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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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  • 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.

Suggested Citation

  • Suzuki, Aya & Jarvis, Lovell S. & Sexton, Richard J., 2011. "Partial Vertical Integration, Risk Shifting, and Product Rejection in the High-Value Export Supply Chain: The Ghana Pineapple Sector," World Development, Elsevier, vol. 39(9), pages 1611-1623, September.
  • Handle: RePEc:eee:wdevel:v:39:y:2011:i:9:p:1611-1623
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    Cited by:

    1. Lowitt, Kristen & Hickey, Gordon M. & Ganpat, Wayne & Phillip, Leroy, 2015. "Linking Communities of Practice with Value Chain Development in Smallholder Farming Systems," World Development, Elsevier, vol. 74(C), pages 363-373.
    2. Hansen, Henrik & Trifković, Neda, 2014. "Food Standards are Good – For Middle-Class Farmers," World Development, Elsevier, vol. 56(C), pages 226-242.
    3. Lemeilleur, Sylvaine, 2013. "Smallholder Compliance with Private Standard Certification: The Case of GlobalGAP Adoption by Mango Producers in Peru," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 16(4).
    4. Du, Xiaoxue & Lu, Liang & Reardon, Thomas & Zilberman, David, 2015. "The Economics of Agricultural Supply Chain Design: A Portfolio Selection Approach," 2016 Allied Social Science Association (ASSA) Annual Meeting, January 3-5, 2016, San Francisco, California 212809, Agricultural and Applied Economics Association.
    5. Kleemann, Linda & Thiele, Rainer, 2015. "Rural welfare implications of large-scale land acquisitions in Africa: A theoretical framework," Economic Modelling, Elsevier, vol. 51(C), pages 269-279.
    6. VAN DEN BROECK, Goedele & MAERTENS, Miet, 2016. "Horticultural exports and food security in developing countries," Working Papers 232595, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    7. Negash, Martha & Riera, Olivia, 2014. "Biodiesel value chain and access to energy in Ethiopia: Policies and business prospects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 39(C), pages 975-985.
    8. Kleemann, Linda & Abdulai, Awudu, 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 (IfW).
    9. Kleemann, Linda & Abdulai, Awudu & Buss, Mareike, 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 (IfW).
    10. Kleemann, Linda & Abdulai, Awudu & Buss, Mareike, 2014. "Certification and Access to Export Markets: Adoption and Return on Investment of Organic-Certified Pineapple Farming in Ghana," World Development, Elsevier, vol. 64(C), pages 79-92.
    11. 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.
    12. SUZUKI, Aya & MANO, Yukichi & ABEBE, Girum, 2017. "Earnings, Savings, and Job Satisfaction in a Labor-intensive Export Sector: Evidence from the Cut Flower Industry in Ethiopia," Discussion paper series HIAS-E-55, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    13. Fassinou Hotegni, V. Nicodème & Lommen, Willemien J. M. & van der Vorst, Jack G. A. J. & Agbossou, Euloge K. & Struik, Paul C., 2014. "Bottlenecks and Opportunities for Quality Improvement in Fresh Pineapple Supply Chains in Benin," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 17(3).

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