Quarterly Journal of International Agriculture No. 4/09
Investment in compliance with GlobalGAP standards:
does it pay off for small-scale producers in Kenya?
Solomon Asfaw
University of Hannover, Germany
Dagmar Mithöfer
International Centre of Insect Physiology and Ecology, Nairobi,
Kenya
Hermann Waibel
University of Hannover, Germany
Abstract
Limited empirical evidence exists either to refute or confirm the
concern that the proliferation and enhanced stringency of private
food-safety standards marginalize smallholders from global markets and
thus drive them deeper into poverty. In this paper, factors are
identified that can explain the decision of small-scale producers to
adopt private standards. It is also analysed whether investments in
standards com-pliance pays off for small-scale producers. Using
household-level survey data from Kenya, it can be shown that adopters
and non-adopters are distinguishable by their wealth status, access to
services and level of education. Econometric analysis shows that
adoption of standards significantly improves smallholder farm financial
performance. The financial rate of return on investments in standards
compliance at farm level is high even under conservative assumptions.
The major message of the paper is that smallholder farmers who have the
ability to invest in required structures benefit substantially from
adopting private standards.
Keywords: export producers, GlobalGAP standards, adoption, impact, Kenya
JEL: Q13, Q17
Vol. 48 (2009), No. 4: 337-362