Bart Minten

Relationships and traders in Madagascar

This article documents the role that personal relationships play in economic exchange. Original survey data show that agricultural traders in Madagascar perceive relationships as the most important factor for success in their business. Evidence details the extent to which relationships are used to serve a variety of purposes such as: the circulation of information about prices and market conditions; the provision of trade credit; the prevention and handling of contractual difficulties; the regularity of trade flows; and the mitigation of risk. Of these, the regularity of supply and demand and the sharing of risk appear particularly important. Larger and more prosperous traders are those with quantitatively and qualitatively better relationships. Family plays little role in business beyond assistance at start‐up.

Supermarket revolution in Asia and emerging development strategies to include small farmers

A “supermarket revolution” has occurred in developing countries in the past 2 decades. We focus on three specific issues that reflect the impact of this revolution, particularly in Asia: continuity in transformation, innovation in transformation, and unique development strategies. First, the record shows that the rapid growth observed in the early 2000s in China, Indonesia, Malaysia, and Thailand has continued, and the “newcomers”—India and Vietnam—have grown even faster. Although foreign direct investment has been important, the roles of domestic conglomerates and even state investment have been significant and unique. Second, Asias supermarket revolution has exhibited unique pathways of retail diffusion and procurement system change. There has been “precocious” penetration of rural towns by rural supermarkets and rural business hubs, emergence of penetration of fresh produce retail that took much longer to initiate in other regions, and emergence of Asian retail developing-country multinational chains. In procurement, a symbiosis between modern retail and the emerging and consolidating modern food processing and logistics sectors has arisen. Third, several approaches are being tried to link small farmers to supermarkets. Some are unique to Asia, for example assembling into a “hub” or “platform” or “park” the various companies and services that link farmers to modern markets. Other approaches relatively new to Asia are found elsewhere, especially in Latin America, including “bringing modern markets to farmers” by establishing collection centers and multipronged collection cum service provision arrangements, and forming market cooperatives and farmer companies to help small farmers access supermarkets.

The effect of distance and road quality on food collection, marketing margins, and traders' wages: evidence from the former Zaire

Abstract Food price variation is typical of the food economies of many low income countries. The presence or absence of road infrastructure is perceived to be one of the main determinants of this variation. This analysis shows that in the case of the former Zaire, food price dispersion is significant both across products and across regions. It is demonstrated that transportation costs explain most of the differences in food prices between producer regions and that road quality is an important factor in the transportation costs. However, food prices decrease relatively faster than transportation costs increase and traders wages are higher on bad roads.

Modern Food Supply Chains and Development: Evidence from Horticulture Export Sectors in Sub‐Saharan Africa

The global food system is undergoing rapid processes of transformation and modernisation. This is causing important changes in developing‐country food supply chains, particularly in supermarket‐driven and high‐value export chains, but the welfare implications of these changes are poorly understood. This article analyses and compares the welfare effects in different horticulture export chains in sub‐Saharan Africa, disentangling different types of effects and the channels through which rural households are affected. Its main conclusion is that increased high‐value exports and the modernisation of export supply chains can bring about important positive welfare effects, which can occur in various ways through product‐ or labour‐market effects and through direct and indirect effects.

Surprised by supermarkets: diffusion of modern food retail in India

Purpose - The purpose of this paper is to analyze the patterns and dynamics of the diffusion of modern food retail in India. Design/methodology/approach - The paper is based on detailed sales data from retail chains in India, short case studies of retail chains, and review of literature. Findings - The article presents three surprises concerning modern food retail diffusion in India. First, modern retail has developed in three “waves”, with the first wave, government retail chains, starting in the 1960s/1970s, cooperative retail chains starting in the 1970s/1980s, and private retail chains in the 1990s/2000s. All three were substantial, and internationally uniquely, all three coexist in the 2000s as segments of modern retail. Second, the rise of modern private retail in India in the past six years has been among the fastest in the world, growing at 49 percent a year on average over that period, and bouncing back to growth after a dip from the recent recession. The great majority of modern private retail has arisen in 2007-2010. Third, beside the uniqueness of the coexistence of three types of retail noted above, Indian private retail chain development has unique or rare characteristics: driven by domestic capital investment, “early” (in terms of usual international patterns) diversification into small formats, “early” penetration of small cities and even rural towns, of the food markets of the poor and lower-middle class, and of fresh produce retail. These unique factors have helped to propel it quickly. Originality/value - For the first time in the literature, the paper presents an analysis of: the three waves in Indian retail; detailed sales data for all leading chains; and its uniqueness.

The quiet revolution in Asia's rice value chains

There is a rapid transformation afoot in the rice value chain in Asia. The upstream is changing quickly—farmers are undertaking capital‐led intensification and participating in burgeoning markets for land rental, fertilizer and pesticides, irrigation water, and seed, and shifting from subsistence to small commercialized farms; in some areas landholdings are concentrating. Midstream, in wholesale and milling, there is a quiet revolution underway, with thousands of entrepreneurs investing in equipment, increasing scale, diversifying into higher quality, and the segments are undergoing consolidation and vertical coordination and integration. Mills, especially in China, are packaging and branding, and building agent networks in wholesale markets, and large mills are building direct relationships with supermarkets. The downstream retail segment is undergoing a “supermarket revolution,” again with the lead in change in China. In most cases the government is not playing a direct role in the market, but enabling this transformation through infrastructural investment. The transformation appears to be improving food security for cities by reducing margins, offering lower consumer rice prices, and increasing quality and diversity of rice. This paper discusses findings derived from unique stacked surveys of all value chain segments in seven zones, more and less developed, around Bangladesh, China, India, and Vietnam.

Multinationals vs. Cooperatives: The Income and Efficiency Effects of Supply Chain Governance in India

The impact of multinational firms on the domestic agricultural sector in developing countries is controversial, in particular in India. Relying on a unique set of household-level data from the state of Punjab, we study the biggest dairy company in the world (Nestle) in India and compare its vertical spillover effects on upstream suppliers to other market channels (informal sector and cooperatives). We find that farmers that supply informal channels are less efficient and earn less profits per dairy animal than farmers supplying the cooperative and the multinational sector. Further, we find that farmers in the multinational channel are more efficient than farmers in the cooperative channel, but equally profitable. Hence, we do not find that supplying the cooperative channel is more beneficial for local dairy farmers than supplying the multinational channel. Overall, however, dairy productivity and profitability levels are still dramatically low, with tremendous scope for dairy development.

Food Quality Changes and Implications: Evidence from the Rice Value Chain of Bangladesh

In Dhaka, the share of the less expensive coarse rice is shown to be rapidly decreasing in rice markets and it thus seems that the role of rice as only a cheap staple food is being redefined. The increasing demand for the more expensive varieties is seemingly associated with a more important off-farm food sector—in particular, milling, retailing, and branding—as well as a transformed milling industry. We further find that the labor rewards for growing different rice varieties are not significantly different and that farmers do not benefit directly from consumers’ increased willingness to pay for rice.

Productivity in Malagasy rice systems: wealth-differentiated constraints and priorities

This study explores the constraints on agricultural productivity and priorities in boosting productivity in rice, the main staple in Madagascar, using a range of different data sets and analytical methods, integrating qualitative assessments by farmers and quantitative evidence from panel data production function analysis and willingness-to-pay estimates for chemical fertilizer. Nationwide, farmers seek primarily labor productivity enhancing interventions, e.g., improved access to agricultural equipment, cattle and irrigation. Shock mitigation measures, land productivity increasing technologies and improved land tenure are reported to be much less important. Poorer farmers have significantly lower rice yields than richer farmers, as well as significantly less land. Estimated productivity gains are greatest for the poorest with respect to adoption of climatic shock mitigation measures and chemical fertilizer. However, fertilizer use on rice appears only marginally profitable and highly variable across years. Research and interventions aimed at reducing costs and price volatility within the fertilizer supply chain might help at least the more accessible regions to more readily adopt chemical fertilizer.

Structural Transformation of Cereal Markets in Ethiopia

Abstract We study cereal markets in Ethiopia over the last decade, a period that has been characterised by important local changes, including strong economic growth, urbanisation, improved road and communication infrastructure, and higher adoption of modern inputs in agriculture. These changes are associated with better spatial price integration as well as with significant declines in real price differences between supplying and receiving markets and in cereal milling and retail margins. In short, important improvements have occurred in Ethiopia’s cereal marketing system. This is especially important because dysfunctional cereal markets were previously identified as an important cause of food insecurity in the country.