Productive Employment in Segmented Markets of Fresh Produce


Time span of the project    2014-2017
Contact personRemco Oostendorp
Project partners
Partnership of Economic Policy (PEP); VU Amsterdam (VU); Amsterdam Institute for International Development (AIID); University of Nairobi (UoN); Fresh Produce Exporters Association of Kenya (FPEAK); and Grupo deAnalisispara el Desarrollo (GRADE)
Project sponsorNWO/WOTRO
Project websitehttp://www.nwo.nl/en/research-and-results/research-projects/i/01/12201.html

 

This research project investigates the segmentation of the avocado sector in Kenya, comparing a modern and innovatively programmed and a more traditional and non-programmed mode of farming. 
In the former, farmers directly linked to exporters through contractual relationships and produce according to (certified) Global Good Agricultural Practices (Global GAPs) and agricultural products can be traced back to the producer. In the latter, farmers sell their outputs to ‘brokers’ or middlemen using non-certified production methods and products cannot be traced in the production chain.  
The aim of the project is to study the effects of moving from the traditional to the modern sector on small-scale avocado growers.  At the end of 2016 baseline household and farmer group survey data were collected from Murang’a County in central Kenya among three types of farmers, namely (i) farmers who already had a contract with an exporter during the previous season, (ii) farmers who had just signed a contract with an exporter that would become effective during the following season, and (iii) farmers who had no contract signed. 

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In the first three months of 2018 various project activities were wrapped up as the project was officially closing by March 31. Two policy briefs were written to disseminate key messages produced by the project and published on the website of the Partnership for Economic Policy (PEP) (https://www.pep-net.org/presm-policy-briefs). The policy brief ‘Avocado contract farming in Kenya: Does it work?’ argues that contract farming is the best option for Kenya to transform its avocado sector with exporters and many smallholder avocado farmers benefitting. But it also discusses the challenge that side-selling is widespread and that a lack of loyalty and trust threatens contract sustainability.  This points to the need for policies to increase investment in training and trust, to innovate contract design and to discourage side-selling (and side-buying). The policy brief ‘The Booming Peruvian Avocado Export Sector: Lessons for Kenya’ points out that Kenya can learn from the Peruvian experience relying on a strong public-private partnership to develop new market opportunities, but also that the government needs to stimulate the participation and inclusion of small producers in this process. A scientific paper ‘The Impact of Smallholder Export Participation in Avocado Export Market on Farm Productivity in Kenya’ was finalized for publication and submitted to an international journal.  The paper examines the determinants and impacts of smallholder producers' participation in global value chains on farm incomes and productivity. In terms of impact, it is found that participation in the export market results in increased prices fetched for avocados, but lower harvested yields, probably because of the more stringing requirements of exporting firms. Also, labor inputs increase with participation. The net effect on avocado incomes seems to be positive, in the order of 22 percent, but the effect is imprecisely estimated. Also endowments of the farmers, in terms of family composition, assets, land, number of avocado trees and training explain most of the observed differences in incomes and prices fetched. This suggests that barriers to entry do not play a major role in determining participation in the export market.