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Compliance with International Food Safety Standards in Kenya's Green Bean Industry: A Paired Case Study of Small and Large Family Farms

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  • Okello, Julius Juma
  • Swinton, Scott M.

Abstract

This study uses two farm case studies to explore how Kenyan green bean farmers are meeting European food safety standards. For green bean farmers, the standards increase the fixed costs and the transactions costs of producing beans; the standards also alter how bean quality is assessed. Both the small and the large farm use contracts to protect their specific investments in complying with the standards. However, while the large farm invests in improved facilities using its own equity, the small farm uses a marketing group to spread investment costs and reduce the transaction cost to buyers of monitoring the performance of small units. Green bean buyers face the asymmetric information problem of creating incentives for farmers to comply voluntarily with hard-to-observe production practice requirements. The buyers have responded by using closely monitored contracts, the threat of contract termination, and variable product pricing to induce compliance with the standards. The combined result of producer and buyer behavior has been to increase the scale of green bean production in Kenya. Small farms that band together in cooperative groups have succeeded in collectively attaining the scale economies needed to remain viable.

Suggested Citation

  • Okello, Julius Juma & Swinton, Scott M., 2005. "Compliance with International Food Safety Standards in Kenya's Green Bean Industry: A Paired Case Study of Small and Large Family Farms," 2005 Annual meeting, July 24-27, Providence, RI 19241, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea05:19241
    DOI: 10.22004/ag.econ.19241
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    File URL: http://ageconsearch.umn.edu/record/19241/files/sp05ok01.pdf
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    References listed on IDEAS

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    1. Steven Tadelis & Oliver E.Williamson, 2012. "Transaction Cost Economics," Introductory Chapters, in: Robert Gibbons & John Roberts (ed.), : The Handbook of Organizational Economics, Princeton University Press.
    2. Rehber, Erkan, 1998. "Vertical Integration In Agriculture And Contract Farming," Working Papers 25991, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    3. Elizabeth M. M. Q. Farina & Thomas Reardon, 2000. "Agrifood Grades and Standards in the Extended Mercosur: Their Role in the Changing Agrifood System," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(5), pages 1170-1176.
    4. Debertin, David L., 2012. "Agricultural Production Economics, Second Edition," Monographs: Applied Economics, AgEcon Search, number 158319, September.
    5. Minot, Nicholas, 1986. "Contract Farming and Its Effect on Small Farmers in Less Developed Countries," Food Security International Development Working Papers 54740, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    6. Fafchamps, Marcel, 1996. "The enforcement of commercial contracts in Ghana," World Development, Elsevier, vol. 24(3), pages 427-448, March.
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    Cited by:

    1. Chemnitz, Christine & Grethe, Harald & Kleinwechter, Ulrich, 2007. "Quality Standards for Food Products - A Particular Burden for Small Producers in Developing Countries?," 106th Seminar, October 25-27, 2007, Montpellier, France 7926, European Association of Agricultural Economists.
    2. Nthambi, Mary & Mburu, John I. & Nyikal, Rose, 2013. "Smallholder Choice of Compliance Arrangements: The Case GlobalGAP adoption by French Bean Farmers in Kirinyaga, Mbooni and Buuri/Laikipia Districts," 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161471, African Association of Agricultural Economists (AAAE).

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