How Does Participation in Value Chains Matter to African Farmers?

60 Pages Posted: 28 Aug 2018

Date Written: July 6, 2018

Abstract

Trade and participation in global value chains can play a key role in economic diversification and development. This paper deepens the discussion about productivity growth and upgrading in agriculture in Africa, and the role of national, regional, and international value chains in supporting such structural change. The analysis in this report is based on quantitative and qualitative surveys undertaken in 2016 in Ghana, Kenya, and Zambia, where 3,935 farmers, 60 aggregators, and 56 buyers in the maize, cassava, and sorghum value chains were interviewed in the three countries. The descriptive results show that farmers who were on a contract saw greater structural transformation; higher output; and better access to seeds, fertilizers, pesticides, technology, and extension services compared with farmers who were not on a contract. To identify more robustly the link between value chain participation and contract farming with productivity and upgrading, the paper looks at the relationship using a variety of empirical methodologies, ranging from ordinary least squares and probit regressions to propensity score matching. Based on the empirical evidence, the hypothesis that value chain participation leads to structural transformation cannot be confirmed. The paper does find evidence that formal or informal contractual arrangements that regulate the provision of inputs to production, such as fertilizer, technology, extension services, and market information, positively affect upgrading. It remains nevertheless important to understand the impact of government policies on the emergence of value chains given that value chains support contractual arrangements.

Suggested Citation

Dihel, Nora Carina and Goswami, Arti Grover and Hollweg, Claire H. and Slany, Anja, How Does Participation in Value Chains Matter to African Farmers? (July 6, 2018). World Bank Policy Research Working Paper No. 8506. Available at SSRN: https://ssrn.com/abstract=3238346

Nora Carina Dihel (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Arti Grover Goswami

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States

Claire H. Hollweg

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Anja Slany

Ruhr-University Bochum ( email )

Faculty of Management and Economics
Chair of International Economics
Bochum, 44780
Germany

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