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Effects of Supermarkets on Fresh Fruit and Vegetables Small-Scale Farmers in Central Kenya

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  • Riungu, Claris Karimi
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    Abstract

    Supermarkets have been spreading very rapidly in developing countries for the past decade. Kenya is the second advanced country in terms of presence of supermarkets, after South Africa. Supermarkets in Kenya have been increasing tremendously since 2003 and thus competition has increased. Growth in supermarket business has involved increase in the variety of products offered for sale, including agricultural produce. The effect of supermarkets on small-scale farmers has not been assessed. The main objective of this study was to analyze the effect of domestic supermarkets on small-scale farmers in Kenya. The study was carried out in the three leading supermarkets, their suppliers who included the farmers, traders the traditional channel farmers. Primary data was collected from 100 farmers, 50 from supermarket channel and 50 from traditional channel; 10 traders and eight branches of selected supermarkets. Results revealed that there were current and future opportunities of branches of supermarket of purchasing commodities from small-scale farmers. Fresh ‘n’ Juici and Uchumi branches interviewed indicated 80% and 60% of their fresh produce respectively was supplied by small-scale farmers either directly or indirectly. Traders indicated that they purchase 100% of the commodities especially the ALVs and green vegetables from small-scale farmers currently. They expected to source larger quantities in future because there has been an increase of branches of supermarkets, for example Uchumi, Tuskys and Nakumatt. A larger percentage of traders and farmer respondents had the opinion that they will sell large quantities in future. Results from multiple regression analysis revealed that farmers’ past experience, distance to supermarket, reliability of the market, better prices and reduced risks affects the perception of the farmers about supermarkets. Results further confirmed that 88% of farmer respondents used good production practices and changed their cropping pattern as strategies they use so that they can supply supermarkets. All traders and farmer respondents had the better prices as one of the benefits while 88% and 68% of the traders and farmers respectively had stable market hence lowering post-harvest losses. Results from producer surplus calculations revealed that farmers who supply to supermarkets directly or through traders have higher producer surplus than those who supply to alternative markets except for farmers who sell Spider plant (Cleome gynadra) directly. Therefore, more small-scale farmers should find avenues or ways of supplying supermarkets by joining groups. It is also recommended that farmers should begin to add value to their commodities by grading and packaging.

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    Bibliographic Info

    Paper provided by Collaborative Masters Program in Agricultural and Applied Economics in its series Research Theses with number 134484.

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    Date of creation: Apr 2011
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    Handle: RePEc:ags:cmpart:134484

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    Web page: http://www.agriculturaleconomics.net

    Related research

    Keywords: Crop Production/Industries;

    References

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    1. Martens, Bobby J. & Florax, Raymond J.G.M. & Dooley, Frank J., 2005. "The Effect of Entry by Supercenter and Warehouse Club Retailers on Grocery Sales and Small Supermarkets: A Spatial Analysis," 2005 Annual meeting, July 24-27, Providence, RI 19176, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Roe, Terry L. & Shane, Mathew & Somwaru, Agapi, 2005. "The Rapid Expansion of the Modern Retail Food Marketing in Emerging Market Economies: Implications to Foreign Trade and Structural Change in Agriculture," 2005 Annual meeting, July 24-27, Providence, RI 19112, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    6. 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.
    7. Fernando Balsevich & Julio A. Berdegué & Luis Flores & Denise Mainville & Thomas Reardon, 2003. "Supermarkets and Produce Quality and Safety Standards in Latin America," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1147-1154.
    8. Kinsey, Jean D., 1999. "Minnesota Agricultural Economist 698," Minnesota Applied Economist/Minnesota Agricultural Economist 13187, University of Minnesota, Department of Applied Economics.
    9. Hildegunn Ekroll Stokke, 2008. "Multinational supermarket chains in developing countries: Does local agriculture benefit," Working Paper Series 9408, Department of Economics, Norwegian University of Science and Technology.
    10. Louw, Andre & Jordaan, Daniel du Plessis Scheepers & Ndanga, Leah Z.B. & Kirsten, Johann F., 2008. "Alternative marketing options for small-scale farmers in the wake of changing agri-food supply chains in South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 47(3), September.
    11. Dave D. Weatherspoon & Thomas Reardon, 2003. "The Rise of Supermarkets in Africa: Implications for Agrifood Systems and the Rural Poor," Development Policy Review, Overseas Development Institute, vol. 21, pages 333-355, 05.
    12. Reardon, Thomas & Berdegue, Julio A. & Lundy, Mark & Schutz, Paul & Balsevich, Fernando & Hernandez, Ricardo & Perez, Edwin & Jano, Pilar & Wang, Honglin, 2004. "Supermarkets and Rural Livelihoods: A Research Method," Staff Papers 11818, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    13. Senauer, Benjamin & Goetz, Linde, 2003. "The Growing Middle Class In Developing Countries And The Market For High-Value Food Products," Working Papers 14331, University of Minnesota, The Food Industry Center.
    14. Ricardo Hernández & Thomas Reardon & Julio Berdegué, 2007. "Supermarkets, wholesalers, and tomato growers in Guatemala," Agricultural Economics, International Association of Agricultural Economists, vol. 36(3), pages 281-290, 05.
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