IDEAS home Printed from https://ideas.repec.org/a/eee/jfpoli/v61y2016icp92-102.html
   My bibliography  Save this article

Farmers’ marketing preferences in local coffee markets: Evidence from a choice experiment in Ethiopia

Author

Listed:
  • Gelaw, Fekadu
  • Speelman, Stijn
  • Van Huylenbroeck, Guido

Abstract

This study investigates transactions in the local coffee markets in Ethiopia. While the Ethiopian Commodity Exchange, which was established in 2008, introduced regulatory, institutional, and organizational innovations in the coffee market, informal norms and conventions remain the primary institutions governing transactions in the local markets. Based on a choice experiment, we found that for coffee farmers the characteristics of the traders are more important than the price offered when anchoring their transactions into personal relationships. This can be explained as the institutional response of farsighted calculative farmers to poorly organized coffee markets and to lacking credit and insurance markets. Contrary to the concept of embeddedness, which claims that economic transactions are embedded into social relationships, social relationships are observed to be embedded into economic relationships. One of the perverse effects of these personal relationship-based transactions is that farmers are insufficiently incentivized to maintain and improve coffee quality.

Suggested Citation

  • Gelaw, Fekadu & Speelman, Stijn & Van Huylenbroeck, Guido, 2016. "Farmers’ marketing preferences in local coffee markets: Evidence from a choice experiment in Ethiopia," Food Policy, Elsevier, vol. 61(C), pages 92-102.
    • Handle: RePEc:eee:jfpoli:v:61:y:2016:i:c:p:92-102
    DOI: 10.1016/j.foodpol.2016.02.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306919216300021
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.foodpol.2016.02.006?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. Kherallah, Mylene & Kirsten, Johann F, 2002. "The New Institutional Economics: Applications For Agricultural Policy Research In Developing Countries," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 41(2).
    2. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1251-1288.
    3. Platteau, Jean-Philippe, 2009. "Institutional obstacles to African economic development: State, ethnicity, and custom," Journal of Economic Behavior & Organization, Elsevier, vol. 71(3), pages 669-689, September.
    4. Greif, Avner, 1989. "Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders," The Journal of Economic History, Cambridge University Press, vol. 49(4), pages 857-882, December.
    5. Collins, Andrew T. & Rose, John M. & Hensher, David A., 2013. "Specification issues in a generalised random parameters attribute nonattendance model," Transportation Research Part B: Methodological, Elsevier, vol. 56(C), pages 234-253.
    6. Carl Shapiro, 1982. "Consumer Information, Product Quality, and Seller Reputation," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 20-35, Spring.
    7. Mather, David & Boughton, Duncan & Jayne, T.S., 2013. "Explaining smallholder maize marketing in southern and eastern Africa: The roles of market access, technology and household resource endowments," Food Policy, Elsevier, vol. 43(C), pages 248-266.
    8. Posner, Richard A, 1980. "A Theory of Primitive Society, with Special Reference to Law," Journal of Law and Economics, University of Chicago Press, vol. 23(1), pages 1-53, April.
    9. Levien, Michael, 2015. "Social Capital as Obstacle to Development: Brokering Land, Norms, and Trust in Rural India," World Development, Elsevier, vol. 74(C), pages 77-92.
    10. Miguel Carriquiry & Bruce A. Babcock, 2007. "Reputations, Market Structure, and the Choice of Quality Assurance Systems in the Food Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(1), pages 12-23.
    11. Getaw Tadesse & Gerald Shively, 2013. "Repeated Transaction in Rural Grain Markets of Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 49(9), pages 1172-1187, September.
    12. Masahiko Aoki, 2013. "Endogenizing institutions and institutional changes," Chapters, in: Comparative Institutional Analysis, chapter 16, pages 267-297, Edward Elgar Publishing.
    13. Marcel Fafchamps, 2004. "Market Institutions in Sub-Saharan Africa: Theory and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262062364, December.
    14. McCluskey, Jill J. & Loureiro, Maria L., 2005. "Reputation and Production Standards," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 30(1), pages 1-11, April.
    15. Daniel McFadden, 1986. "The Choice Theory Approach to Market Research," Marketing Science, INFORMS, vol. 5(4), pages 275-297.
    16. Jose Blandon & Spencer Henson & Towhidul Islam, 2009. "Marketing preferences of small-scale farmers in the context of new agrifood systems: a stated choice model," Agribusiness, John Wiley & Sons, Ltd., vol. 25(2), pages 251-267.
    17. Kranton, Rachel E, 1996. "Reciprocal Exchange: A Self-Sustaining System," American Economic Review, American Economic Association, vol. 86(4), pages 830-851, September.
    18. Little, Peter D. & Debsu, Dejene Negassa & Tiki, Waktole, 2014. "How pastoralists perceive and respond to market opportunities: The case of the Horn of Africa," Food Policy, Elsevier, vol. 49(P2), pages 389-397.
    19. Olwande, John & Smale, Melinda & Mathenge, Mary K. & Place, Frank & Mithöfer, Dagmar, 2015. "Agricultural marketing by smallholders in Kenya: A comparison of maize, kale and dairy," Food Policy, Elsevier, vol. 52(C), pages 22-32.
    20. Carl Shapiro, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(4), pages 659-679.
    21. Claude Ménard, 2008. "A New Institutional Approach to Organization," Springer Books, in: Claude Ménard & Mary M. Shirley (ed.), Handbook of New Institutional Economics, chapter 12, pages 281-318, Springer.
    22. Joseph E. Stiglitz, 2002. "Information and the Change in the Paradigm in Economics," American Economic Review, American Economic Association, vol. 92(3), pages 460-501, June.
    23. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    24. Jill E. Hobbs, 2003. "Information, Incentives and Institutions in the Agri-food Sector," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 51(3), pages 413-429, November.
    25. Guido Tabellini, 2008. "Presidential Address Institutions and Culture," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 255-294, 04-05.
    26. Barrett, Christopher B., 2008. "Smallholder market participation: Concepts and evidence from eastern and southern Africa," Food Policy, Elsevier, vol. 33(4), pages 299-317, August.
    27. Geoffrey M. Hodgson, 1998. "The Approach of Institutional Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 166-192, March.
    28. Sitko, Nicholas J. & Jayne, T.S., 2012. "Why are African commodity exchanges languishing? A case study of the Zambian Agricultural Commodity Exchange," Food Policy, Elsevier, vol. 37(3), pages 275-282.
    29. Rose, John M. & Bliemer, Michiel C.J. & Hensher, David A. & Collins, Andrew T., 2008. "Designing efficient stated choice experiments in the presence of reference alternatives," Transportation Research Part B: Methodological, Elsevier, vol. 42(4), pages 395-406, May.
    30. Jean-Philippe Platteau, 2009. "Institutional Obstacles to African Economic Development: State, Ethnicity, and Custom," Post-Print hal-00726664, HAL.
    31. Louviere,Jordan J. & Hensher,David A. & Swait,Joffre D. With contributions by-Name:Adamowicz,Wiktor, 2000. "Stated Choice Methods," Cambridge Books, Cambridge University Press, number 9780521788304.
    32. Williamson, Oliver E, 1993. "Calculativeness, Trust, and Economic Organization," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 453-486, April.
    33. Mujawamariya, Gaudiose & D’Haese, Marijke & Speelman, Stijn, 2013. "Exploring double side-selling in cooperatives, case study of four coffee cooperatives in Rwanda," Food Policy, Elsevier, vol. 39(C), pages 72-83.
    34. Meijerink, Gerdien & Bulte, Erwin & Alemu, Dawit, 2014. "Formal institutions and social capital in value chains: The case of the Ethiopian Commodity Exchange," Food Policy, Elsevier, vol. 49(P1), pages 1-12.
    35. Peter Boxall & Wiktor Adamowicz, 2002. "Understanding Heterogeneous Preferences in Random Utility Models: A Latent Class Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(4), pages 421-446, December.
    36. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 797-817.
    37. George Baker & Robert Gibbons & Kevin J. Murphy, 2002. "Relational Contracts and the Theory of the Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 39-84.
    38. Claude Menard & Mary M. Shirley (ed.), 2005. "Handbook of New Institutional Economics," Springer Books, Springer, number 978-0-387-25092-2, November.
    39. Brian Roe & Thomas L. Sporleder & Betsy Belleville, 2004. "Hog Producer Preferences for Marketing Contract Attributes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 115-123.
    40. Durlauf,S.N., 1999. "The case "against" social capital," Working papers 29, Wisconsin Madison - Social Systems.
    41. David Hensher & John Rose & William Greene, 2005. "The implications on willingness to pay of respondents ignoring specific attributes," Transportation, Springer, vol. 32(3), pages 203-222, May.
    42. Mylene Lagarde, 2013. "Investigating Attribute Non‐Attendance And Its Consequences In Choice Experiments With Latent Class Models," Health Economics, John Wiley & Sons, Ltd., vol. 22(5), pages 554-567, May.
    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. Stefano Ciliberti & Simone Del Sarto & Angelo Frascarelli & Giulia Pastorelli & Gaetano Martino, 2020. "Contracts to Govern the Transition towards Sustainable Production: Evidence from a Discrete Choice Analysis in the Durum Wheat Sector in Italy," Sustainability, MDPI, vol. 12(22), pages 1-14, November.
    2. Castro, André Bueno Rezende de, 2021. "Impact of Agricultural Market Linkages on Small-Scale Farmers’ Welfare: Evidence from Tanzania," 2021 Conference, August 17-31, 2021, Virtual 314941, International Association of Agricultural Economists.
    3. Oreoluwa Ola & Luisa Menapace, 2020. "Revisiting constraints to smallholder participation in high‐value markets: A best‐worst scaling approach," Agricultural Economics, International Association of Agricultural Economists, vol. 51(4), pages 595-608, July.
    4. Duyen Thi Thu Tran & Yoshifumi Takahashi & Hisako Nomura & Mitsuyasu Yabe, 2020. "Exploring heterogeneity in shrimp farmers` preferences for the contracts of producing certified organic shrimp," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 10(1), pages 270-283, June.
    5. Laura Enthoven & Goedele Van den Broeck, 2021. "Promoting Food Safety in Local Value Chains: The Case of Vegetables in Vietnam," Sustainability, MDPI, vol. 13(12), pages 1-17, June.
    6. 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.
    7. Fekadu Gelaw & Stijn Speelman & Guido Huylenbroeck, 2017. "Impacts of Institutional Intervention on Price Transmissions: The Case of the Ethiopian Commodity Exchange," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 88-106, November.
    8. Dam, Thi Huyen Trang & Tur-Cardona, Juan & Speelman, Stijn & Amjath-Babu, T.S. & Sam, Anu Susan & Zander, Peter, 2021. "Incremental and transformative adaptation preferences of rice farmers against increasing soil salinity - Evidence from choice experiments in north central Vietnam," Agricultural Systems, Elsevier, vol. 190(C).
    9. Hanna Ihli & Ronja Seegers & Etti Winter & Brian Chiputwa & Anja Gassner, 2022. "Preferences for tree fruit market attributes among smallholder farmers in Eastern Rwanda," Agricultural Economics, International Association of Agricultural Economists, vol. 53(1), pages 5-21, January.
    10. Fischer, Sabine & Wollni, Meike, 2018. "The role of farmers’ trust, risk and time preferences for contract choices: Experimental evidence from the Ghanaian pineapple sector," Food Policy, Elsevier, vol. 81(C), pages 67-81.
    11. Badria Hamed Al Ruqishi & Tarig Gibreel & Faical Akaichi & Lokman Zaibet & Slim Zekri, 2020. "Contractual agriculture: better partnerships between small farmers and the business sector in the sultanate of Oman," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 10(1), pages 321-335, June.
    12. Ola, Oreoluwa & Menapace, Luisa, 2020. "Smallholders' perceptions and preferences for market attributes promoting sustained participation in modern agricultural value chains," Food Policy, Elsevier, vol. 97(C).
    13. Angelo Frascarelli & Stefano Ciliberti & Gustavo Magalhães de Oliveira & Gabriele Chiodini & Gaetano Martino, 2021. "Production Contracts and Food Quality: A Transaction Cost Analysis for the Italian Durum Wheat Sector," Sustainability, MDPI, vol. 13(5), pages 1-12, March.
    14. Oyinbo, O. & Maertens, M. & Chamberlin, J. & Vanlauwe, B. & Craufurd, P. & Kamara, A., 2018. "Maize Farmers Preferences for ICT-based extension services: Evidence from a Choice Experiment in Nigeria," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277328, International Association of Agricultural Economists.
    15. Nguyen Hung Anh & Wolfgang Bokelmann, 2019. "Determinants of Smallholders’ Market Preferences: The Case of Sustainable Certified Coffee Farmers in Vietnam," Sustainability, MDPI, vol. 11(10), pages 1-20, May.

    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. Dam, Thi Huyen Trang & Tur-Cardona, Juan & Speelman, Stijn & Amjath-Babu, T.S. & Sam, Anu Susan & Zander, Peter, 2021. "Incremental and transformative adaptation preferences of rice farmers against increasing soil salinity - Evidence from choice experiments in north central Vietnam," Agricultural Systems, Elsevier, vol. 190(C).
    2. Surendran Arumugam & Ramu Govindasamy & James E. Simon & Emil Wyk & Burhan Ozkan, 2022. "Market outlet choices for African Indigenous Vegetables (AIVs): a socio-economic analysis of farmers in Zambia," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 10(1), pages 1-13, December.
    3. W. Bentley MacLeod, 2006. "Reputations, Relationships and the Enforcement of Incomplete Contracts," CESifo Working Paper Series 1730, CESifo.
    4. Vincenzo Scoppa, 2003. "Contratti incompleti ed enforcement endogeno. Una rassegna della letteratura," Economia politica, Società editrice il Mulino, issue 3, pages 391-440.
    5. Boris Gershman, 2016. "Long-Run Development and the New Cultural Economics," Working Papers 2016-06, American University, Department of Economics.
    6. Liesbeth Dries & Domenico Dentoni, 2015. "Private sector investments to create market-supporting institutions: The case of Malawian Agricultural Commodity Exchange," Working Papers 2015/08, Maastricht School of Management.
    7. Donkor, Emmanuel & Mbeche, Robert & Mithöfer, Dagmar, 2023. "Strategic business decisions of retailers in the edible insect value chain in Uganda," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 26(2), January.
    8. Ali Ardeshiri & Joffre Swait & Elizabeth C. Heagney & Mladen Kovac, 2019. "Preserve or retreat? Willingness-to-pay for Coastline Protection in New South Wales," Papers 1902.03310, arXiv.org.
    9. Henrik Egbert & Teodor Sedlarski, 2011. "Exploring Impact: Negative Effects of Social Networks," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 1(2), pages 1-80.
    10. Rocco Macchiavello & Ameet Morjaria, 2015. "The Value of Relationships: Evidence from a Supply Shock to Kenyan Rose Exports," American Economic Review, American Economic Association, vol. 105(9), pages 2911-2945, September.
    11. Rocco Macchiavello & Ameet Morjaria, 2015. "The Value of Relationships: Evidence from a Supply Shock to Kenyan Rose Exports," American Economic Review, American Economic Association, vol. 105(9), pages 2911-2945, September.
    12. Castañeda Dower, Paul & Gerber, Theodore P. & Weber, Shlomo, 2022. "Firms, kinship networks, and economic growth in the Kyrgyz Republic," Journal of Comparative Economics, Elsevier, vol. 50(4), pages 997-1018.
    13. Kirui, Oliver K. & Njiraini, Georgina W., 2013. "Impact of Collective Action on the smallholder agricultural commercialization and incomes: Experiences from Kenya," 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161617, African Association of Agricultural Economists (AAAE).
    14. W. Bentley MacLeod, 2007. "Reputations, Relationships, and Contract Enforcement," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 595-628, September.
    15. Chen, Yong & Mak, Barry & Li, Zhou, 2013. "Quality deterioration in package tours: The interplay of asymmetric information and reputation," Tourism Management, Elsevier, vol. 38(C), pages 43-54.
    16. John Romley & Tiffany Shih, 2017. "Product safety spillovers and market viability for biologic drugs," International Journal of Health Economics and Management, Springer, vol. 17(2), pages 135-158, June.
    17. Sanchez-Pages Santiago & Straub Stéphane, 2010. "The Emergence of Institutions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-38, September.
    18. Ting Li & Robert J. Kauffman & Eric van Heck & Peter Vervest & Benedict G. C. Dellaert, 2014. "Consumer Informedness and Firm Information Strategy," Information Systems Research, INFORMS, vol. 25(2), pages 345-363, June.
    19. Coyne, Christopher J. & Mathers, Rachel L., 2011. "Rituals: An economic interpretation," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1), pages 74-84.
    20. Dhillon, Amrita & Rigolini, Jamele, 2011. "Development and the interaction of enforcement institutions," Journal of Public Economics, Elsevier, vol. 95(1), pages 79-87.

    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:jfpoli:v:61:y:2016:i:c:p:92-102. 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/foodpol .

    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.