Small Farmers and Big Retail: trade-offs of supplying supermarkets in Nicaragua

Hope Michelson, Thomas Reardon and Francisco Jose Perez

No 62124, Staff Paper Series from Michigan State University, Department of Agricultural, Food, and Resource Economics

Abstract: In Nicaragua and elsewhere in Central America, small-scale farmers are weighing the risks of entering into contracts with supermarket chains. We use unique data on negotiated prices from Nicaraguan farm cooperatives supplying supermarkets to study the impact of supply agreements on producers’ mean output prices and price stability. We find that prices paid by the domestic retail chain approximate the traditional market in mean and variance. In contrast, we find that mean prices paid by Wal-mart are significantly lower than the traditional market but that Wal-Mart systematically reduces price volatility compared with the traditional market. We find some evidence, however, that farmers may be paying too much for this contractual insurance against price variation.

Keywords: Agribusiness; International Development (search for similar items in EconPapers)
Pages: 31
Date: 2010-04
New Economics Papers: this item is included in nep-agr
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Citations: View citations in EconPapers (7)

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Journal Article: Small Farmers and Big Retail: Trade-offs of Supplying Supermarkets in Nicaragua (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:midasp:62124

DOI: 10.22004/ag.econ.62124

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