FARM-LEVEL PERSPECTIVES ON THE IMPACT OF DOMESTIC SUPERMARKETS ON KENYA'S FRESH FRUITS AND VEGETABLES SUPPLY SYSTEM

David Neven (), Thomas Reardon, Michael M. Odera and Honglin Wang ()

No 11667, Staff Paper Series from Michigan State University, Department of Agricultural, Food, and Resource Economics

Abstract: The rise of supermarkets in Kenya has given rise to a new group of medium-sized farms managed by well-educated farmers. Focusing on kale, the essay shows that nearly all supermarket-channel farmers have the capacity to supply larger volumes year round and have transportation vehicles, an irrigation system, a packing shed, a cellular phone, and so on, pointing to the existence of a threshold capital vector which farmers must have in order to access supermarkets. Especially farm size and irrigation were found to be significant determinants of participation in the supermarket channel. Kale suppliers to supermarkets use more capital intensive production technologies, leading to average labor and land productivities which are 60-70% higher than in the traditional channel. Eighty percent of labor consists of hired workers, indicating that these farmers could be important in alleviating poverty for rural households with little or no land. While most traditional-channel kale farmers sell to brokers and get a price that lets them break-even at best, supermarket-channel farmers have a 40% gross profit margin. These margins and lower market risks in the supermarket channel have resulted in a strong growth dynamic of supermarket-channel farmers which have doubled the size of their operations over the last five years.

Keywords: Marketing (search for similar items in EconPapers)
Pages: 46
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ags:midasp:11667

DOI: 10.22004/ag.econ.11667

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