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Partial Vertical Integration, Risk Shifting, and Product Rejection in the High-Value Export Supply Chain: The Ghana Pineapple Sector

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Author Info

  • Suzuki, Aya
  • Jarvis, Lovell S.
  • Sexton, Richard J.

Abstract

Summary High-value export supply chains hold potential to improve smallholders' welfare, but their relative production inefficiency and moral hazard problems can cause exporters to prefer vertically integrated plantation production. However, pineapple exporters in Ghana produce both for their own account and purchase from smallholders. We hypothesize that vertical integration is only partial because exporters face large market risks that smallholders, surprisingly, are better able to absorb. We show empirically that exporters' average rejection rate of export-quality fruit is high and varies in response to unanticipated fluctuations in European demand. These results support the hypothesis and are consistent with theories of partial vertical integration but not the standard principal-agent paradigm.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 39 (2011)
Issue (Month): 9 (September)
Pages: 1611-1623

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Handle: RePEc:eee:wdevel:v:39:y:2011:i:9:p:1611-1623

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Web page: http://www.elsevier.com/locate/worlddev

Related research

Keywords: high-value supply chain risk smallholders vertical integration Ghana Africa;

References

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Citations

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Cited by:
  1. Lemeilleur, Sylvaine, 2012. "Smallholder compliance with private standard certification: the case of GlobalGAP adoption by mango producers in Peru," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 123457, International Association of Agricultural Economists.
  2. Linda Kleemann & Awudu Abdulai & Mareike Buss, 2013. "Is Organic Farming Worth its Investment? The Adoption and Impact of Certified Pineapple Farming in Ghana," Kiel Working Papers 1856, Kiel Institute for the World Economy.
  3. Henrik Hansen & Neda Trifković, 2013. "Food Standards are Good – for Middle-Class Farmers," IFRO Working Paper 2013/19, University of Copenhagen, Department of Food and Resource Economics.
  4. Kleemann, Linda & Abdulai, Awudu, 2013. "Organic certification, agro-ecological practices and return on investment: Evidence from pineapple producers in Ghana," Ecological Economics, Elsevier, vol. 93(C), pages 330-341.
  5. Linda Kleemann & Awudu Abdulai, 2012. "Organic Certification, Agro-Ecological Practices and Return on Investment: Farm Level Evidence from Ghana," Kiel Working Papers 1816, Kiel Institute for the World Economy.
  6. Linda Kleemann & Rainer Thiele, 2014. "Rural Welfare Implications of Large-scale Land Acquisitions in Africa: A Theoretical Framework," Kiel Working Papers 1921, Kiel Institute for the World Economy.

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