Farmers’ Preferences for Supermarket Contracts in Kenya

Dennis O. Ochieng, Prakashan Chellattan Veettil () and Matin Qaim

No 235632, 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association

Abstract: Empirical analysis of contractual arrangements between supermarkets and smallholder farmers remains scarce, yet farmers’ contract preferences influence their participation in supermarket contracts. We employ mixed logit model to analyze farmers’ preferences for contracts using discrete choice data from a sample of vegetable farmers of central Kenya, sampled through stratified random sampling procedure. Results show that farmers generally do not exhibit risk aversion to contracts and would choose them depending on their attributes. Certain farmer characteristics influence decision to contract and preferences for contract design attributes. Findings also show that group marketing could be an interesting option to reduce individual risks and transaction costs. Designing contracts that lower risks to smallholder farmers, and or with transparent risk-sharing clauses would enhance their participation in supermarket contracts. Some wider policy implications are discussed.

Keywords: Agribusiness; Agricultural and Food Policy; Food Security and Poverty; Institutional and Behavioral Economics (search for similar items in EconPapers)
Pages: 32
Date: 2016
New Economics Papers: this item is included in nep-agr and nep-dcm
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Related works:
Journal Article: Farmers’ preferences for supermarket contracts in Kenya (2017)
Working Paper: Farmers’ Preferences for Supermarket Contracts in Kenya (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea16:235632

DOI: 10.22004/ag.econ.235632

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