IDEAS home Printed from https://ideas.repec.org/a/eee/agisys/v132y2015icp145-156.html
   My bibliography  Save this article

The impacts of differentiated markets on the relationship between dairy processors and smallholder farmers in the Peruvian Andes

Author

Listed:
  • Fuentes Navarro, E.
  • Faure, G.
  • Cortijo, E.
  • De Nys, E.
  • Bogue, J.
  • Gómez, C.
  • Mercado, W.
  • Gamboa, C.
  • Le Gal, P.-Y.

Abstract

The structure of dairy supply chains in developing countries often shows a large diversity of organization usually based on smallholder farmers' involvement. This paper investigates how a dual supply chain combining both formal and informal markets with predominantly smallholder farmers impacts farmer–processor interactions at technical and organizational level in a Peruvian Andean valley. The analysis is based on three complementary field studies conducted between 2009 and 2012. Results show a large diversity of supply channels in formal and informal chains. Milk flows are observed between formal and informal processors based on a mix of competition and complementarity depending on the season of the year and the level of consumer demand. Smallholder farmers can change processors frequently according to the milk price and services offered, since no contracts link stakeholders. This organization allows smallholder farmers to be involved in the dairy sector but with low profitability. While the informal sector shows better profits per liter of milk than the formal ones, it remains sensitive to the State's willingness to apply stricter quality regulations.

Suggested Citation

  • Fuentes Navarro, E. & Faure, G. & Cortijo, E. & De Nys, E. & Bogue, J. & Gómez, C. & Mercado, W. & Gamboa, C. & Le Gal, P.-Y., 2015. "The impacts of differentiated markets on the relationship between dairy processors and smallholder farmers in the Peruvian Andes," Agricultural Systems, Elsevier, vol. 132(C), pages 145-156.
    • Handle: RePEc:eee:agisys:v:132:y:2015:i:c:p:145-156
    DOI: 10.1016/j.agsy.2014.10.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0308521X14001358
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.agsy.2014.10.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Johannes Sauer & Matthew Gorton & John White, 2012. "Marketing, cooperatives and price heterogeneity: evidence from the CIS dairy sector," Agricultural Economics, International Association of Agricultural Economists, vol. 43(2), pages 165-177, March.
    2. Novo, André Monteiro & Slingerland, Maja & Jansen, Kees & Kanellopoulos, Argyris & Giller, Ken E., 2013. "Feasibility and competitiveness of intensive smallholder dairy farming in Brazil in comparison with soya and sugarcane: Case study of the Balde Cheio Programme," Agricultural Systems, Elsevier, vol. 121(C), pages 63-72.
    3. Dries, Liesbeth & Germenji, Etleva & Noev, Nivelin & Swinnen, Johan F.M., 2009. "Farmers, Vertical Coordination, and the Restructuring of Dairy Supply Chains in Central and Eastern Europe," World Development, Elsevier, vol. 37(11), pages 1742-1758, November.
    4. Miyata, Sachiko & Minot, Nicholas & Hu, Dinghuan, 2009. "Impact of Contract Farming on Income: Linking Small Farmers, Packers, and Supermarkets in China," World Development, Elsevier, vol. 37(11), pages 1781-1790, November.
    5. Ortiz, Oscar & Orrego, Ricardo & Pradel, Willy & Gildemacher, Peter & Castillo, Renee & Otiniano, Ronal & Gabriel, Julio & Vallejo, Juan & Torres, Omar & Woldegiorgis, Gemebredin & Damene, Belew & Kak, 2013. "Insights into potato innovation systems in Bolivia, Ethiopia, Peru and Uganda," Agricultural Systems, Elsevier, vol. 114(C), pages 73-83.
    6. Landais, E., 1998. "Modelling farm diversity: new approaches to typology building in France," Agricultural Systems, Elsevier, vol. 58(4), pages 505-527, December.
    7. Thornton, P. K. & Herrero, M., 2001. "Integrated crop-livestock simulation models for scenario analysis and impact assessment," Agricultural Systems, Elsevier, vol. 70(2-3), pages 581-602.
    8. Bartl, K. & Mayer, A.C. & Gómez, C.A. & Muñoz, E. & Hess, H.D. & Holmann, F., 2009. "Economic evaluation of current and alternative dual-purpose cattle systems for smallholder farms in the central Peruvian highlands," Agricultural Systems, Elsevier, vol. 101(3), pages 152-161, July.
    9. Bruno Revesz & Carolina Trivelli & Javier Escobal, 2006. "Pequeña agricultura comercial: dinámica y retos en el Perú," Diagnóstico y propuesta, Consorcio de Investigación Económica y Social.
    10. Gow, Hamish R. & Streeter, Deborah H. & Swinnen, Johan F. M., 2000. "How private contract enforcement mechanisms can succeed where public institutions fail: the case of Juhocukor a.s," Agricultural Economics, Blackwell, vol. 23(3), pages 253-265, September.
    11. repec:bla:devpol:v:21:y:2003:i:5-6:p:641-654 is not listed on IDEAS
    12. Kristjanson, P. & Krishna, A. & Radeny, M. & Kuan, J. & Quilca, G. & Sanchez-Urrelo, A. & Leon-Velarde, C., 2007. "Poverty dynamics and the role of livestock in the Peruvian Andes," Agricultural Systems, Elsevier, vol. 94(2), pages 294-308, May.
    13. Staal, Steven & Delgado, Christopher & Nicholson, Charles, 1997. "Smallholder dairying under transactions costs in East Africa," World Development, Elsevier, vol. 25(5), pages 779-794, May.
    14. Farina, Elizabeth M.M.Q. & Gutman, Graciela E. & Lavarello, Pablo J. & Nunes, Rubens & Reardon, T., 2005. "Private and public milk standards in Argentina and Brazil," Food Policy, Elsevier, vol. 30(3), pages 302-315, June.
    15. Key, Nigel & Runsten, David, 1999. "Contract Farming, Smallholders, and Rural Development in Latin America: The Organization of Agroprocessing Firms and the Scale of Outgrower Production," World Development, Elsevier, vol. 27(2), pages 381-401, February.
    16. Moll, Henk A.J. & Staal, Steven J. & Ibrahim, M.N.M., 2007. "Smallholder dairy production and markets: A comparison of production systems in Zambia, Kenya and Sri Lanka," Agricultural Systems, Elsevier, vol. 94(2), pages 593-603, May.
    17. Vijayalakshmi, S. & Sitaramaswamy, J. & De Boer, John, 1995. "Rationalization of milk procurement, processing and marketing in southern India," Agricultural Systems, Elsevier, vol. 48(3), pages 297-314.
    18. Valeeva, Natalia I. & Huirne, Ruud B.M. & Meuwissen, Miranda P.M. & Oude Lansink, Alfons G.J.M., 2007. "Modeling farm-level strategies for improving food safety in the dairy chain," Agricultural Systems, Elsevier, vol. 94(2), pages 528-540, May.
    19. Francesconi, Gian Nicola & Heerink, Nico & D'Haese, Marijke, 2010. "Evolution and challenges of dairy supply chains: Evidence from supermarkets, industries and consumers in Ethiopia," Food Policy, Elsevier, vol. 35(1), pages 60-68, February.
    20. Solano, C. & Bernues, A. & Rojas, F. & Joaquin, N. & Fernandez, W. & Herrero, M., 2000. "Relationships between management intensity and structural and social variables in dairy and dual-purpose systems in Santa Cruz, Bolivia," Agricultural Systems, Elsevier, vol. 65(3), pages 159-177, September.
    21. Gorton, Matthew & Dumitrashko, Mikhail & White, John, 2006. "Overcoming supply chain failure in the agri-food sector: A case study from Moldova," Food Policy, Elsevier, vol. 31(1), pages 90-103, February.
    22. Mdoe, Ntengua & Wiggins, Steve, 1996. "Dairy products demand and marketing in Kilimanjaro Region, Tanzania," Food Policy, Elsevier, vol. 21(3), pages 319-336, July.
    23. Valentinov, Vladislav, 2007. "Why are cooperatives important in agriculture? An organizational economics perspective," Journal of Institutional Economics, Cambridge University Press, vol. 3(1), pages 55-69, April.
    24. Holloway, Garth & Nicholson, Charles & Delgado, Chris & Staal, Steve & Ehui, Simeon, 2000. "Agroindustrialization through institutional innovation: Transaction costs, cooperatives and milk-market development in the east-African highlands," Agricultural Economics, Blackwell, vol. 23(3), pages 279-288, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Daburon, Annabelle & Alary, Véronique & Martin, Vincent & Ali, Ahmed & Osman Abdelzaher, Mona & Awad Aziz Melak, Sherif & Hosni, Taha, 2016. "Quality management in inclusive business: an Egyptian milk sourcing case study," 149th Seminar, October 27-28, 2016, Rennes, France 244781, European Association of Agricultural Economists.
    2. Rao, Elizaphan J. O. & Omondi, Immaculate & Karimov, Aziz A. & Baltenweck, Isavelle, 2016. "Dairy farm households, processor linkages and household income: the case of dairy hub linkages in East Africa," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(4), October.
    3. Maria J. Restrepo & Margareta A. Lelea & Brigitte Kaufmann, 2016. "Second-Order Cybernetic Analysis to Re-construct Farmers’ Rationale When Regulating Milk Production," Systemic Practice and Action Research, Springer, vol. 29(5), pages 449-468, October.
    4. Noelia S. Bedoya-Perales & Glenio Piran Dal’ Magro, 2021. "Quantification of Food Losses and Waste in Peru: A Mass Flow Analysis along the Food Supply Chain," Sustainability, MDPI, vol. 13(5), pages 1-15, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Narayanan, Sudha & Gulati, Ashok, 2002. "Globalization and the smallholders," MSSD discussion papers 50, International Food Policy Research Institute (IFPRI).
    2. Bobojonov, Ihtiyor & Teuber, Ramona & Oshakbayev, Dauren & Glauben, Thomas, 2015. "Agrifood sector transformation and its implications on development of small farmers in Kazakhstan," 2015 Conference, August 9-14, 2015, Milan, Italy 211357, International Association of Agricultural Economists.
    3. Shiferaw, K. & Gebremedhin, B. & Tegegne, A. & Hoekstra, D., 2018. "Analysis of milk production, butter marketing and household use of inputs in rural Ethiopia," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277104, International Association of Agricultural Economists.
    4. Alemu, Abebe Ejigu & Adesina, Jimi, 2015. "Effects of cooperatives and contracts on rural income and production in the dairy supply chains: Evidence from Northern Ethiopia," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 10(4), pages 1-16, December.
    5. Adu-Gyamfi Poku & Regina Birner & Saurabh Gupta, 2018. "Making Contract Farming Arrangements Work in Africa’s Bioeconomy: Evidence from Cassava Outgrower Schemes in Ghana," Sustainability, MDPI, vol. 10(5), pages 1-21, May.
    6. John C. Beghin & Miet Maertens & Johan Swinnen, 2017. "Nontariff Measures and Standards in Trade and Global Value Chains," World Scientific Book Chapters,in: Nontariff Measures and International Trade, chapter 2, pages 13-38 World Scientific Publishing Co. Pte. Ltd..
    7. John C. Beghin & Miet Maertens & Johan Swinnen, 2017. "Nontariff Measures and Standards in Trade and Global Value Chains," World Scientific Book Chapters, in: John Christopher Beghin (ed.), Nontariff Measures and International Trade, chapter 2, pages 13-38, World Scientific Publishing Co. Pte. Ltd..
    8. Reardon, Thomas & Barrett, Christopher B., 2000. "Agroindustrialization, globalization, and international development: An overview of issues, patterns, and determinants," Agricultural Economics, Blackwell, vol. 23(3), pages 195-205, September.
    9. Tao Xiang & Jikun Huang & d’Artis Kancs & Scott Rozelle & Jo Swinnen, 2012. "Food Standards and Welfare: General Equilibrium Effects," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(2), pages 223-244, June.
    10. Agata Malak-Rawlikowska & Dominika Milczarek-Andrzejewska & Jan Fałkowski, 2019. "Farmers’ Bargaining Power and Input Prices: What Can We Learn from Self-Reported Assessments? 1," Social Sciences, MDPI, vol. 8(2), pages 1-13, February.
    11. Mignouna, D.B. & Abdoulaye, T. & Alene, A. & Akinola, A.A. & Manyong, V.M., 2015. "Drivers of Market Participation Decisions among Small-scale Farmers in Yam Growing Areas of Nigeria and Ghana," 2015 Conference, August 9-14, 2015, Milan, Italy 230219, International Association of Agricultural Economists.
    12. Maertens, Miet & Vande Velde, Katrien, 2017. "Contract-farming in Staple Food Chains: The Case of Rice in Benin," World Development, Elsevier, vol. 95(C), pages 73-87.
    13. Saenger, Christoph & Torero, Maximo & Qaim, Matin, 2016. "Impact of third-party enforcement of contracts in agricultural markets—A field experiment in Vietnam," IFPRI book chapters, in: Devaux, André & Torero, Maximo & Donovan, Jason & Horton, Douglas E. (ed.), Innovation for inclusive value-chain development: Successes and challenges, chapter 11, pages 343-374, International Food Policy Research Institute (IFPRI).
    14. Vishnu, Kedar & Rai, Ruchika, 2022. "Measuring The Impact of Transaction Costs on Profitability of Farmers: Empirical Evidence from India," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322593, Agricultural and Applied Economics Association.
    15. Swinnen Johan & Vandeplas Anneleen, 2012. "Rich Consumers and Poor Producers: Quality and Rent Distribution in Global Value Chains," Journal of Globalization and Development, De Gruyter, vol. 2(2), pages 1-30, January.
    16. Kydd, Jonathon, 2015. "Ex-post evaluation study of IFPRI’s research on high-value agriculture, 1994–2010," Impact assessments 39, International Food Policy Research Institute (IFPRI).
    17. Getnet, Kindie & Kefyalew, Geremew & Berhanu, Wassie, 2018. "On the power and influence of the cooperative institution: Does it secure competitive producer prices?," World Development Perspectives, Elsevier, vol. 9(C), pages 43-47.
    18. Jan Fałkowski & Agata Malak-Rawlikowska & Dominika Milczarek-Andrzejewska, 2013. "Determinants and Consequences of Participating in a Restructured Supply Chain: the Experience of the Dairy Sector in Poland," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 34.
    19. Vandeplas, Anneleen, 2011. "Multinationals or Cooperatives: Does it Matter to Farmers? - A Study of the Dairy Sector in Punjab (India)," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 115545, European Association of Agricultural Economists.
    20. Meilin Ma & Richard J. Sexton, 2021. "Modern agricultural value chains and the future of smallholder farming systems," Agricultural Economics, International Association of Agricultural Economists, vol. 52(4), pages 591-606, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:agisys:v:132:y:2015:i:c:p:145-156. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/agsy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.