10 research outputs found

    Codes of Conduct and Marketing Strategies in Kenya’s Horticultural Sector

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    The global demand for product quality and safety in Western European markets has motivated rapid growth of production and marketing codes of conduct between business partners. However, though the Kenya Horticultural Crops Development Authority’s code of conduct on contractual guidelines has promoted business to farm business (B2B) relationships between exporters and smallholders, the relationships have received little empirical analysis. This paper uses case analysis based on strategic marketing framework to examine the B2B’s purpose, target and competitive, growth, promotion, distribution, and pricing strategies. The analysis reveals that the B2B strategies are based on supply chain governance constructs: written and verbal contracts. The purpose of the contracts is to manage procurement of high quality and safe produce which in itself is contingent on the European Union market served. On targets, written contracts seem efficient with organized producers and verbal contracts with independent producers. As competitive edges, written contracts are orientated toward differentiation strategy and verbal contracts, low-cost strategy. Growth in written contracts is through market penetration and diversification in verbal contracts. However, sharp differences exist on distributional, promotional and pricing strategies. Keywords: code of conduct, contracts, marketing strategies, horticulture, Keny

    Incentives, Transaction Costs and Social Capital Considerations in Determination of Contract Duration in the Kenyan Smallholder Horticultural Sub-Sector

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    A multinomial regression is used on data from a survey of French bean smallholders to analyse duration of business to farm business relations in horticulture farming conditional on incentives, transaction cost minimization and social capital. Average marginal effects return a higher probability of short duration given a higher number of farmer neighbours and farms located further from the village indicating dependence on social networks and avoidance of competition for farm supplies. The probability of long duration is higher if farmers have access to credit and prior information on prices, large farm area under beans and contractual experience, if selected to farm beans and if a farmer knows a higher number of farmers selling to the same buyer, if a farmer uses a supply contract and the farm is further from the source of irrigation water. This suggests that long duration exchanges are based on high powered incentives, transaction cost reduction, social capital and control of quality supplies. It is concluded that the success of production and market intervention programs in the smallholder sector will require buyers to exploit social networks, use production and output incentives and build on existing farmer expertise. Keywords: contract duration; incentives; transaction costs; social capital; smallholders; Keny

    Price Formation in the Presence of International Private Food Quality Standard: The case of Kenyan French beans

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    Private food quality assurance standards especially GlobalGAP now dominate Western food retailers’ markets. GlobalGAP defines market access condition for producers requiring farm investments, traceability and certification. Despite quality, safety, health, welfare and environmental benefits, compliance is costly for smallholders yet a price premium is unobservable. Alternative markets mitigate quality and safety risks through contracts whose use and frequency of renewal is unexplained. Using data from French bean producers, three essays are presented: analysis of GlobalGAP adoption, its effect on producer prices, use and frequency of contracts renewal. In the first essay, results show that producer price, many producers in a village and short monitored supply chains reduce the likelihood but protective gear, collective organizations and extension services increase the likelihood of adoption. This means that price incentive, independent and monitored production constrains adoption but farm assets, farmer capacity and non-monetary incentives enhance adoption. In the second essay, the econometric model shows that GlobalGAP certification, use of supply contracts, direct procurement by exporters, and the size of markets in a village, have a positive effect on producer prices. Organized producers receive significantly lower prices. The GlobalGAP premium is not very large or constant over one season and is less important than in supply contracts and direct procurement. More buyers in a given village, non-switching selling to one buyer and better roads are found to increase prices paid to producers. The third essay finds that higher producer prices and many producers in a village are associated with oral contracts while extension, group size, post primary education and contract seasons with a buyer differentiate written contracts. Further, the results show that contract renewals increase with price if it is known at planting, spot cash payments, distance to irrigation water source, producer-exporter market linkage, sales receipting and traceability but reduce with the number of buyers in a village. The results indicate that alternative markets depend strongly on oral contracts while contract renewal is based more on satisfaction, trust, switching costs and competition. Overall, producer groups and non-monetary incentives may be a more effective way to co-opt smallholders in private quality and safety standards. Beside other benefits, there is a GlobalGAP certification premium though not very large. Finally, alternative markets exist for smallholders without GlobalGAP certification through supply contracts.Private Qualitätsstandards für Nahrungsmittel, insbesondere GlobalGAP, dominieren mittlerweile den westlichen Lebensmitteleinzelhandel. Die Anforderungen von GlobalGAP an die Produzenten beinhalten Investitionen in die landwirtschaftlichen Betriebe, Rückverfolgbarkeit und eine Zertifizierung. Trotz des Nutzens hinsichtlich Qualität, Sicherheit, Gesundheit, Wohlfahrt und Umwelt ist die Erfüllung der Anforderungen kostspielig für Kleinbetriebe und ein Preisaufschlag ist nicht beobachtbar. Auf alternativen Absatzmärkten werden Qualitäts- und Sicherheitsrisiken mittels Verträgen reduziert, wobei aber Nutzung und Häufigkeit der Vertragsverlängerungen bis jetzt unerklärt sind. Die drei Arbeiten, die auf Daten von Produzenten für grüne Bohnen basieren, untersuchen neben der Umsetzung von GlobalGAP den Effekt von GlobalGAP auf die Erzeugerpreise, sowie die Nutzung und Häufigkeit von Vertragsverlängerungen. Die Ergebnisse der ersten Arbeit zeigen, dass die Wahrscheinlichkeit der Umsetzung von GlobalGAP mit steigenden Erzeugerpreisen, der Zunahme der Anzahl der Produzenten in einem Dorf und einer kurzen, überwachten Versorgungsketten sinkt. Sie steigt aber, wenn Schutzvorrichtungen, genossenschaftliche Organisationen und Beratungsstellen vorhanden sind. Das bedeutet, dass Preisanreize, eine unabhängige und überwachte Produktion die Umsetzung behindert, jedoch landwirtschaftliche Produktionsmittel, Kompetenzentwicklung der Landwirte und nicht-monetäre Anreize die Umsetzung unterstützen. Das in der zweiten Arbeit geschätzte ökonometrische Modell zeigt, dass die GlobalGAP Zertifizierung, der Gebrauch von Lieferverträgen, Direktbeschaffung durch Exporteure und die Größe des Marktes eines Dorfes einen positiven Effekt auf die Erzeugerpreise haben. Organisierte Erzeuger erzielen signifikant niedrigere Preise. Der GlobalGAP Preisaufschlag ist nicht sehr groß oder konstant über eine Saison. Auch ist er weniger wichtig in Lieferverträgen und bei der Direktbeschaffung. Es wird festgestellt, dass mehr Käufer in einem gegebenen Dorf, der nicht-wechselnde Verkauf an nur einen Käufer und bessere Straßenverhältnisse die Erzeugerpreise steigern. Die Ergebnisse der dritten Arbeit sind, dass mündliche Verträge mit höheren Erzeugerpreisen und vielen Erzeuger in einem Dorf assoziert sind, während Beratung, Gruppengröße, postprimäre Bildung und Vertragslaufzeit schriftliche Verträge differenzieren. Die Ergebnisse zeigen außerdem, dass Vertragsverlängerungen mit den Preisen, wenn diese zum Zeitpunkt der Pflanzung bekannt sind, den Spotmarktpreisen, der Entfernung zur Quelle für Bewässerungswasser, der Produzenten-Exporteur Marktverbindung, sowie der Möglichkeit des Erhalts von Bestätigungen und der Nachverfolgbarkeit von Verkäufen zunehmen. Andererseits nehmen sie ab, wenn die Anzahl der Käufer in einem Dorf steigt. Diese Ergebnisse deuten an, dass alternative Absatzmärkte stark von mündlichen Verträgen abhängen, wohingegen die Vertragsverlängerungen mehr auf Zufriedenstellung, Vertrauen, Wechselkosten und Wettbewerb basiert. Alles in allem betrachtet, können Erzeugergruppen und nicht-monetäre Anreize effektiver sein, um Kleinbetriebe in private Qualitäts- und Sicherheitsstandards zu kooptieren. Neben anderen Vorteilen gibt es einen GlobalGAP Preisaufschlag, auch wenn dieser nicht sehr groß ist. Letztlich existieren alternative Absatzmärkte für Kleinbetriebe ohne GlobalGAP Zertifizierung durch Lieferverträge

    Export Market Linkage via Gentleman's Agreement: Evidence from French Bean Marketing in Kenya

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    "Gentleman's agreements" involving handshakes or promissory market access possibilities through brokers and middlemen have enabled most small farmers in Kenya to export an extensive array of fruits and vegetables. However, despite rapid expansion into these forms of market linkages, there has been a dearth of empirical information regarding the factors that such marketers consider when linking small farmers to the market. This paper uses data from a 2001 French bean farmers survey conducted in Mwea Tebere Central Kenya to evaluate household and infrastructural factors determining informal linkages for French bean marketing. Logit estimates show that irrigation equipment is a prerequisite for linkage, farm localities further from central crop collection centres and close proximity of farms to source of irrigation waters, and poor accessibility of large farms preferred by brokers in linking small farmers. The results lend credence to the importance of brokers and middlemen as an emerging institution in linking small farmers to export markets in rural regions that have poor infrastructures e.g. roads.verbal agreement, logit, French beans exports, small farmers, linkage, brokers and middlemen, International Relations/Trade,

    Usage of Agricultural Intensification Practices by Smallholder Farmers in Kenyan Rapidly Developing Dry Areas

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    Developing countries, Kenya included are mostly affected by food problems and poverty as a result of high dependence on agriculture. In Kenya agriculture contributes to 27.3% of the Gross Domestic Product. Agriculture in Kenya is dominated by smallholder farmers, whose production is hampered by climate variability, declining land sizes and low agricultural technologies. Agricultural intensification is aimed at solving the problem of low agricultural productivity and poverty through increasing farm output per unit land area. Makueni and Nyando Sub-County were considered as hotspots of climate change by CCAFS. A total of 320 households were sampled from the two sub-counties. From the scope farmers were engaged in 16 agricultural intensification practices, some practices were substitutes others complementary so they were highly correlated. Principal Component Analysis (PCA) was then used to group them into clusters called principal components. PCA helped in creating levels of agricultural intensifications. From the results, the number of components (Levels of agricultural intensification) of users was ranging from one to five. That is from low users of strategy 1, partial users of 2, 3 and 4 to full users of 5. The result revealed that 56% of farmers used 5 sets of strategies while 31%, 8%, 3% and 1% of farmers’ used 4, 3, 2 and 1 levels of agricultural intensification practices respectively. The results implied that there was need for smallholder farmers to increase agricultural intensification which leads to improved smallholder farmers livelihood outcomes and helps in building their resilience to harsh climatic conditions. Keywords: Agricultural intensification practices, Kenya, Principal Component Analysis, Smallholder farmer DOI: 10.7176/JESD/10-18-04 Publication date:September 30th 201

    UNDERSTANDING THE MULTIPLE SOURCES DRIVERS OF AGRICULTURAL INCOME AMONGST SMALLHOLDER FARMERS IN SOUTHERN MALI

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    Multiple sources of income are important strategies for reducing smallholder farmer liquidity constraints and over dependency on single income source. However, farmers in Southern Mali, especially Malian high agricultural potential region are still faced with liquidity constraints resulting from low income from cash crop (cotton) production. Therefore, this study was carried out to understand the factors that motivate farmers’ decision to engage in several income-generating activities. Cross-sectional data were collected from 134 randomly sampled smallholder farmers from three villages in different agro-ecological zones in Southern Mali. Multivariate probit (MVP) regression model was used to estimate the effect of socioeconomic and institutional factors on farmer participation in different sources of farm income. Correlation analysis showed that there is a significant correlation between the different income sources. Results from the econometric model revealed that the age of the family head determines the probability of farmers' participating in multiple sources of incomes, family size, dependency ratio, land tenure, education level, access to agricultural credit and extension services, cash crop income, off-farm income, input prices, agricultural output prices, and rural infrastructure. These results imply that policymakers and agricultural development programs should target strengthening of institutions as well as enhancement of farmers’ access to productive resources

    Export Market Linkage via Gentleman's Agreement: Evidence from French Bean Marketing in Kenya

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    "Gentleman's agreements" involving handshakes or promissory market access possibilities through brokers and middlemen have enabled most small farmers in Kenya to export an extensive array of fruits and vegetables. However, despite rapid expansion into these forms of market linkages, there has been a dearth of empirical information regarding the factors that such marketers consider when linking small farmers to the market. This paper uses data from a 2001 French bean farmers survey conducted in Mwea Tebere Central Kenya to evaluate household and infrastructural factors determining informal linkages for French bean marketing. Logit estimates show that irrigation equipment is a prerequisite for linkage, farm localities further from central crop collection centres and close proximity of farms to source of irrigation waters, and poor accessibility of large farms preferred by brokers in linking small farmers. The results lend credence to the importance of brokers and middlemen as an emerging institution in linking small farmers to export markets in rural regions that have poor infrastructures e.g. roads

    DETERMINANTS OF VERTICAL COORDINATION OPTION CHOICES AMONG SMALLHOLDER FRENCH BEANS PRODUCERS IN KENYA

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    Research background: With market liberalization and the introduction of the new Global GAP measures, several vertical coordination options have emerged, presenting smallholder farmers with multiple market outlets. The choice of any vertical coordination option (VCO) is likely to be entwined by farm, farmer and vertical coordination attributes, yet the selection of an appropriate market outlet for delivering farm produce is not clear-cut. Purpose of the article: This study determines factors influencing the choice of vertical coordination options among smallholder French beans producers in Murang’a South Sub-County Methods: Using data from a sample of 215 smallholder producers, the study employed a multivariate probit model (MVP) to explain the determinants of vertical coordination option choices among French beans farmers in four wards located in Murang’a South Sub-County. Findings & Value added: The results indicate that the choice of vertical coordination option was significantly influenced by gender, household size, education stock, group membership, extension service, training access, farming experience, off-farm income, credit access, distance and market reliability. This implies that the promotion of collective action as an institutional tool for linking farmers to high-value markets, matters. These networks will aid in sharing knowledge, increasing borrowing power and thus, producers can improve French bean quality as required by the market. Additionally, financial institutions stakeholders should develop policies that favour the acquisition of credit at affordable rates. Further, the government with other relevant stakeholders should conduct more training on global gap standards

    UNDERSTANDING THE MULTIPLE SOURCES DRIVERS OF AGRICULTURAL INCOME AMONGST SMALLHOLDER FARMERS IN SOUTHERN MALI

    No full text
    Multiple sources of income are important strategies for reducing smallholder farmer liquidity constraints and over dependency on single income source. However, farmers in Southern Mali, especially Malian high agricultural potential region are still faced with liquidity constraints resulting from low income from cash crop (cotton) production. Therefore, this study was carried out to understand the factors that motivate farmers’ decision to engage in several income-generating activities. Cross-sectional data were collected from 134 randomly sampled smallholder farmers from three villages in different agro-ecological zones in Southern Mali. Multivariate probit (MVP) regression model was used to estimate the effect of socioeconomic and institutional factors on farmer participation in different sources of farm income. Correlation analysis showed that there is a significant correlation between the different income sources. Results from the econometric model revealed that the age of the family head determines the probability of farmers' participating in multiple sources of incomes, family size, dependency ratio, land tenure, education level, access to agricultural credit and extension services, cash crop income, off-farm income, input prices, agricultural output prices, and rural infrastructure. These results imply that policymakers and agricultural development programs should target strengthening of institutions as well as enhancement of farmers’ access to productive resources

    Determinants of adoption of GLOBAL G.A.P. standards: Evidence from smallholder French beans farmers in Murang’a County, Kenya

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    AbstractGLOBAL Good Agricultural Practices (GLOBAL G.A.P.) standards have appeared to increasingly control the exchange of horticultural products in the international market. To make horticulture exports viable and lucrative, smallholder farmers need to invest in GLOBAL G.A.P. While research has focused on the impact of adoption on the welfare of farmers, the factors stimulating the adoption of these standards have been ignored. This study examines the determinants of the adoption of GGAPs (GLOBAL G.A.P.) among smallholder French bean producers in Murang’a South Sub-County. The study used cross-sectional data from a random sample of 215 farmers. The adoption index was used to determine adoption levels per household while a “gologit model” was applied to assess factors influencing the adoption of GGAPs among farmers. The adoption index results indicate that farmers on the contract had higher adoption levels (66%) relative to non-contracted farmers (34%). Based on the gologit findings, the determinants of farmer’s compliance levels were age (P < 0.01), gender (P < 0.1), education (P < 0.01), household size (P < 0.01), training (P < 0.01), extension service (P < 0.05), group membership (P < 0.05), farming experience (P < 0.05), vertical coordination options (VCO) (P < 0.1) and market availability(P < 0.01) and reliability (P < 0.05). Therefore, this study recommends an incentive that will promote the improvement of agricultural extension to facilitate contract farming for the adoption of GGAPs. Additionally, the government should put in place measures to safeguard farmers from market exploitation
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