Vertical Coordination Options and Horticultural Produce Supply Chain Performance among Smallholder French Beans Producers in Murang’a South Sub-County, Kenya

Abstract

Global agri-food systems have undergone rapid transformations towards higher concentration and closer vertical coordination to meet increasing requirements on food quality, safety and traceability. Vertical coordination options, namely contracts, middlemen, and spot market transactions, have facilitated smallholder participation in high-value chains. However, despite their potential to link farmers to markets, there is a dearth of information on the joint effects of different vertical coordination options on horticultural supply chain performance. Using data from 215 households randomly selected from Murang'a South Sub-County, and applying a multivariate probit (MVP) model; a generalized ordered logit (gologit); and a multinomial endogenous switching regression, this study sought to determine the factors that influence the choice of vertical coordination options and evaluate the influence of vertical coordination options on the adoption of GLOBALG.A.Ps, in addition to estimating the effects of contract and non-contract vertical coordination options on the smallholder French beans' farmers gross margin. The results show that firstly, the likelihood of choice of vertical coordination options increased with the gender of the decision-maker, off-farm income and farming experience at a 1% significant level each. The adoption index results demonstrate that contracted farmers had a 64% compliance level compared to 34% for their non-contract counterparts. Secondly, the GLOBALG.A.P uptake status was significantly and positively correlated with education level, training, farming experience, group membership and vertical coordination options, and lastly, farmers who sold in all the three vertical coordination options reported gross margins of KES 22,565 (ATT) per season. Accordingly, it follows that smallholder French bean farmer's socio-economic circumstances matter in shaping the choice of vertical coordination options and GLOBALG.A.P. uptake status. Moreover,diversifying vertical coordination options yield higher gross margins for smallholder French beans' farmers. These results imply a need to intensify training on new GLOBALG.A.P. measures, advocacy for enhanced group membership, and incentivizing farm business through farmers’ participation in off-farm activities that generate the extra income needed to support fresh produce marketing.