Elizaphan J.O. Rao

Farmer Participation in Supermarket Channels, Production Technology, and Efficiency: The Case of Vegetables in Kenya

Supermarkets are gaining ground in the agri-food systems of many developing countries. While recent research has analyzed income effects in the small farm sector, impacts on productivity and efficiency have hardly been studied. We use a meta-frontier approach and combine this with propensity score matching to estimate treatment effects among vegetable farmers in Kenya. Participation in supermarket channels increases farm productivity in terms of meta-technology ratios by 45%. We also find positive and significant impacts on technical efficiency and scale efficiency. Supermarket expansion therefore presents opportunities for agricultural growth in the small farm sector, which is crucial for poverty reduction in Africa.

Following Up on Smallholder Farmers and Supermarkets in Kenya

In many developing countries, supermarkets are expanding rapidly. This affects farmers’ marketing options. Previous studies have analyzed welfare effects of smallholder participation in supermarket channels from a static perspective, using cross-section data. We develop a conceptual framework and use panel data to better understand participation and impact dynamics. The analysis focuses on vegetable producers in Kenya. Participation in supermarket channels is associated with income gains. However, many farmers have dropped out of the supermarket channel due to various constraints. The initial income gains cannot be sustained when returning to the traditional market. Organizational support may be needed to avoid widening income disparities.

Farmers’ preference for bundled input-output markets and implications for adapted dairy hubs in Tanzania – a choice experiment

Dairy business hubs present opportunities for efficiently linking farmers to input and output markets. Yet participation by smallholder dairy farmers in these hubs will only be realized if the hub options are adapted to fit the needs of farmers. In this study we have analyzed preference for dairy business hubs in Tanzania where ILRI is currently implementing adapted hub options. Using survey data from smallholder dairy producers from Tanga and Morogoro and applying the choice experiment method we find significant preference for hub options with higher milk prices and payment for milk on a fortnight rather than cash basis. Farmers also prefer hub options that bundle milk marketing with input provision. For bundled inputs, smallholder dairy farmers prefer hub options that allow payment for such inputs via credit or check-off rather than cash. Our analyses also reveal significant heterogeneity in preference among farmers hence the need for advanced analytical approaches that can handle such heterogeneity. Emerging dairy hubs in Tanzania should be supported to either establish in-house input provision arrangements or to enter into contracts with major agro-input dealers in their environs.

Do Dairy Market Hubs improve smallholder farmers’ income? The case of dairy farmers in the Tanga and Morogoro regions of Tanzania

ABSTRACT The dairy industry has great potential to improve living standards for the poor in Tanzania and more so for smallholder farmers who account for the largest share of milk consumed nationally. To increase production efficiency and overall output, the Government of Tanzania and its development partners are promoting dairy market hubs (DMHs) to enhance access to milk markets, inputs and services. However, there is limited empirical evidence on the degree to which these potential benefits translate into real benefits in dairy production and income, particularly for smallholder farmers. This paper therefore, examines the effect of DMHs on smallholder farmers’ income. Using primary data collected from 461 smallholder dairy farmers in four districts in two regions of Tanzania (Tanga and Morogoro) the study employs quasi-experimental methods combining propensity score matching and difference-in-difference (DD) to estimate treatment effects. The results indicate that participation in DMHs increased household dairy income by 4.07 percentage points on average for the period 2014 to 2016. Participation is encouraged by group membership, land owned and quantity of milk sold. It relates negatively with milk price and negatively, though weakly, with age. These results suggest that it would be productive to support livestock producer groups across all potential dairy areas to move towards forming DMHs. Specific actions that could facilitate this are discussed.

Supermarket Growth and Rural Welfare: Evidence from Kenya

The role of supermarkets in food retailing is rapidly growing in many developing countries. In the early stages of growth, supermarkets primarily concentrate on selling processed foods, but over time they also start dealing with fresh products, including fruits and vegetables. This chapter presents findings from a study of smallholder farmers in Kenya who supply vegetables to different market outlets. The findings show that participation in supermarket supply chains increases household income and reduces poverty. Supplying to supermarkets increases farm productivity and causes higher labor demand. Positive employment effects are shown to be especially pronounced for female rural laborers. However, the technical requirements imposed by supermarkets present entry barriers to these emerging supply chains, which may have to be addressed through institutional support.