Promoting the Kenyan Potato Value Chain: Can Contract Farming Help Build Trust and Reduce Transaction Risks?

Heike Hoeffler

No 7726, 99th Seminar, February 8-10, 2006, Bonn, Germany from European Association of Agricultural Economists

Abstract: African economies are increasingly confronted with changing food and commodity markets, due to globalisation, economic liberalisation and urbanisation. Subsequently, consumer preferences change. This poses new opportunities but also challenges to small-scale producers, traders and processors along agricultural value chains. The value chain is increasingly seen as an important development framework, with contract farming being viewed as an instrument for improving value chain performance by reducing transaction costs and risks and by building trust in vertical cooperation. This paper uses the case study of the potato value chain in Kenya to examine these assumptions. It is shown that contract farming can be used to reduce transaction costs and risks, and to improve the organisation and governance of value chains by creating stable business relationships. Nevertheless, it is constrained by a number of market and institutional failures.

Keywords: Agribusiness; Marketing (search for similar items in EconPapers)
Pages: 12
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://ageconsearch.umn.edu/record/7726/files/sp06ho02.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae99:7726

DOI: 10.22004/ag.econ.7726

Access Statistics for this paper

More papers in 99th Seminar, February 8-10, 2006, Bonn, Germany from European Association of Agricultural Economists Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().