Compliance with international food safety standards as an outcome of a Nash bargaining process: a case study on Kenyan small scale green beans farms

This study provides a stylized model on “Exit, voice and loyalty” as alternative strategic responses taken by Kenyan green beans farmers in the context of new and more stringent international food safety standards. On the analytical side, we use the Nash bargaining theory where the exporter and a representative grower bargain over the product quality level and the premium producer price. The comparative statics analysis shows that the producer bargaining power unlike the compliance costs has, ceteris paribus, a positive effect on the equilibrium quality level while these exogenous variables have ambiguous effects on producer price at equilibrium. Empirical results from logit model estimation with survey data at farm-level in Kenya show that households with highly educated members, access to credit and relatively large-size farms are more likely to participate in the certified supply chain. Off-farm income, live assets and distance of public services from the farm do not influence the compliance. In terms of policy implications, education and credit access could play an important role in the capacity-building of small-scale growers associations through public private partnership.