The dynamics of Africa’s fruit and vegetable processing sectors

The production of fruits and vegetables (F&V) in Africa has increased 3.3 percent annually during the last 20 years, but only 0.7 percent in per capita terms (FAOSTAT 2022; Figure 3.1). Africa has the lowest per capita production and consumption of F&V in the world, although South Africa, Morocco, and Egypt are large producers and exporters

Essays on producer organizations : Business models, social inclusion and food safety

Agri-food value chains in developing countries are experiencing rapid transformations because of increased urbanization, incomes, and supermarket retail chains, which have led to tighter food safety requirements. These changes call for upgrading and coordination of activities and decisions by actors in the chain to ensure value chain efficiency and to meet customer’s demands. Although wide literature is available on value chain upgrading and coordination, most research adopts a chain-wide perspective. Little has been done to understand the role of specific actors like POs. Yet, POs form the main channel through which smallholders are included in agri-food value chains in developing countries. More so, previous studies focus on economic upgrading while little attention has been given to social upgrading. Scholars are beginning to question whether economic upgrading leads to social upgrading. The present thesis aims to gain insights into the role of POs in value chain coordination and upgrading in agri-food value chains, and assess the relationship between economic upgrading and social upgrading. The thesis addresses this general aim using four research questions and by using both qualitative and quantitative methods. Chapter 2 takes a first step in answering the general aim by focusing on the business models of POs. With the changing coordination and upgrading strategies of value chains, POs are expected to change their business models as they adopt coping strategies. However, not much is known about the business models of POs. Thus, Chapter 2 fill this gap by answering the following question: RQ1: What are the business model components of POs and what typology of PO business models can be derived? Based on key informant interviews with managers and members of the board of 22 POs, experts from the government, and NGOs together with observations of PO activities and meetings, qualitative data was obtained to explore business models of POs. The study finds that key activities, key resources, members, governance structure, cost structure, and revenue streams, customer segments, legal form, and member and customer value propositions are important business model components of POs. Four types of business models of POs were derived including bargaining, cooling, hub, and processing. A processing PO is associated with the highest level of vertical integration and economic upgrading, while a bargaining PO is associated with low economic upgrading and vertical coordination in value chains. Cooling and hub POs facilitate intermediate levels. Because of its focus on improving competitiveness in value chains, we consider a processing PO as more business-oriented than bargaining, cooling, and hub POs. A bargaining PO is a typical example of a traditional organization or in other words, a less business-oriented organization. Chapter 3 extends the scope of the initial study by including a survey of smallholders in bargaining and processing POs to examine social inclusion. The purpose of this study is to assess the determinants of smallholders’ membership and participation in decision-making processes in POs. This will help in explaining social inclusion in POs, thus contributing to understanding social upgradining in value chains. The following research question was addressed: RQ2: What factors determine farmers’ membership and their participation in decision-making in POs? Using the economic utility theory and multinomial logit analysis of quantitative data from the 595 smallholder dairy farmers, results show that membership in bargaining POs favors farmers with hired labor and those in remote locations. Farmers who are more educated, own pure breeds, and have a large number of cows are likely to belong to processing POs compared to non-membership. Furthermore, farmers who are located in less remote areas are more likely to be members of processing POs versus non-membership. A sequential logit model was employed to analyze smallholder participation in three decision-making stages: attending the AGM, speaking up in the AGM, and serving on the board. The relationship between membership in processing POs and participation is negative. Membership in processing POs reduces the likelihood to speak up in the AGM and to serve on the board. We find that farm assets such as ownership of pure breed cows, number of cows, and farm size are positively associated with attending the AGM of bargaining POs while young farmers and women are excluded from the decision-making process in processing POs. Likewise, the probability of small farmers and those with low social capital to participate in the processing POs is low. The study provides insights into the role of POs in social upgrading in value chains. Chapter 4 offers further insights into the role of POs in social upgrading by examining who benefits from inclusion. It is argued that women control fewer resources, have less decision-making power over household income, and face time constraints because of their triple burden of productive, domestic, and community responsibilities (IFPRI, 2020). This creates barriers to women's participation in agri-food value chains. POs have been recognized as promising channels for women smallholders to overcome agricultural production and marketing challenges by facilitating access to markets, information, training, and inputs, and increasing women empowerment. Chapter 4 examines the effect of membership in POs on women empowerment by answering the following question: RQ3: What is the effect of household and woman membership in POs on women empowerment? The effect of PO membership is distinguished by the type of PO and the gender of a member. Quantitative data was used from 267 men and 207 women in member and non-member married households, and an entropy balancing technique and regression models were employed to assess the membership effect. Empowerment indicators are drawn from the Women Empowerment Livestock Index (WELI) tool and include (1) decisions about agricultural production; (2) decisions related to nutrition; (3) access to and control over resources; (4) control over and use of income; (5) access to and control over opportunities; and (6) workload. We find that household membership in a bargaining PO, that is, regardless of whether the man or the woman in the household is the member, increases women’s ownership of cows, their control over decisions on buying and selling of cows and dairy production while household membership in processing POs increases women’s control over dairy production decisions. Distinguishing the membership effect by the gender of the member, we find that woman membership in bargaining POs increases women’s ownership of cows but woman membership in processing POs has no significant effect on this outcome. The paper suggests that the type of PO has implications for women empowerment with bargaining POs appearing to be more empowering than processing POs. In Chapter 5, we gather empirical evidence from smallholders on economic upgrading through POs. The study focuses on process upgrading regarding improvement of food safety control measures. Food safety is the main determinant for coordination and upgrading in value chains and for inclusion of smallholders. The study examines the effect of membership in POs on the adoption of food safety measures. The research question asked is as follows: RQ4: What is the effect of household membership in POs on the adoption of food safety measures? We assess whether and to what extent membership in POs affects farmers’ adoption of food safety measures, and explore the differences in membership effects across POs. Using a literature review and 11 expert interviews, we identify four categories of food safety measures related to production: milking, milk storage, milking area, and animal health. The expert interviews aided in rating the importance of each category on milk safety and in generating the food safety indexes for the categories. We then used the food safety indexes to empirically evaluate the effect of membership on the adoption of the food safety measures across the four categories. For this empirical estimation, a quantitative survey with 595 smallholder dairy farmers in Kenya was employed. Using the propensity score matching technique to control for selection bias, our results show that membership positively and significantly improves smallholders’ adoption of food safety measures related to milk storage and the cleaning of the milking area. Notably, the estimation of the membership effects across POs reveals that members of processing POs achieve higher adoption levels of food safety measures than members of bargaining POs. The effect size of membership in processing POs is larger than that of membership in bargaining POs. We confirm that adopting vertical integration entails following strict food safety control measures. In sum, the four research questions have contributed to understanding value chain coordination and upgrading through POs. Regarding business models of POs, we show that where low coordination and economic upgrading exist in value chains, POs perform traditional functions of collection and bulking to improve economies of scale. However, as the need for coordination and economic upgrading increases, POs vertically integrate into processing, provide additional services such as inputs and technical training, hire professional managers, improve value proposition for members and customers and adopt strict food safety control measures. The typology is useful in formulating a business model design when establishing a new PO. For researchers, the typology is important for analyzing the impact of different POs on smallholder livelihoods and the performance of the organizations. In terms of the relationship between economic upgrading and social upgrading, bargaining POs are associated with low economic upgrading, but high social upgrading. Processing POs are associated with high economic upgrading, i.e., high food safety compliance, access to technical services, and vertical integration. However, this results in a trade-off where poor and women farmers are excluded from value chains. If development practitioners aim to promote inclusive growth, supporting bargaining POs is recommended. For processing POs, provision of additional services such as financial and technical training to the poorest farmers would be needed to improve inclusion in highly upgraded value chains

Which type of producer organization is (more) inclusive? Dynamics of farmers’ membership and participation in the decision-making process

Producer organizations (POs) provide benefits to smallholders by alleviating market access challenges. However, whether all farmers benefit from a PO is still a question. Limited evidence is available on whether POs are inclusive of poor farmers. Even if the poor join, do they participate in decision-making? We conducted interviews with 595 smallholder dairy farmers in Kenya. We distinguish three groups; members of a bargaining PO, members of a processing PO and non-members. We show that membership is related to the structural characteristics of the organization: processing POs favor membership of farmers that are wealthier, more educated and more innovative. As to participation in the decision-making process: older, male and specialized farmers have a higher chance of being involved than poor farmers. Factors distinguishing farmer participation in decision-making between bargaining and processing POs are highlighted. We find that a bargaining PO is more inclusive of all groups of farmers, while women and poor farmers are excluded from decision-making in a processing PO. Our findings contribute to policymaking on inclusive development.</p

Adoption of food safety measures: The role of bargaining and processing producer organizations

Increasing demand for safe food in developing countries entails meeting stringent food safety requirements. Food retailers and regulatory bodies impose food safety measures related to production and handling of farm produce. For smallholders to remain competitive in such a system, institutional arrangements are necessary. We examine the role of producer organizations (POs) in influencing safe food production behaviours among farmers. Using data from 11 expert interviews and a quantitative survey involving 595 smallholder dairy farmers in Kenya, a propensity score matching estimation is employed to assess membership effects. We show that membership in POs positively and significantly influences smallholders’ adoption of food safety measures related to milk storage and the milking area. We highlight the importance of social incentives in improving food safety adoption among farmers even when price incentives are absent. Our recommendation is that PO policies that alleviate barriers to food safety adoption among farmers will be helpful in scaling up adoption

Cost and affordability of a healthy diet for urban populations in Thailand and the Philippines before and during the COVID-19 pandemic

Abstract Background The coronavirus disease 2019 (COVID-19) pandemic severely affected global food security, but analyses of its impact on the cost and affordability of a healthy diet are limited. This study examines the immediate effect of the COVID-19 pandemic on the cost and affordability of a healthy diet among urban households in Bangkok, Thailand and Manila, the Philippines. Methods We used official food price and household income and food expenditure data from the national statistics offices. The cost of recommended diet (CoRD) method was employed to assess the minimum cost of a healthy diet, following the healthy diet recommendations provided in the national food-based dietary guidelines of the specific countries. Regression discontinuity design was estimated to determine the COVID-19 effect on food prices and scenario analysis done to determine the effect of reduced food budgets with and without government relief programs. Results The results show that the average cost of the recommended diet was US$1.55 per person/day in Bangkok and US$ 3.76 in Manila (2019 prices in purchasing power parities) immediately before the pandemic. This diet is generally affordable for all households in Bangkok, but only for 37% of households (4.98 million people) in Manila, indicating much higher poverty in the latter. The pandemic and associated government measures decreased the cost of the recommended diet with 6.5% in Bangkok (p = 0.001) but not in Manila (p = 0.167). Assuming contractions in people’s food budgets of 15–20%, the recommended diet became unaffordable for 0.08–0.12 million people in Bangkok and 6.32–7.73 million people in Manila during the pandemic. Government relief largely compensated for this loss in Bangkok, but relief payments in Manila were not enough to compensate the effect. Conclusion These results show that the main effect of the COVID-19 pandemic on the affordability of healthy diets was through the effect on reduced incomes of the poor rather than through prices. Government relief measures should target low-income households to give them the means to purchase healthy food items

Does Contract Farming Improve Smallholder Farmers Income? The Case of Avocado Farming in Kenya

Contract farming is seen by its proponents as a tool for creating new market opportunities as well as for providing credit and training, leading to increased incomes of smallholder farmers. Critics, however, argue that contract farming encourages unequal bargaining relationships with agribusiness firms and is likely to pass risks to farmers, thus favouring large scale farmers at the expense of smallholders. Another school of thought contends that the effect of contract farming on the livelihoods of smallholder farmers is context specific and depends on the enterprise in question. Yet, there is a dearth of empirical evidence from such studies in Sub-Saharan Africa. We use data collected in 2012 from 100 smallholder avocado farmers in Kandara district in Kenya, obtained using multistage sampling technique, to examine the effect of contract farming on household income. Because of lack of pre-treatment data and the possibility of selection bias due to observable characteristics, we use propensity score matching technique to construct controls for the treatment group. The results indicate that contract farming has a positive and significant effect on avocado income. However, further analysis reveals that contract farming does not have any significant effect on the total household income of smallholder avocado farmers. Instead, support services such as interlinked credit and provision of information should be taken into consideration in contract farming because of their potential benefits for smallholders