In this study, we have combined the literature on social networks and emerging high-value supply chains to elicit the importance of information networks when choosing agricultural output markets. Precisely, we focus on informal farmer interactions to exchange information, what we call ‘information links’. In our definition, an information link exists if farmers exchange information on possible vegetable marketing options. In this paper, we have analyzed three aspects. First, the determinants of the existence of information links between farmers using dyadic probit models. Second, we have assessed the effects of having information links with other farmers that previously supplied HVM on farmers’ own probability of participation in HVM using probit models. Finally, using multinomial logit models, we have assessed the effects of having information links with other farmers that previously supplied HVM on farmers’ own participation dynamics including joining, dropping, or supplying HVM over a two time period: 2008 and 2012.
Analysis of social effects is usually beset by econometric challenges like selection bias, simultaneity and correlated unobservable variables. In our analysis, we attempted to tackle these challenges in various ways such as including several variables that would capture unobserved characteristics and lagging some variables that we had past data on to avoid simultaneity. We also undertook various robustness checks including using instruments.
Our results show that HVM farmers are obtaining vegetable marketing information from fellow HVM farmers and also from TM farmers. We however, do not find evidence that TM farmers are obtaining marketing information from HVM farmers.
Further, we find that having information links with other farmers that previously supplied HVM increase probability of farmers’ own participation in HVM by 10 to 19 percentage
Chapter 2. Informal Information Networks and Smallholder Participation in High-Value Markets
points. Results of the multinomial logit model show that access to market information is likely to enhance farmers’ participation in HVM overtime, and decrease the probability of supplying TM overtime. This is plausible because farmers would be interested to participate in the most lucrative channel.
Our results have important policy implications for dissemination of market information. To start with, it is important that market information is disseminated to farmers so that they can make informed market choice decisions. Informal information systems like social network would be a pathway to disseminate such information: our findings show that these networks have an effect on farmers’ decision making on choice of marketing channel. The findings that there is flow of market information among HVM farmers and that HVM obtain market information from TM farmers and not the vice versa, has important implications. Given that HVM-supplying households are mostly the more wealthy ones and those with larger farms, further development of the HVM is likely to aggravate the inequality between small and large farmers through differential access to information. Therefore, governments need to put in place other mechanisms to support the informal information networks in spreading market information. For example, the agricultural extension officers can disseminate market information through small groups at the village level, while ensuring inclusive engagement of all farmers (those supplying HVM and TM) in such groups.
The findings that information networks increase the probability of participation in HVM, and that of staying in HVM imply that participation in HVM is likely to increase as farmers attain information about these markets. Therefore, it is vital to avail market information to farmers to increase participation. Furthermore, increased participation in HVM is likely to results in positive welfare effects in terms of household income, household nutrition, productivity, and employment creation as shown in past research, and this is likely to have an effect on overall economic development.
Our results should be taken as an analytic evidence for the important role played by information networks in choice of supply channel. Even though our study is tailored to the specific context of smallholder vegetable farmers in rural Kenya, the findings have broader applicability to other areas of developing countries experiencing rapid growth of supermarkets and other emerging high-value markets, while at the same time facing challenges of accessing market information. This study being the first to use informal
social networks data in the context of modern supply chains makes a great contribution both in the social network and HVM literature. However, more research in this direction is needed. This would for instance be a study using complete panel data on social networks and combining social network with behavioral field experiments to capture unobserved endogeneity.
Chapter 3. Impacts of Supermarkets on Farm Household Nutrition in Kenya
3 Impacts of Supermarkets on Farm Household Nutrition in Kenya
4Abstract. Many developing countries experience a food system transformation with a rapid growth of supermarkets. We analyze impacts of supermarkets on farm household nutrition with survey data from Kenya. Participation in supermarket channels is associated with significantly higher calorie, vitamin A, iron, and zinc consumption. We use simultaneous equation models to analyze impact pathways. Supermarket-supplying households have higher incomes, a higher share of land under vegetables, and a higher likelihood of male control of revenues. Furthermore, income and the share of land under vegetables have positive impacts, while male control of revenues has negative impacts on dietary quality. Policy and further research implications are discussed.