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Farmers’ Preferences for Supermarket Contracts in Kenya

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  • Ochieng, Dennis O.
  • Veettil, Prakashan C.
  • Qaim, Matin

Abstract

Empirical analysis of contractual arrangements between supermarkets and smallholder farmers remains scarce, yet farmers’ contract preferences influence their participation in supermarket contracts. We employ mixed logit model to analyze farmers’ preferences for contracts using discrete choice data from a sample of vegetable farmers of central Kenya, sampled through stratified random sampling procedure. Results show that farmers generally do not exhibit risk aversion to contracts and would choose them depending on their attributes. Certain farmer characteristics influence decision to contract and preferences for contract design attributes. Findings also show that group marketing could be an interesting option to reduce individual risks and transaction costs. Designing contracts that lower risks to smallholder farmers, and or with transparent risk-sharing clauses would enhance their participation in supermarket contracts. Some wider policy implications are discussed.

Suggested Citation

  • Ochieng, Dennis O. & Veettil, Prakashan C. & Qaim, Matin, 2016. "Farmers’ Preferences for Supermarket Contracts in Kenya," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235632, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea16:235632
    DOI: 10.22004/ag.econ.235632
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    File URL: http://ageconsearch.umn.edu/record/235632/files/AAEA%20paper.pdf
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    Cited by:

    1. Omondi, S.O., 2018. "Economic analysis of small-scale poultry production in Kenyan medium-sized cities of Kisumu and Thika," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277360, International Association of Agricultural Economists.
    2. repec:eee:jfpoli:v:85:y:2019:i:c:p:28-39 is not listed on IDEAS
    3. Benali, M. & Bruemmer, B. & Afari-Sefa, V., 2018. "Small producer participation in export vegetable supply chains and poverty: evidence from different export schemes in Tanzania," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277131, International Association of Agricultural Economists.
    4. repec:eee:wdevel:v:99:y:2017:i:c:p:285-298 is not listed on IDEAS
    5. repec:eee:wdevel:v:112:y:2018:i:c:p:259-271 is not listed on IDEAS
    6. Dennis O. Ochieng, 2017. "Supermarket Contracts, Income, and Changing Diets of Farm Households: Panel Data Evidence from Kenya," GlobalFood Discussion Papers 260397, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    7. Benali, Marwan & Brümmer, Bernhard & Afari-Sefa, Victor, 2017. "Small producer participation in export vegetable supply chains and poverty: evidence from different export schemes in Tanzania," GlobalFood Discussion Papers 262583, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    8. repec:eee:jfpoli:v:81:y:2018:i:c:p:67-81 is not listed on IDEAS
    9. repec:gam:jsusta:v:10:y:2018:i:10:p:3735-:d:176246 is not listed on IDEAS
    10. repec:eee:wdevel:v:104:y:2018:i:c:p:46-64 is not listed on IDEAS
    11. repec:bla:agecon:v:50:y:2019:i:1:p:27-37 is not listed on IDEAS
    12. Ochieng, D., 2018. "Supermarket Contracts, Income, and Changing Diets of Farm Households: Panel Data Evidence from Kenya," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277423, International Association of Agricultural Economists.
    13. Gamboa, Cindybell & Van Den Broeck, Goedele & Maertens, Miet, 2018. "Adoption of improved quinoa varieties among smallholder farmers in the Peruvian Andes," Working Papers 277984, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    14. Liu, Y., 2018. "Determinants and impacts of marketing channel choice among cooperatives members: Evidence from agricultural cooperative in China," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275898, International Association of Agricultural Economists.

    More about this item

    Keywords

    Agribusiness; Agricultural and Food Policy; Food Security and Poverty; Institutional and Behavioral Economics;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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