422
for production is cheap; natural resources to support vegetable production, particularly land and water, are abundant (Swinnen et al. 2013); and exporters have their
own means to mobilize producers into effective farmers’ groups. However, there are
uncertainties regarding farmers’ continued participation in both milk and vegetable
value chains because their participation is predicted to decline with the increase in
quality and standard requirements (Henson and Hamphrey 2010; Danielou and
Ravry 2005).
4 Conclusions and Policy Implications
4.1 Conclusion
The chapter sought to map the application of contract farming and the co-operative
model of business to assess smallholder farmers’ prospects for integrating into agricultural commodity value chains, using milk and vegetable value chains from
selected countries in SSA as case studies. The analysis has revealed complex
dynamics within the value chains that result in limited scope to achieve the desired
outcome of promoting the linkage of smallholder farmers to formal markets, using
the identified means of vertical coordination.
In terms of the application of the selected forms of vertical coordination, the
major findings are:
(i) We found crop-specific biases in terms of the application of the two business
models, where there is keener application of the hybrid forms of vertical coordination in the vegetable value chain than in the milk value chain. This bias is
obviously meant to strengthen oversights through effective engagement of
intermediary agents.
(ii) Most of the studied coordination mechanisms are buyer (exporter)-driven.
Buyers’ main incentive to engage smallholder farmers seems to be to seize
opportunities in foreign markets, accorded by specific trade agreements that
are bound to change over time.
(iii) We consistently found lower farmers’ participation prospects where there are
no economies of size, implying limited participation for smallholders producing less produce and those who are deficient in key competencies and resources,
with women being potentially the most affected.
(iv) There are no effective institutional mechanisms to allow participating farmers
to hedge against potential risks from supply disruption and abrupt changes in
contract terms.
(v) Smallholder farmers’ participation in high-value chains seems to be favourable
when critical resources (labour, land and water) that are needed for production
are readily available and cheap. This raises concerns for farmers’ future prospects, as climate shocks to agricultural production become more eminent.
F. T. M. Kilima and L. R. Kurwijila
for production is cheap; natural resources to support vegetable production, particularly land and water, are abundant (Swinnen et al. 2013); and exporters have their
own means to mobilize producers into effective farmers’ groups. However, there are
uncertainties regarding farmers’ continued participation in both milk and vegetable
value chains because their participation is predicted to decline with the increase in
quality and standard requirements (Henson and Hamphrey 2010; Danielou and
Ravry 2005).
4 Conclusions and Policy Implications
4.1 Conclusion
The chapter sought to map the application of contract farming and the co-operative
model of business to assess smallholder farmers’ prospects for integrating into agricultural commodity value chains, using milk and vegetable value chains from
selected countries in SSA as case studies. The analysis has revealed complex
dynamics within the value chains that result in limited scope to achieve the desired
outcome of promoting the linkage of smallholder farmers to formal markets, using
the identified means of vertical coordination.
In terms of the application of the selected forms of vertical coordination, the
major findings are:
(i) We found crop-specific biases in terms of the application of the two business
models, where there is keener application of the hybrid forms of vertical coordination in the vegetable value chain than in the milk value chain. This bias is
obviously meant to strengthen oversights through effective engagement of
intermediary agents.
(ii) Most of the studied coordination mechanisms are buyer (exporter)-driven.
Buyers’ main incentive to engage smallholder farmers seems to be to seize
opportunities in foreign markets, accorded by specific trade agreements that
are bound to change over time.
(iii) We consistently found lower farmers’ participation prospects where there are
no economies of size, implying limited participation for smallholders producing less produce and those who are deficient in key competencies and resources,
with women being potentially the most affected.
(iv) There are no effective institutional mechanisms to allow participating farmers
to hedge against potential risks from supply disruption and abrupt changes in
contract terms.
(v) Smallholder farmers’ participation in high-value chains seems to be favourable
when critical resources (labour, land and water) that are needed for production
are readily available and cheap. This raises concerns for farmers’ future prospects, as climate shocks to agricultural production become more eminent.
F. T. M. Kilima and L. R. Kurwijila