Can producer groups improve technical efficiency among artisanal shrimpers in Nigeria? A study accounting for observed and unobserved selectivity

Abstract

It is widely recognized that participation in producer groups is advantageous for smallholders who must deal with complex production and marketing constraints and dynamic business environments. However, available data on this process are scarce in the fishery sector, while existing evidence is limited by smallholders’ potential self-selection into producer groups. This study, therefore, examined the selectivity-corrected role of fisher groups in improving shrimpers’ technological and technical efficiency. Using the latest primary data from artisan shrimpers in Nigeria, we applied propensity score matching and Greene’s selectivity stochastic production frontier model to control for selection bias from both observable and unobservable factors. Empirical results from our metafrontier approach show that technical efficiency scores for members tend to be overestimated if selectivity is not properly controlled. However, the technical efficiencies and productivities of members were significantly higher regardless of how biases were corrected, implying that participation in fisher groups is positively related to increases in shrimpers’ capture and technical efficiency. Further findings suggest that current artisanal fisher groups are “production-oriented” as they ensure that members access vital shrimping inputs at lower costs. With declining returns to scale for members, the study concludes that without public and private support for collective action in the fishery sector, membership in artisanal fisher groups may not lead to significant improvement in shrimpers’ productivity. The study discusses several recommendations on how collective action can be further encouraged and developed among artisan fishers.

Contingent resource-based view of food netchain organization and firm performance: a comprehensive quantitative framework

“…While human resources resulted in closer organizational SC network structures for processors, the results from the producer model show that human resources only tighten horizontal relationships. These results imply that experienced, older producers are more likely to forge and rely on collaborative relationships that enhance their knowledge and information and improve their innovativeness (Adetoyinbo and Otter, 2022).…”

“…First, fisherfolk are operating in informal markets marked by relatively lower bargaining power, which traders generally seek to take advantage of. With the forged relational contract also nonformalized, fisherfolk, like many smallholders in Africa (Barrett et al , 2011; Verhofstadt and Maertens, 2014), counter the bargaining power of these influential buyers by engaging in collective action that allows for better information access and support from fisher groups (Adetoyinbo and Otter, 2022).…”

“…Furthermore, horizontal relationships enable individual actors to pool their financial and productive resources to attain economies of scale in commercializing products and purchasing inputs (Lazzarini et al, 2001). Smallholders can intensify their production and processing activities, increase their market orientation and create values that consequently improve their performance by sharing associated risks and costs collectively through producer groups/ cooperatives (Adetoyinbo and Otter, 2022;Gramzow et al, 2018;Pham et al, 2019;Verhofstadt and Maertens, 2014). Furthermore, stakeholders are considered to be important in organizational structures since they influence the success of business enterprises in modern turbulent environments (Freeman, 1984).…”

“…Second, fisherfolk are located in isolated coastal areas that are characterized by higher transaction and input costs and spatial market price differentials (Adetoyinbo and Otter, 2022). These, in addition to possible buyers' opportunistic behavior and a lack of flexibility due to mutual dependency, make the formation of tighter vertical relationships riskier for fisherfolk.…”

“…This is the case with the local food systems in low- and middle-income countries, which serve as the main source of livelihood for many rural households but experience, for example, tremendous market, technological and organizational contingencies due to the ongoing globalization, regionalization and urbanization processes over the past two decades (Barrett et al , 2011; FAO, 2017b; Reardon, 2015). While the role of closer SC network structures as alternative sources of information and resources has been emphasized (Adetoyinbo and Otter, 2022; de Brauw and Bulte, 2021), little is known about how smallholders in highly dynamic food systems can manage these contingencies and optimize their performances.…”