Market Competition in Export Cash Crops and Farm Income

87 Pages Posted: 5 Oct 2014

See all articles by Nicolas M. Depetris Chauvin

Nicolas M. Depetris Chauvin

Princeton University - Department of Economics; Inter-American Development Bank (IADB)

Guido G. Porto

Universidad Nacional de La Plata - Faculty of Economics

Date Written: December 28, 2010

Abstract

This paper studies how the internal structure of agriculture export markets and the level of competition affect poverty and welfare in rural areas in Africa. We develop a game-theory model of supply chains in cash crop agriculture between many atomistic smallholders 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, we assess the poverty impacts of those changes in the value chains for twelve case studies. We investigate 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 we find that an increase in competition among processors is good for the farmers. However, small changes to the level of competition are unlikely to have significant effects on farmers’ livelihood. We also find that, on average, non-poor, male headed household are the ones that benefit the most from an increase in competition. The introduction of outgrower contracts in our model only produces significant changes in the simulations of one of our case studies.

Keywords: Agriculture; Value Chains; Cash Crops; Poverty; Market Competition; Smallholders

JEL Classification: O13, L11, Q12

Suggested Citation

Depetris Chauvin, Nicolas M. and Porto, Guido G., Market Competition in Export Cash Crops and Farm Income (December 28, 2010). Available at SSRN: https://ssrn.com/abstract=2505320 or http://dx.doi.org/10.2139/ssrn.2505320

Nicolas M. Depetris Chauvin (Contact Author)

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

HOME PAGE: http://www.princeton.edu/~depetris

Inter-American Development Bank (IADB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

Guido G. Porto

Universidad Nacional de La Plata - Faculty of Economics ( email )

1900 La Plata
Argentina

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