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Global Agrifood Value Chains and Local Poverty Reduction: What Happens to Those Who Don’t Plug In?

Author

Listed:
  • Chang, Han-Hsin

    (Consultant at the former Office of Regional Economic Integration, ADB)

  • Di Caprio, Alisa

    (Asian Development Bank)

  • Sahara, Sahara

    (Bogor Agricultural University)

Abstract

Structural changes in the global agrifood value chain have transformed food production in developing countries including Indonesia. One element of this is the spread of supermarket retailing. By increasing the demand for and returns to higher quality produce, this development has the potential to improve living standards in a sector where poverty has been persistent. Many studies have shown the magnitude of price premiums available to farmers who sell to supermarkets. However, little attention has been paid to how the introduction of a supermarket retailer affects those farmers who continue to sell to traditional market channels. Our data suggests that in regions where there are both modern and traditional buyers, competition effects result in the immiserization of farmers who continue to sell to traditional markets. This result underlines the fact that while sectorial transformation has desirable poverty reduction potential, actual impacts are lumpy. The distribution of farmer participation in a region may result in a case where the upgrading of agrifood supply chains can increase poverty in the absence of policy interventions.

Suggested Citation

  • Chang, Han-Hsin & Di Caprio, Alisa & Sahara, Sahara, 2015. "Global Agrifood Value Chains and Local Poverty Reduction: What Happens to Those Who Don’t Plug In?," ADB Economics Working Paper Series 453, Asian Development Bank.
  • Handle: RePEc:ris:adbewp:0453
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    References listed on IDEAS

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    1. W. Bruce Traill, 2006. "The Rapid Rise of Supermarkets?," Development Policy Review, Overseas Development Institute, vol. 24(2), pages 163-174, March.
    2. Suryadarma, Daniel, 2011. "Competition between traditional food traders and supermarkets in Indonesia," 2011: The Supermarket Revolution in Food: Good, Bad or Ugly for the World's Farmers, Consumers and Retailers?, 14-16 August 2011 125323, Crawford Fund.
    3. Dave D. Weatherspoon & Thomas Reardon, 2003. "The Rise of Supermarkets in Africa: Implications for Agrifood Systems and the Rural Poor," Development Policy Review, Overseas Development Institute, vol. 21, pages 333-355, May.
    4. Daniel Suryadarma & Adri Poesoro & Sri Budiyati & Akhmadi & Meuthia Rosfadhila, 2007. "Impact of Supermarkets on Traditional Markets and Retailers in Indonesia's Urban Centers," Development Economics Working Papers 22548, East Asian Bureau of Economic Research.
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    More about this item

    Keywords

    agrifood value chain; Indonesia; quality price premium; small farmers; supermarket;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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