Supermarket contracts boost incomes and reduce multidimensional poverty for smallholders in Kenya
As food systems in developing countries change rapidly, one important trend is the growing role of modern supermarkets in urban food retailing, with far-reaching implications for food marketing and human health. Supermarkets have complex impacts on food systems: They potentially compete with small-scale vendors in informal markets, while also boosting prospects for local farmers. Going forward, policy makers need a full understanding of the impacts of supermarkets on different players in food supply chains.
For farmers, the certainty that comes with a supermarket contract is beneficial because it can reduce their exposure to market risk and help them to overcome credit constraints. For example, if a farmer knows that a certain amount of their produce will be purchased at an agreed price, they can make longer-term decisions about investment and credit. However, because companies often prefer contracting medium- and larger-sized farms that can consistently supply higher volumes, some smallholder farmers may not be able to participate successfully in supermarket contract schemes.
To investigate the impacts of supermarkets on small farmers further, our recent research, published in Food Policy, looked at the impact that a multi-year supermarket contract had on multiple dimensions of smallholder livelihoods in Kenya.
Photo credit: Yusunkwon