Title:
Small-Farmer Participation in New Agrifood Systems: The Case of Supermarkets in Honduras
Presenter:
Jose Blandon
Author:
Jose Blandon
Date: 2006
Location:
University of Guelph
Abstract:
Agrifood systems are facing dynamic changes in developed as well as in developing countries. Transactions of food products that were usually made in spot markets (SM) are now increasingly made in coordinated markets. One of the reasons for this change is the influence exerted by retail and food service chains as well as food processors (Reardon and Berdagué, 2002). Whilst this situation represents opportunities for small producers, the high standards set by buyers in terms of quantity, quality, timing, safety, packaging, etc., can prevent farmers from exploiting such opportunities, because of the significant changes required in their production and marketing systems. Further, the associated coordination and transaction costs can drive buyers towards a smaller supply base of large producers. Concerned about such changes in agrifood systems in developing countries, specifically the rapid rise of supermarkets, a transaction costs economics framework is used to analyze the supermarket supply chain (SSC) for fresh fruits and vegetables (FFV) in Honduras. The aim of this research is to determine and assess the motivations and constraints associated with the decision of small farmers about the market channel used for selling FFV in Honduras. The study was split into two phases. The first phase was carried out in Honduras during September-December 2004. This phase was mainly qualitative, consisting of in-depth interviews with different actors involved in the FFV sector, including government, private sector, non-governmental organizations (NGOs), farmer organizations, donors, universities and small farmers in order to get a general characterization of the supply chain of FFV in Honduras. The second phase was carried out during the period April-June 2005, and its objective was to collect quantitative information about marketing attributes that determine the decision of farmers about selling or not selling FFV in a determined market. For this purpose, a survey including participant and non-participant farmers in the SSC for FFV was carried out. Considering the usual limitation of getting relevant market information in an emerging topic and in a developing country a stated choice method was used. Stated preference data can be useful to research about new products or services that are not yet in the market (Louviere et al., 2003), or when they are relatively new and appropriate data does not exist yet, as is the case of contractual arrangements between the SSC and farmers in Honduras. Results show that farmers prefer marketing attributes associated with the SSC such as fixing price and quantity with buyers at planting, but prefer other attributes associated with the SM, such as cash payment, non-scheduled delivery, selling at the farm gate, and selling individually. Furthermore, farmers prefer market conditions that do not require major/significant entry costs, suggesting that they have limitations to make significant investments in their farms, which are usually required to participate in the SSC for FFV. In spite of their constraints to participate in the SSC farmers prefer to sell their products individually. Dividing the sample in participant and non-participant farmers in the SSC some differences in preferences are evident, however, results still suggest that farmers are more oriented to traditional markets. The identification and assessment in this research of transaction costs, motivations and constraints associated with the participation of small farmers in the SSC provide excellent inputs for policy makers interested in promoting small farmer participation in new supply chains. Policies oriented to overcome technological barriers such as those associated with entry cost, output, quality, and frequent production are particularly important. Moreover, policies also must be aimed to tackle marketing barriers associated with particular characteristics of procurement systems used in the SSC, such as grading, selling place and payment system.
Presentation:
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