The effect of distance and road quality on food collection, marketing margins, and traders' wages: evidence from the former Zaire

Food price variation is typical of the food economies of many low income countries. The presence or absence of road infrastructure is perceived to be one of the main determinants of this variation. This analysis shows that in the case of the former Zaire, food price dispersion is significant both across products and across regions. It is demonstrated that transportation costs explain most of the differences in food prices between producer regions and that road quality is an important factor in the transportation costs. However, food prices decrease relatively faster than transportation costs increase and traders' wages are higher on bad roads.     

Multinationals vs. Cooperatives: The Income and Efficiency Effects of Supply Chain Governance in India

The impact of multinational firms on the domestic agricultural sector in developing countries is controversial, in particular in India. Relying on a unique set of household‐level data from the state of Punjab, we study the biggest dairy company in the world (Nestlé) in India and compare its vertical spillover effects on upstream suppliers to other market channels (informal sector and cooperatives). We find that farmers that supply informal channels are less efficient and earn lower profits per dairy animal than farmers supplying the cooperative and the multinational sector. Furthermore, we find that farmers using the multinational channel are more efficient than farmers in the cooperative channel, but equally profitable. Hence, we do not find that supplying the cooperative channel is more beneficial for local dairy farmers than supplying the multinational channel. Overall, however, dairy productivity and profitability levels are still dramatically low, with substantial scope for dairy development.     

Spatial integration at multiple scales: rice markets in Madagascar

The dramatic increase in the price of rice and other commodities over the past year has generated new interest in how these markets work and how they can be improved. This article uses an exceptionally rich data set to test the extent to which markets in Madagascar are integrated across space at different scales of analysis and to explain some of the factors that limit spatial arbitrage and price equalization within a single country. We use rice price data across four quarters of 2000–2001 along with data on transportation costs and infrastructure availability for nearly 1,400 communes in Madagascar to examine the extent of market integration at three different spatial scales—subregional, regional, and national—and to determine whether non-integration is due to high transfer costs or lack of competition. The results indicate that markets are fairly well integrated at the subregional level and that factors such as high crime rates, remoteness, and lack of information are among the factors limiting competition.     

Does access to improved grain storage technology increase farmers' welfare? Experimental evidence from maize farming in Ethiopia

Seasonal price variability for cereals is two to three times higher in Africa than on the international reference market. Seasonality is even more pronounced when access to appropriate storage and opportunities for price arbitrage are limited. As smallholder farmers typically sell their production after harvest, when prices are low, this leads to lower incomes as well as higher food insecurity during the lean season, when prices are high. One solution to reduce seasonal stress is the use of improved storage technologies. Using data from a randomised controlled trial, in a major maize-growing region of Western Ethiopia, we study the impact of hermetic bags, a technology that protects stored grain against insect pests, so that the grain can be stored longer. Despite considerable price seasonality—maize prices in the lean season are 36% higher than after harvesting—we find no evidence that hermetic bags improve welfare, except that access to these bags allowed for a marginally longer storage period of maize intended for sale by 2 weeks. But this did not translate into measurable welfare gains as we found no changes in any of our welfare outcome indicators. This ‘near-null’ effect is due to the fact that maize storage losses in our study region are relatively lower than previous studies suggested—around 10% of the quantity stored—likely because of the widespread use of an alternative to protect maize during storage, for example a cheap but highly toxic fumigant. These findings are important for policies that seek to promote improved storage technologies in these settings.     

Diet transformation in Africa: the case of Ethiopia

Africa's food systems are changing fast amid rapid economic growth, emerging urbanization, and structural transformation. In this study, we use four rounds of nationally representative data from Ethiopia to document changes in household food consumption patterns over a period of unprecedented economic growth. We find that while the share of food in the total consumption basket is declining, food quantities and calorie intakes have considerably increased between 1996 and 2011. A decomposition analysis suggests that this was mostly driven by improvements in household incomes—a finding that is consistent across the calorie distribution. Also, the content of the food basket is changing with a gradual shift toward high‐value foods such as animal products, fruits and vegetables and processed foods. Overall, this diet transformation has important implications for the food security debate and for agricultural and food policy in the country.     

Quality control in nonstaple food markets: evidence from India

Using original survey data collected on growers, traders, processors, markets, and village communities, we will compare the situation in four states: Tamil Nadu, Uttar Pradesh, Maharashtra, and Orissa. We examine the way that information about crop attributes is conveyed (or not) along the value chain. We find that little information circulates about unobservable crop characteristics. Growers receive a price premium when they dry, grade, and pack their produce, but we find no evidence that information about crop salubrity or agricultural practices circulates through the value chain or that growers are encouraged to follow specific agricultural practices for quality purposes. Market infrastructure is deficient regarding sanitation, with few public toilets, inadequate drainage, and no coordinated pest control.     

Spillovers from high-value agriculture for exports on land use in developing countries: evidence from Madagascar

High-value agriculture for exports is increasingly important in developing countries. In a case study of contract farming for exports of vegetables from Madagascar, strong spillover effects of these trade opportunities on land use are found to exist. Using a matched plot sampling design, the productivity of rice—the main domestically consumed staple—is shown to be two-thirds higher on fields that were contracted during the off-season for the production of vegetables. This increase in yields is linked to an increase of soil fertility due to the application of fertilizer and compost, which farmers did not use prior to the contracts. Although agricultural output goes up significantly, labor productivity stays the same, suggesting that there is greater labor absorption on existing land and the diffusion of this type of technology at a larger scale throughout Madagascar would be expected to substantially decrease incentives to deforest by increasing wages and to boost productivity of existing lands relative to newly deforested ones.     

Global Retail Chains and Poor Farmers: Evidence from Madagascar

Global retail companies (“supermarkets”) have an increasing influence on developing countries, through foreign investments and/or through the imposition of their private standards. The impact on developing countries and poverty is often assessed as negative. In this paper we show the opposite, based on an analysis of primary data collected to measure the impact of supermarkets on small contract farmers in Madagascar, one of the poorest countries in the world. Almost 10,000 farmers in the Highlands of Madagascar produce vegetables for supermarkets in Europe. In this global supply chain, small farmers’ micro-contracts are combined with intensive farm assistance and supervision programs to fulfill complex quality requirements and phyto-sanitary standards of supermarkets. Small farmers that participate in these contracts have higher welfare, more income stability and shorter lean periods. We also find significant effects on improved technology adoption, better resource management and spillovers on the productivity of the staple crop rice. The small but emerging modern retail sector in Madagascar does not (yet) deliver these benefits as they do not (yet) request the same high standards for their supplies.