"You Quit?" Influence of Neighbor Experience and Exit on Small Farmer Market Participation

Michelson, Hope (2015): "You Quit?" Influence of Neighbor Experience and Exit on Small Farmer Market Participation.

Abstract

This research analyzes the relationship between a farmers' participation in Nicaraguan supermarket supply chains and the market entries and exit of neighboring farmers. Drawing on insights from the technology adoption literature on learning and experimentation, we incorporate measures of neighbor experience into a model of a farmer's decision to join or quit these markets. We also test for strategic delay by small farmers and estimate the price that some farmers may pay for experimentation.

Our results suggest both that that neighbors' exits negatively influence a farmer's own decision to join the supply chain and that some farmers engage in strategic delay. Early adopters bear costs of their neighbors' "free riding" in the form of higher product rejection rates and lower annual transactions with supermarkets. Evidence of strategic delay on the part of farmers suggests a social process rather than a firm-level roll out of new contracts within a given village.

• Item Type: MPRA Paper
• Language: English
• Keywords: contract farming, supermarkets, market adoption, Latin America, Walmart, Nicaragua, strategic delay
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture ; Natural Resources ; Energy ; Environment ; Other Primary Products

References

Bandiera, O., and I. Rasul. 2005. “Social Networks and Technology Adoption in Northern Mozambique.”, Jul, pp. 1–45.

Barrett, C.B., M.E. Bachke, M.F. Bellemare, H.C. Michelson, S. Narayanan, and T.F. Walker. 2011. “Smallholder Participation in Contract Farming: Comparative Evidence from Five Countries.” World Development, Oct, pp. 1–17.

Conley, T., and C. Udry. 2010. “Learning about a New Technology: Pineapple in Ghana.” American Economic Review 100:35–69.

Foster, A., and M. Rosenzweig. 1995. “Learning by Doing and Learning from Others: Human capital and technical change in agriculture.” Journal of Political Economy 103:1176–1209.

Isham, J. 2002. “The Effect of Social Capital on Fertiliser Adoption: Evidence from rural Tanzania.” Journal of African Economies 11:39–60.

Jano, P., and D. Mainville. 2006. “Public and Private Roles in Promoting Small Farmers’ Access to Non-traditional Markets: Case Studies from Central America.”

Maertens, A. 2009. “Who Cares What Others Think (or Do)? Social Learning, Social Pressures and Imitation in Three Villages in India.” Cornell University Working Paper, Aug, pp. 1–36.

Michelson, H., T. Reardon, and F. Perez. 2012. “Small Farmers and Big Retail: Trade-offs of Supplying Supermarkets in Nicaragua.” World Development 40:342–354.

Michelson, H.C. 2013. “Small Farmers, NGOs, and a Walmart World: Welfare Effects of Supermarkets Operating in Nicaragua.” American Journal of Agricultural Economics 95:628–649.

Moser, C.M., and C.B. Barrett. 2006. “The Complex Dynamics of Smallholder Technology Adoption: The Case of SRI in Madagascar.” Agricultural Economics 35:373–388.

Munshi, K. 2004. “Social Learning in a Heterogeneous Population: Technology diffusion in the Indian Green Revolution.” Journal of Development Economics 73:185–213.

Narayan, D., and L. Pritchett. 1999. “Cents and Sociability: Household income and social capital in rural Tanzania.” Economic Development and Cultural Change 47:871–897.

Narayanan, S. 2012. “Safe Gambles? Farmer perceptions of transactional cer- tainty and risk-return tradeoffs in contract farming schemes in southern India.”, Aug, pp. 1–54.

Neill, S.P., and D.R. Lee. 2001. “Explaining the Adoption and Disadoption of Sustainabile Agriculture: The Case of Cover Crops in Northern Honduras.” Economic Development and Cultural Change 29:793–820.

Reardon, T., and E.M.M.Q. Farina. 2000. “Agrifood Grades and Standards in the Extended Mercosur: Their Role in the Changing Agrifood System.” American Journal of Agricultural Economics 82:1170–1176.

Ruben, R., D. Boselie, and H. Lu. 2007. “Vegetables Procurement by Asian Su- permarkets: A transaction cost approach.” Supply Chain Management 12:60– 68.

Sahn, D., and D. Stifel. 2000. “Poverty Comparisons Over Time and Across Countries in Africa.” World Development 28:2123–2155.

Wiegel, J.R. 2012. “Retail-led restructuring of the agri-food system in Nicaragua.”, Oct, pp. 1–167.