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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.

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  • 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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    More about this item

    Keywords

    Agribusiness; Agricultural and Food Policy; Food Security and Poverty; Institutional and Behavioral Economics;
    All these keywords.

    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; Animal Welfare Policy

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