Special Trade Research Seminar: Supply Chains in Export Agriculture, Competition, and Poverty in Sub-Saharan Africa

Chair:  Justin Lin, Sr. Vice President & Chief Economist, DECVP

Speakers:

• Guido Porto, Universidad Nacional de La Plata, Argentina
• Nicolas Depetris, Dubai School of Government
• Marcelo Olarreaga, University of Geneva

Abstract: This manuscript studies how the internal structure of agriculture export markets and the level of competition affect poverty and welfare in rural areas in Africa. The authors develop a game-theory model of supply chains in cash crop agriculture between many atomistic small land holders and a few exporters. The model provides the tools needed to simulate the changes in farm-gate prices of export crops given hypothetical changes in the structure of the supply chain. Using  household surveys, the authors assess the poverty impacts of those changes in the value chains for twelve case studies. The study investigates the average impact for all rural households, the distribution of these impacts for poor vis-à-vis non-poor households, and the differences in impacts between male- and female-headed households. Overall the findings suggest that competition among processors is good for the farmers. However, small changes in competition are unlikely to have significant effects on farmers’ livelihood. On average, non-poor, male headed households are the ones that benefit the most from an increase in competition. The introduction of out-grower contracts in the analytical model only produces significant changes in the simulations of one of our case studies.

• Paper (pdf - 2.6mb)