inclusive and Sustainable Value Chain concept and the Reverse Asymmetric Information theory in the analysis of certification, premium pricing formation and the management of cocoa farms in the Trans-Amazonian region. Exploratory Factorial Analysis (EFA) was used to identify the latent factors or variables associated with the effect of certification to improve the life quality of cocoa producers. Results and conclusion: Female management of the farms was 20%, which was consistent with the reality of family farming in the state of Pará. The EFA identified four latent variables, which explained 77.059% of the total variance of the data. To explain the reality of the certified cocoa farms of Transamazon region, the latent variables Productive Efficiency, Human Capital Formation, Certification Power and Certified Farm contributed to 22.054%, 21.63%, 17.03% and 16.35% respectively. It is concluded that certification improved productive efficiency and human capital formation in the activity but was unable to prevent deforestation. Research implications: The effects of certification on the cocoa farms analyzed have led to progresses in human capital formation and productive efficiency through good crop management practices and improvements in working conditions. However, limitations on livelihoods, labor recruitment, access to credit, and reduction of deforestation remain. Premium pricing is the variable that must be adjusted to increase the efficiency and effectiveness of certification in differentiating products and inserting them into global food chains. Originality/value: According to 68% of respondents, the premium pricing paid for cocoa does not compensate all social opportunity costs and ecosystem services of the standing forest, which limits the effectiveness of certification in meeting the needs and well-being of producers, the preservation of biodiversity and greenhouse gas emissions.