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What Impact Are EU Supermarket Standards Having on Developing Countries Export of High-Value Horticultural Products? Evidence from Kenya

  • Asfaw, Solomon
  • Mithofer, Dagmar
  • Waibel, Hermann
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    European Union (EU) retailers are setting global benchmarks for the production of fresh food, and are asking their suppliers for produce to be certified according to food safety and quality standards. Compliance to these standards for developing countries small-scale producers entail costly investment in variable inputs and long term structures. Limited empirical evidence exists either to refute or confirm the concern that the proliferation and enhanced stringency of these standards marginalize smallholders from global market. This article therefore explores the costs of compliance, factors explaining the smallholder decision to adopt EU private quality standard and the impacts of the standard on farm financial performance. We develop a two-stage standard treatment effect model to account for self-selection as a source of endogeneity. Analysis is based on a random cross section sample of 439 small-scale export vegetable producers in Kenya whose production was monitored in 2005/2006. We demonstrate that adopters and non-adopters are distinguishable by their asset holding and household wealth, access to services, labor endowment and level of education. Once we control for endogeneity problem, we found that small-scale producers can benefit substantially from adopting the standard at the farm level.

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    File URL: http://purl.umn.edu/7870
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    Paper provided by European Association of Agricultural Economists in its series 105th Seminar, March 8-10, 2007, Bologna, Italy with number 7870.

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    Date of creation: 2007
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    Handle: RePEc:ags:eaa105:7870
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    1. C. Dolan & J. Humphrey, 2000. "Governance and Trade in Fresh Vegetables: The Impact of UK Supermarkets on the African Horticulture Industry," Journal of Development Studies, Taylor & Francis Journals, vol. 37(2), pages 147-176.
    2. AUGIER Patricia & GAZIOREK Michael & LAITONG Charles, 2004. "The Impact of Rules of Origin On Trade Flows," International Trade 0404001, EconWPA.
    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. Fernandez-Cornejo, Jorge & Hendricks, Chad & Mishra, Ashok K., 2005. "Technology Adoption and Off-Farm Household Income: The Case of Herbicide-Tolerant Soybeans," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 37(03), December.
    5. Huffman, Wallace E., 1991. "Agricultural Household Models: Survey and Critique," Staff General Research Papers 11008, Iowa State University, Department of Economics.
    6. Maertens, Miet & Swinnen, Johan F.M., 2006. "Standards as Barriers and Catalysts for Trade and Poverty Reduction," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25772, International Association of Agricultural Economists.
    7. Basu, Kaushik & Narayan, Ambar & Ravallion, Martin, 1999. "Is knowledge shared within households?," Policy Research Working Paper Series 2261, The World Bank.
    8. Sunding, David & Zilberman, David, 2001. "The agricultural innovation process: Research and technology adoption in a changing agricultural sector," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 4, pages 207-261 Elsevier.
    9. Maertens, Miet, 2006. "Trade, Food Standards and Poverty: The Case of High-Value Vegetable Exports from Senegal," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25614, International Association of Agricultural Economists.
    10. Asfaw, Abay & Admassie, Assefa, 2004. "The role of education on the adoption of chemical fertiliser under different socioeconomic environments in Ethiopia," Agricultural Economics, Blackwell, vol. 30(3), pages 215-228, May.
    11. 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.
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