IDEAS home Printed from https://ideas.repec.org/a/eee/wdevel/v149y2022ics0305750x21003120.html
   My bibliography  Save this article

Supermarket contracts, opportunity cost and trade-offs, and farm household welfare: Panel data evidence from Kenya

Author

Listed:
  • Ochieng, Dennis O.
  • Ogutu, Sylvester O.

Abstract

While previous studies analyzed the welfare effects of smallholder participation in supermarket channels, little is known about the effects over time of supplying supermarkets on farm household incomes and diets, possible trade-offs, and opportunity costs of supermarkets on different income sources. We use panel data from smallholder vegetable farmers in Kenya to address these research gaps. The results show that supermarket contracts increase overall income by 61% and the dietary diversity score of nutritious foods by 4%, on average. Supermarket contracts also increase farm income without sacrificing income from other sources. In terms of participation dynamics, supermarket stayers and dropouts achieve overall income gains, but newcomers do not immediately benefit, due to their huge initial capital investment. Supermarket participation is not a panacea for all smallholder marketing and livelihood challenges but benefits farmers who can meet contractual requirements.

Suggested Citation

  • Ochieng, Dennis O. & Ogutu, Sylvester O., 2022. "Supermarket contracts, opportunity cost and trade-offs, and farm household welfare: Panel data evidence from Kenya," World Development, Elsevier, vol. 149(C).
    • Handle: RePEc:eee:wdevel:v:149:y:2022:i:c:s0305750x21003120
    DOI: 10.1016/j.worlddev.2021.105697
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X21003120
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.worlddev.2021.105697?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. Hazell, Peter & Poulton, Colin & Wiggins, Steve & Dorward, Andrew, 2010. "The Future of Small Farms: Trajectories and Policy Priorities," World Development, Elsevier, vol. 38(10), pages 1349-1361, October.
    2. Demmler, Kathrin M. & Ecker, Olivier & Qaim, Matin, 2018. "Supermarket Shopping and Nutritional Outcomes: A Panel Data Analysis for Urban Kenya," World Development, Elsevier, vol. 102(C), pages 292-303.
    3. Rao, Elizaphan J.O. & Qaim, Matin, 2013. "Supermarkets and agricultural labor demand in Kenya: A gendered perspective," Food Policy, Elsevier, vol. 38(C), pages 165-176.
    4. Gbemisola Oseni & Paul Winters, 2009. "Rural nonfarm activities and agricultural crop production in Nigeria," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 189-201, March.
    5. de Janvry, Alain & Sadoulet, Elisabeth, 2020. "Using agriculture for development: Supply- and demand-side approaches," World Development, Elsevier, vol. 133(C).
    6. Keijiro Otsuka & Yuko Nakano & Kazushi Takahashi, 2016. "Contract Farming in Developed and Developing Countries," Annual Review of Resource Economics, Annual Reviews, vol. 8(1), pages 353-376, October.
    7. Elizaphan J. O. Rao & Bernhard Brümmer & Matin Qaim, 2012. "Farmer Participation in Supermarket Channels, Production Technology, and Efficiency: The Case of Vegetables in Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(4), pages 891-912.
    8. Moustier, Paule & Tam, Phan Thi Giac & Anh, Dao The & Binh, Vu Trong & Loc, Nguyen Thi Tan, 2010. "The role of farmer organizations in supplying supermarkets with quality food in Vietnam," Food Policy, Elsevier, vol. 35(1), pages 69-78, February.
    9. Hope C. Michelson, 2013. "Small Farmers, NGOs, and a Walmart World: Welfare Effects of Supermarkets Operating in Nicaragua," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(3), pages 628-649.
    10. Chege, Christine G.K. & Andersson, Camilla I.M. & Qaim, Matin, 2015. "Impacts of Supermarkets on Farm Household Nutrition in Kenya," World Development, Elsevier, vol. 72(C), pages 394-407.
    11. Rosina Wanyama & Theda Gödecke & Christine G. K. Chege & Matin Qaim, 2019. "How important are supermarkets for the diets of the urban poor in Africa?," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 11(6), pages 1339-1353, December.
    12. Rischke, Ramona & Kimenju, Simon C. & Klasen, Stephan & Qaim, Matin, 2015. "Supermarkets and food consumption patterns: The case of small towns in Kenya," Food Policy, Elsevier, vol. 52(C), pages 9-21.
    13. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    14. Camilla I.M. Andersson & Christine G.K. Chege & Elizaphan J.O. Rao & Matin Qaim, 2015. "Following Up on Smallholder Farmers and Supermarkets in Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(4), pages 1247-1266.
    15. Ochieng, Dennis O. & Veettil, Prakashan C. & Qaim, Matin, 2017. "Farmers’ preferences for supermarket contracts in Kenya," Food Policy, Elsevier, vol. 68(C), pages 100-111.
    16. Justus Ochieng & Lilian Kirimi & Dennis O. Ochieng & Timothy Njagi & Mary Mathenge & Raphael Gitau & Miltone Ayieko, 2020. "Managing climate risk through crop diversification in rural Kenya," Climatic Change, Springer, vol. 162(3), pages 1107-1125, October.
    17. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    18. J.S. Cramer & G. Ridder, 1988. "The Logit Model in Economics," Statistica Neerlandica, Netherlands Society for Statistics and Operations Research, vol. 42(4), pages 297-314, December.
    19. Sylvester Ochieng Ogutu & Theda Gödecke & Matin Qaim, 2020. "Agricultural Commercialisation and Nutrition in Smallholder Farm Households," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(2), pages 534-555, June.
    20. Thomas Reardon & C. Peter Timmer & Christopher B. Barrett & Julio Berdegué, 2003. "The Rise of Supermarkets in Africa, Asia, and Latin America," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1140-1146.
    21. Smith, Lisa C. & Haddad, Lawrence, 2015. "Reducing Child Undernutrition: Past Drivers and Priorities for the Post-MDG Era," World Development, Elsevier, vol. 68(C), pages 180-204.
    22. David Tschirley & Thomas Reardon & Michael Dolislager & Jason Snyder, 2015. "The Rise of a Middle Class in East and Southern Africa: Implications for Food System Transformation," Journal of International Development, John Wiley & Sons, Ltd., vol. 27(5), pages 628-646, July.
    23. Ton, Giel & Vellema, Wytse & Desiere, Sam & Weituschat, Sophia & D'Haese, Marijke, 2018. "Contract farming for improving smallholder incomes: What can we learn from effectiveness studies?," World Development, Elsevier, vol. 104(C), pages 46-64.
    24. DeWalt, Kathleen M., 1993. "Nutrition and the commercialization of agriculture: Ten years later," Social Science & Medicine, Elsevier, vol. 36(11), pages 1407-1416, June.
    25. Marc F. Bellemare, 2018. "Contract farming: opportunity cost and trade†offs," Agricultural Economics, International Association of Agricultural Economists, vol. 49(3), pages 279-288, May.
    26. Jones, Andrew D. & Shrinivas, Aditya & Bezner-Kerr, Rachel, 2014. "Farm production diversity is associated with greater household dietary diversity in Malawi: Findings from nationally representative data," Food Policy, Elsevier, vol. 46(C), pages 1-12.
    27. Neven, David & Odera, Michael Makokha & Reardon, Thomas & Wang, Honglin, 2009. "Kenyan Supermarkets, Emerging Middle-Class Horticultural Farmers, and Employment Impacts on the Rural Poor," World Development, Elsevier, vol. 37(11), pages 1802-1811, November.
    28. Ola, Oreoluwa & Menapace, Luisa, 2020. "A meta-analysis understanding smallholder entry into high-value markets," World Development, Elsevier, vol. 135(C).
    29. Ogutu, Sylvester Ochieng & Ochieng, Dennis O. & Qaim, Matin, 2020. "Supermarket contracts and smallholder farmers: Implications for income and multidimensional poverty," Food Policy, Elsevier, vol. 95(C).
    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. Mai Chiem Tuyen & Prapinwadee Sirisupluxana & Isriya Bunyasiri & Pham Xuan Hung, 2022. "Perceptions, Problems and Prospects of Contract Farming: Insights from Rice Production in Vietnam," Sustainability, MDPI, vol. 14(19), pages 1-22, September.
    2. Mai Chiem Tuyen & Prapinwadee Sirisupluxana & Isriya Bunyasiri & Pham Xuan Hung, 2022. "Stakeholders’ Preferences towards Contract Attributes: Evidence from Rice Production in Vietnam," Sustainability, MDPI, vol. 14(6), pages 1-21, 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. Ogutu, Sylvester Ochieng & Ochieng, Dennis O. & Qaim, Matin, 2020. "Supermarket contracts and smallholder farmers: Implications for income and multidimensional poverty," Food Policy, Elsevier, vol. 95(C).
    2. Ochieng, D., 2018. "Supermarket Contracts, Income, and Changing Diets of Farm Households: Panel Data Evidence from Kenya," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277423, International Association of Agricultural Economists.
    3. Dennis O. Ochieng, 2017. "Supermarket Contracts, Income, and Changing Diets of Farm Households: Panel Data Evidence from Kenya," GlobalFood Discussion Papers 260397, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    4. Ochieng, Dennis O. & Veettil, Prakashan C. & Qaim, Matin, 2017. "Farmers’ preferences for supermarket contracts in Kenya," Food Policy, Elsevier, vol. 68(C), pages 100-111.
    5. Chege, Christine G.K. & Andersson, Camilla I.M. & Qaim, Matin, 2015. "Impacts of Supermarkets on Farm Household Nutrition in Kenya," World Development, Elsevier, vol. 72(C), pages 394-407.
    6. Nuthalapati, Chandra S.R. & Sutradhar, Rajib & Reardon, Thomas & Qaim, Matin, 2020. "Supermarket procurement and farmgate prices in India," World Development, Elsevier, vol. 134(C).
    7. Benali, Marwan & Brümmer, Bernhard & Afari-Sefa, Victor, 2017. "Small producer participation in export vegetable supply chains and poverty: evidence from different export schemes in Tanzania," GlobalFood Discussion Papers 262583, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    8. Andersson, Camilla I.M. & Kiria, Christine G. & Qaim, Matin & Rao, Elizaphan J.O., 2013. "Following up on smallholder farmers and supermarkets," GlobalFood Discussion Papers 158142, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    9. Qaim, Matin & Andersson, Camilla I.M. & Chege, Christine G.K. & Kimenju, Simon Chege & Klasen, Stephan & Rischke, Ramona, 2014. "Nutrition Effects of the Supermarket Revolution on Urban Consumers and Smallholder Farmers in Kenya," GlobalFood Discussion Papers 180976, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    10. Otsuka, Keijiro & Ali, Mubarik, 2020. "Strategy for the development of agro-based clusters," World Development Perspectives, Elsevier, vol. 20(C).
    11. Chege, Christine G. K. & Andersson, Camilla I.M. & Qaim, Matin, 2014. "Impacts of supermarkets on farm household nutrition in Kenya," GlobalFood Discussion Papers 167910, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    12. Ruml, Anette & Qaim, Matin, 2020. "Effects of marketing contracts and resource-providing contracts in the African small farm sector: Insights from oil palm production in Ghana," World Development, Elsevier, vol. 136(C).
    13. Chege, Christine G.K. & Andersson, Camilla I.M. & Qaim, Matin, 2014. "Impacts Of Supermarkets On Farm Household Nutrition In Kenya," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182724, European Association of Agricultural Economists.
    14. Bellemare, Marc F. & Bloem, Jeffrey R., 2018. "Does contract farming improve welfare? A review," World Development, Elsevier, vol. 112(C), pages 259-271.
    15. Anette Ruml & Matin Qaim, 2021. "New evidence regarding the effects of contract farming on agricultural labor use," Agricultural Economics, International Association of Agricultural Economists, vol. 52(1), pages 51-66, January.
    16. Demmler, Kathrin M. & Ecker, Olivier & Qaim, Matin, 2018. "Supermarket Shopping and Nutritional Outcomes: A Panel Data Analysis for Urban Kenya," World Development, Elsevier, vol. 102(C), pages 292-303.
    17. Awal Abdul‐Rahaman & Gazali Issahaku & Wanglin Ma, 2023. "Agrifood system participation and production efficiency among smallholder vegetable farmers in Northern Ghana," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 812-835, July.
    18. Thomas Vetter & Marianne Nylandsted Larsen & Thilde Bech Bruun, 2019. "Supermarket-Led Development and the Neglect of Traditional Food Value Chains: Reflections on Indonesia’s Agri-Food System Transformation," Sustainability, MDPI, vol. 11(2), pages 1-18, January.
    19. Christine G. Kiria Chege & Rosina Wanyama & Mark Lundy & Wilson Nguru & Matthias Jäger, 2021. "Does Retail Food Diversity in Urban Food Environments Influence Consumer Diets?," Sustainability, MDPI, vol. 13(14), pages 1-15, July.
    20. Ola, Oreoluwa & Menapace, Luisa, 2020. "A meta-analysis understanding smallholder entry into high-value markets," World Development, Elsevier, vol. 135(C).

    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:wdevel:v:149:y:2022:i:c:s0305750x21003120. 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/worlddev .

    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.