Supermarket chains and small farmers in Africa: A new look from the perspective of New Institutional Economics

Abstract

Supermarket chains have expanded and internationalized to become large buyers and distributors in the global agri-food sector. Meanwhile, in Eastern and Southern Africa which is the focus area of this study, collecting data on rural poverty related to small farmers remains daunting. This study investigates the differences between large and small farmers, the transaction costs involved in supplying agricultural products to supermarket chains in Africa and the opportunities and challenges that small farmers face in accessing this market. This study begins with a qualitative exploratory survey and employs a theoretical review of the topic that is informed by New Institutional Economics and Transaction Costs Economic Theory. The study concludes that there are more reasons to believe in the opportunities than in the limitations for small farmers in accessing markets nurtured by supermarket chains after accounting for transaction costs and the organizational challenges involved.