Trade, value chain technology and prices: evidence from dairy in East Africa

Liz Ignowski, Bart Minten, Johan Swinnen, Bjorn Van Campenhout and Senne Vandevelde

No 671298, Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: Agricultural value chains, particularly in the developing world, have been going through drastic changes over the past decades. Differences in world market participation and access to value chain technologies might however have resulted in uneven experiences across countries. In this paper, we explore their impact on prices in the value chain, using the example of two East African countries, Ethiopia and Uganda. We develop a conceptual framework and then validate the model using unique primary price data collected at several levels in the dairy value chains in both countries. We find that prices are overall significantly lower in Uganda than Ethiopia, reflecting their respective net exporting and importing status. Moreover, despite shorter value chains, we find much more significant effects of distances from the capital (the major end destination) on milk prices in Ethiopia than in Uganda. This is seemingly linked to the widespread presence of milk chilling centers in Uganda. While it has been shown that such technology is important for milk quality, we find here that they also have the added benefit to reduce the impact of farmer’s remoteness on prices and therefore allow for more geographically extended value chains.

Pages: 35
Date: 2021-02-24
New Economics Papers: this item is included in nep-agr and nep-int
Note: paper number 422
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Published in LICOS Discussion Paper 422/2021, pages 1-35

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Working Paper: Trade, value chain technology and prices: evidence from dairy in East Africa (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:671298

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