High-value supply chains, food standards and poor farmers in developing countries: the case of vegetable exports from Senegal

This paper studies the welfare effects of high-value FFV exports from Senegal to the EU. We analyze how the structure of the export supply chain has changed in response to tightening food standards and investigate the impact for the local population. The study yields four important findings. First, we find that public and private food standards in the EU have lead to increased consolidation and increased vertical coordination in the FFV supply chain with a shift away from smallholder contract-based production to integrated estate production. Second, these structural changes have increased the participation of rural households, and especially poorer households, in the supply chains through wage employment on FFV estates. Third, we find that household participation in FFV export production, whether through contract-farming or through estate wage employment, generates significant income gains. Fourth, high-value FFV trade has a major impact on rural poverty-reduction and the increasing prevalence of food standards is even enhancing this impact.International Relations/Trade,

Trade, Food Standards and Poverty: The Case of High-Value Vegetable Exports from Senegal

Agricultural supply chains are changing globally with pervasive food standards and increased vertical coordination. The impact of these changes for developing countries and for small farmers in those countries is not yet well understood. We analyze the developments in high-standards FFV supply chains and the effects for small farmers and rural households in Senegal. We use a unique dataset derived from company level interviews and household surveys in the main horticulture zone in Senegal. Supply chain restructuring resulted in a shift from contract-farming with small-scale producers to large-scale vertically integrated estate-farming. A comprehensive econometric analysis shows that the restructuring of the value chain has enhanced an equitable distribution of rents among the rural population. Contract-farming, on the one hand increases the gains from high-value production and trade that accrue to the rural smallholder population but on the other hand, leads to the exclusion of the poorest farmers. Estate-farming and associated rural employment have a smaller (albeit still significantly large) effect on rural incomes and probably increase the rents from high-value agricultural trade that are extracted by large agro-industrial companies but add to the income of the poorest households. This challenges the argument made in the literature that high-standards food production needs to integrate small farmers as suppliers if it needs to benefit rural development and increase the welfare for the poor.International Relations/Trade, D1, L66, O13, Q12, Q17,

ACTIVITY PORTFOLIOS IN RURAL ETHIOPIA: CHOICES AND CONSTRAINTS

Peasant households, especially African rural households, can hold very diversified portfolios of economic activities. Portfolio diversification is often seen as a risk-reducing mechanism and linked with lowering risk at the cost of a lower income. A simple theoretical model of activity choice reveals that factors other than risk might influence the desire to diversity. In addition, binding entry-constraints might exist for certain off-farm activities. An empirical analysis of Ethiopian rural households suggests that entry-constraints are important in explaining portfolio and that diversification can actually result in increasing income.Consumer/Household Economics,

Private Standards and Employment Insecurity: GlobalGAP in the Senegalese Horticulture Export Sector

Crop Production/Industries, International Relations/Trade, Labor and Human Capital,

Standards as barriers and catalysts for trade and poverty reduction.

The importance of food standards in global agricultural trade has increased strongly, but the effects are uncertain. Several studies argue that these standards imposed by high-income countries diminish the export opportunities for developing countries and concentrate the benefits of trade with processing and retailing companies and large farms, thereby casting doubt on the development impact of international agricultural trade. Other argue that the standards can be catalysts for growth. In this paper we critically review the arguments and empirical evidence on the link between increasing food standards, developing country exports and welfare in those countries. We conclude that the evidence is often weaker as claimed. We also provide new insights from two recent survey-based empirical studies. We conclude that standards can be a catalyst for trade, growth and poverty reduction in developing countries.Trade;

Gender and modern supply chains in developing countries.

The rapid spread of modern supply chains in developing countries is profoundly changing the way food is produced and traded. In this paper we examine the gender implications in modern supply chains. We conceptualize the various mechanisms through which women are directly affected, we review existing empirical evidence and add new survey-based evidence. Empirical findings from our own survey suggest that modern supply chains may be associated with reduced gender inequalities in rural areas. We find that women benefit more and more directly from large-scale estate production and agro-industrial processing, and the creation of employment in these modern agro-industries than from smallholder contract-farming.

Trade, standards and poverty: Evidence from Senegal.

Trade; Exports;

From Public to Private Governance in the Food Supply Chains of Emerging Economies

Food and agricultural commodity value chains in developing and transition countries have undergone tremendous changes in the past decades. Companies and property rights have been privatized, markets liberalized, and economies integrated into global food systems. The liberalization and privatization initially caused the collapse of state-controlled vertical integration. More recently, private vertical coordination systems have emerged and are growing rapidly as a response to consumer demand for food quality and safety on the one hand and the farms' production constraints caused by factor market imperfections. In this paper we (a) demonstrate the importance of these changes, (b) discuss the implications for efficiency and equity and (c) provide empirical evidence on the effects in several developing and transition countries.Agricultural and Food Policy, Industrial Organization,

Trade, Standards and Poverty. Evidence from Senegal

The debate on trade and poverty is reinforced by recent studies on the role of standards. It is argued that increasing standards act as trade barriers for developing countries and cause further marginalization of the poor. This paper is the first to quantify income and poverty effects of such high-standards trade and to integrate labor market effects, by using company and household survey data from the vegetable export chain in Senegal. We find that exports have grown sharply despite increasing standards, resulting in important income gains and poverty reduction. Our estimates indicate that poverty is 14 % points lower due to vegetable exports. Tightening food standards induced a shift from smallholder contract-based farming to large-scale integrated estate production, altering the mechanism through which poor households benefit: through labor markets instead of product markets. The impact on poverty reduction is stronger as the poorest benefit relatively more from working on large-scale farms than from contract farming.trade, poverty, standards, vertical coordination, contract farming, Food Security and Poverty, International Relations/Trade, F14, F16, I3, Q12, Q13, Q17,

Globalization, Privatization, and Vertical Coordination in Food Value Chains in Developing and Transition Countries

Food and agricultural commodity value chains in developing and transition countries have undergone tremendous changes in the past decades. Companies and property rights have been privatized, markets liberalized, and economies integrated into global food systems. The liberalization and privatization initially caused the collapse of state controlled vertical integration. More recently, private vertical coordination systems have emerged and are growing rapidly as a response to consumer demand for food quality and safety on the one hand and the farms' production constraints caused by factor market imperfections. In this paper we (a) demonstrate the importance of these changes, (b) discuss the implications for efficiency and equity and (c) provide empirical evidence on the effects in several developing and transition countries.Industrial Organization,