IJARP SJIF(2018): 4.908

International Journal of Advanced Research and Publications!

A Framework For The Analysis Of Integrated Agricultural Value Chains In The Context Of Smallholder Farmers

Volume 4 - Issue 4, April 2020 Edition
[Download Full Paper]

Author(s)
David Muronda, Marian Tukuta, Stanley Marshal Makuza
Keywords
keyword 1; smallholder farmers 2; integrated agricultural system 3; value chain 4; transaction cost theory 5: systems dynamics.
Abstract
Agriculture remains the best opportunity for the majority of people worldwide living in smallholder farms to trade their way out of poverty. Growth generated by agriculture is four times more effective in reducing poverty than growth in any other sectors. Future growth in the agriculture sector relies heavily on diversification and promotion of opportunities for the addition of value. Smallholder farmers rarely engage in single enterprises, but on agriculture as a complete economic system, where a couple of crops and different livestock are integrated on the same farm. However, the reality of smallholder farmers has been understood mostly from fragmented single value chain analysis. In this paper, we develop a theoretical framework that uses the transaction cost and system dynamics theories to study interdependent agricultural value chains. Relevant articles were downloaded from internet and value chain analyses theories were reviewed. We conclude that the integrated value chain provide both income and food security for smallholders in a way which cannot be understood with the application of a single theory. We recommend the validation of the integration of these two theories in future research on smallholder value chains.
References
[1] A. Dorward, “A Risk Programming Approach for Analysing Contractual Choice in the Presence of Transaction Costs,” European Review of Agriculture Economics 26 (4),1999
[2] A. FaBe, U. Grote and E. Winter, “Value chain analysis. Methodologies in the context of environment and trade research,” Discussion paper No. 429. Gottfried Leibniz University of Hannover, Institute for Environmental Economics and World Trade Research, 2009
[3] A. Flynn and K. Bailey, "Sustainable food supply chains: the dynamics for change,” in T Marsden & A Morley (eds), Sustainable food systems: building a new paradigm, Routledge, New York, 2014
[4] A. Größlerr, J.H. Thun and P.M. Milling, “System Dynamics as a Structural Theory in Management,” Production and Operations Management Vol. 17, No. 3, May–June 2008, pp. 373–384, 2008
[5] A. Mele, 2017. "A Structural Model of Dense Network Formation," Econometrica, Econometric Society, Vol. 85, pages 825-850, 2017
[6] A. Mujeyi, M. Mutenje, G.T. Manyawu, L. Gwiriri and I. Chakoma, “Spearheading development through empowering smallholder farmers along beef cattle value chains: A case of Goromonzi and Murehwa Districts, Zimbabwe,” International Journal of Managing Value and Supply Chains (IJMVSC) Vol. 6, No. 4, December 2015, 2015
[7] A.A. Alchian and H. Dennsetz, “Production, information costs, and economic organization”,
[8] A.C. Cuevas, “Transaction Costs of Exchange in Agriculture: A Survey Asian Journal of Agriculture and Development, Vol. 11, No. 1, 2014
[9] B. McGarvey, B. Hannon, “Dynamic modeling for business management: An introduction”, New York, Springer, 2004
[10] B. Richmond, “An Introduction to Systems Thinking,” STELLA, 3rd ed.; High Performance Systems, Inc.: Lebanon, NH, USA, 2001
[11] B.P. Matondi and S. Chikulo, S (2012). Governance over fruits and fresh vegetables in Zimbabwe. Market linkages and value chain study,” Harare, Zimbabwe. Ruzivo Trust, 2012
[12] Based Instruments and Incentive Programs”, Final Report prepared for Land and Water
[13] C. Marinescu, “Transaction Costs and Institutions’ Efficiency: A Critical Approach,” American Journal of Economics and Sociology, Vol. 71, No. 2 (April, 2012). © 2012. American Journal of Economics and Sociology, Inc. 2012
[14] D. Hayes, “Transaction-cost Economics and the Evolving Structure of Agriculture Production.” In E-Commerce in Agribusiness, edited by T.G. Schmitz, C.B. Moss, A. Schmitz, A. Kagan, and B. Bobcock. Florida: Florida Science Source, Inc, 2000
[15] D. Muronda and M. Tukuta, “Factors influencing smallholder participation in the pigeon peas market: A case of Tete Province, Mozambique, African Journal of Business Management, Vol.10(18), pp. 451-458, September 2016, 2016
[16] D. Naziri, K.M. Rich, and B. Bennett, “Would a commodity-based trade approach improve market access for Africa? A case study of the potential of beef exports from communal areas of Namibia”, Development
[17] D. Seville, A. Buxton and B. Vorley, B “Under what conditions are value chains effective tools for pro-poor development?” A report for the Ford Foundation. International Institute for Environment and Development/Sustainable Food Laboratory, 2011
[18] D.C. Lane, “Should system dynamics be described as a “hard” or “deterministic” systems approach?” Systems Res. Behavioural Sci. 17(1) 3–22, 2000
[19] D.C. North, “Institutions, institutional change and economic performance,” Cambridge: Cambridge University Press, 1990
[20] E.F. Boller, J. Avilla, E. Joerg, C. Malavolta, C. Wijnands and P. Esbjerg, “Integrated production: principles and technical guidelines” IOBC WPRS Bull. 27 (2).Bossel, H., 2007. Systems and Models: Complexity, Dynamics, Ev, 2004
[21] F. Mettepenningen and G. van Huylenbroeck, “Factors influencing private transaction costs related to Agri-environmental Schemes in Europe”, In: Bruwer, F., van der Heide, M. (Eds.), Multifunctional Rural Land Management: Economics and Policies, 2009
[22] G. Ducos and P. Dupraz, “Private provision of environmental services and transaction costs: agro-environmental contracts in France”, Proceedings of the Environmental and Resource Economists 3rd World Congress, 3rd–7th July, 2006, Kyoto, Japan, 2006
[23] G. Ducos, P. Dupraz and F. Bonnieux, “Agri-environment contract adoption under fixed and variable compliance costs”, J. Environ. Plan. Manage. 52 (5), 669–687, 2009
[24] G. Holloway, C. Nicolson, C. Delgado, S. Staal, and S. Ehui, “Agro-industrialization through Institutional Innovation: Transaction Costs, Cooperatives and Milk-market Development in the East-African Highlands.” Agricultural Economics 23 (3): 279–288, 2000
[25] G.C. Homans, “Contemporary theory in sociology,” N. K. Denzin, ed. Sociological Methods. McGraw-Hill, New York, 57–72. 1978
[26] G.T. Maluleke, “A systems approach to sustainable development through resource beneficiation. A case for systems dynamics modelling” PhD Thesis. University Of Pretoria, South Africa, 2015
[27] H.A. Shelanski and P. G. Klein, “Empirical Research in Transaction Cost Economics,” Journal of Law, Economics, and Organization 11, 1995
[28] H.A. Simon, "A behavioral model of rational choice", The Quarterly Journal of Economics, vol. 69, n. 1, February: 99-118, compiled in, and quoted from, Simon (1957: 241-260), 1955
[29] H.A. Simon, “Models of Man, Social and Rational”, Mathematical Essays on Rational Human Behavior in a Social Setting, New York: John Wiley and Sons, 1957
[30] H.R. Hendrickson, J.D. Hanson, D.L. Tanaka and G. Sassenrath, “Principles of integrated agriculture systems: Introduction to processes and definition,” Renewable Agriculture and Food Systems: 23(4); 265–271, 2008
[31] H.R. Hendrickson, J.D. Hanson, D.L. Tanaka and G.F. Sassenrath, “Principles ofintegrated agricultural systems: introduction to processes and definition,” Renew. Agric. Food Syst. 23 (4), 265–271, 2008
[32] INCOSE, “The Systems Engineering Handbook Version 3.2. Website http://Icose.org. 2010, Accessed
[33] J. Hobbs, “Evolving Marketing Channels for Beef and Lamb in the United Kingdom – A Transaction Cost Approach,” Journal of International Food and Agribusiness Marketing 7 (4), 1995
[34] J.D. Sterman, Business Dynamics: Systems Thinking and Modeling for a Complex World.McGraw-Hill, New York, 2000
[35] J. Mitchell and C. Coles, “Markets and rural poverty. Upgrading in value chains,” Overseas Development Institute and International Development Research Centre, 2011
[36] J. Mitchell, J. Keane and C. Coles, “Trading Up: How a Value Chain Approach Can Benefit the Rural Poor,” COPLA Global: Overseas Development Institute, 111 Westminster Bridge Road London SE1 7JD UK, 2009
[37] J. Wu and J.L David, “A spatially explicit hierarchical approach to modeling complex ecological systems: theory and applications,” Eco.Model. 153.2-26, 2002
[38] J. Wu, and L.J. David, “A spatially explicit hierarchical approach to modeling complex ecological systems: theory and applications,” Elsevier. Ecological Modelling 153 (2002) 7–26, 2002
[39] J.B. Barney and R. E. Hoskisson, “Strategic groups: Untested assertions and research proposals”, Management and Decision Economics, 11, pp. 187–198, 1990
[40] J.C. Barrett, “Tsetse control, land use and livestock in the development of the Zambezi Valley, Zimbabwe: some policy considerations,” Alpan Network Paper 19. Addis Ababa: International livestock Centre for Africa, 2000, 1989
[41] J.C. Bidogeza, P.B.M. Berentsen, J. De Graaff, J and A. G. J. M. Oude Lansink, “A typology of farm households for the Umutara Province in Rwanda”, Food Security,1(3), 321–335, 2009
[42] J.D. Sterman, Business Dynamics: Systems Thinking and Modeling for a Complex World.
[43] J.P. Walters, D.W. Archer, G.F. Sassenrath, J.R. Hendrickson, J.D Hanson, J.M. Halloran and V.J. Vadas, “Exploring agriculture production systems and their fundamental components with system dynamics modelling,” Ecological Modelling. Vol. 333 (2016) Elsevier, 2016
[44] J.W. Leonardo, J. Bijman and M.A. Slinger, "The Windmill Approach Combining transaction cost economics and farming systems theory to analyse farmer participation in value chain. Outlook on AGRICULTURE Vol. 44, No 3, 2015
[45] K, Rich, B. Perry and S. Kaitibie, “Commodity-based trade and market access for developing country livestock products: the case of beef exports from Ethiopia”, International Food and Agribusiness Management Review 12: 1–22, 2009
[46] Hagedorn, “Particular requirements for institutional analyses of nature-related sectors. European Review of Agriculture Economics Vol35 (3) (2008) pp. 357–384, 2008
[47] K. Hamza and K.M. Rich, “A handbook for applying system dynamics techniques in value chains: An application to pig value chains”, CGIAR Research Programs on Policies, Institutions, and Markets and Livestock and Fish, 2015
[48] K. Schneider and K.M. Gugerty, “Agriculture productivity and poverty reduction: linkages and pathways,” Volume 1. (1) Spring 2011. The Evans School Review, 2011
[49] K.E. Giller, “Guest Editorial: Can we define the term “farming systems?” A question of scale’, Outlook on Agriculture, Vol 42, No 3, pp 149–153, 2013
[50] K.E. Giller, P. Tittonell, M.C. Rufino, M.T. van Wijk, S. Zingore, P. Mapfumo, S. Adjei-Nsiah, M. Herrero, R. Chikowo, M. Corbeels, E.C. Rowe, F. Baijukya, A. Mwijage, J. Smith, E.Yeboah, W.J. van der Burg, O.M. Sanogo, M. Misiko, N. de Ridder, S. Karanja, C. Kaizzi, J. K’ungu, M. Mwale, D. Nwaga, C. Pacini and B. Vanlauwe, B, “Communicating complexity: integrated assessment of trade-offs concerning soil fertility management within African farming systems to support innovation and development,” Agriculture Systems, Vol 104, No 2, pp 191–203, 2011
[51] K.M. Rich and Hamza, “Using system dynamics methods for the impact assessment of animal diseases: Applications to Rift Valley Fever and food safety interventions in pigs, Working paper for the International Livestock Research Institute, 2013
[52] L.B. Turner, M.H. Menendez, R. Gates, O.L.Tedeschi and S.A. Atzori, “System Dynamics Modeling for Agriculture and Natural Resource Management Issues: Review of Some Past Cases and Forecasting Future Roles,” Resources 2016, 5, 40. MDP, 2016 Available online: https://www.mdpi.com/2079-9276/5/4/40/htm. Accessed on 20 February 2019
[53] M. Coggan, E. Buitelaar, S.M. Whitten and J. Bennett, “Factors that influence transaction costs in development offsets: who bears what and why?,” Ecological Economics 88, 222–231, 2013
[54] M. Coggan, M.A. van Grieken, M.A. Boullier and X.J. Xavier, “Private transaction costs of participation in water quality improvement programs for Australia’s Great Barrier Reef: Extent, causes and policy implications.,” Australian Journal of Agriculture and Resource Economics, 59, pp. 499–517, 2014
[55] M. Goodman, “Everyone’s Problem to Solve: Systems Thinking Cross-Functionally”. The Systems Thinker Newsletter, June/July 2006. Available online: https://thesystemsthinker.com/everyones-problem-to-solvesystems-thinking-cross-functionally/. Accessed on 10 February 2019
[56] M. Morrison, J. Durante, J. Greig and J. Ward, “Encouraging Participation in Market
[57] M. Musona, “An exploration of the causes of social unrest in Omay communal lands of Nyaminyami district of Zimbabwe: A human needs perspective,” Department of academic administration, Examination section, Summerstarnd Nelson Mandela Metropolitan university, Port Elizabeth, South Africa, 2011
[58] M.K. Cramer, “Six Criteria of a Viable Theory: Putting Reversal Theory to the Test,” Journal of Motivation, Emotion, and Personality 2013, Vol. 1, No. 1, pp. 9–16, 2013
[59] M.L. Herr,“Local Value Chain Development for Decent Work: An Operational Guide,” Geneva: International Labour Office, 2007
[60] N. Gagnon, “Introduction to the global agri-food system, “ in JI Boye & Y Arcand (eds), Green technologies in food Production and processing, Springer New York, pp. 3-22, 2012
[61] N. Key, E. Sadoulet, and A. de Janvry, “Transaction Cost and Agriculture Household Supply Response,” American Journal of Agriculture Economics 82, 2000
[62] O.E. Williamson, “The Economic Institutions of Capitalism,” New York: the Free Press, 1985
[63] O.E.Williamson, “The Mechanisms of Governance,” Oxford; Oxford University Press, 1996
[64] O.E.Williamson, “The new institutional economics: taking stock, looking ahead,” Journal of Economic Literature, 2000
[65] O.E. Williamson, “The economics of organization: The transaction cost approach”, American Journal of Sociology, 87: 548-577, 1981
[66] Pingali, Y. Khawaja and M. Meijer, “Commercializing Small Farms: Reducing Transaction Costs.” ESA Working Paper No.05-08. Rome, Italy: Food and Agriculture Organization of the United Nations, 2005
[67] P. Tittonell, A. Muriuki, K. Shepherd, D.N. Mugendi, C.K. Kaizzi and J. Okeyo, “The diversity of rural livelihoods and their influence on soil fertility in agricultural systems of East Africa –A typology of smallholder farms”, Agricultural Systems, 103(2), 83–97, 2010, Policy Review 33, no. 2: 195–219. doi:10.1111/ dpr.12098, 2015
[68] R. Kaplinsky and M. Morris, “A handbook for value chain research,” IRDC, 2002
[69] R. Ruben, M. van Boekel, A. van Tilburg and J. Trienekens, J (eds), “Tropical food chains: governance regimes for quality management, Wageningen Academic Publishers, Wageningen, The Netherlands, 2007
[70] R.A. Watson, “Modular interdependency in complex dynamical systems,” In Bilotta et al. (eds), Workshop Proceedings of the 8th International Conference on the Simulation and Synthesis of Living Systems. UNSW Australia, December 2002, 2002
[71] R.L. Ackoff, “Redesigning the future: A systems approach to societal problems,” New York: John Wiley & Sons Inc, 1974
[72] S. Bolwig, S. Ponte, A. du Toit, L. Riisgaard, L. and N. Halberg, N. “Integrating poverty and environmental concerns into value chain analysis: A conceptual framework,” Development Policy Review, vol 28, 2010
[73] S. Chen and M. Ravallion, “The Developing World is Poorer than we Thought, But no Less Successful in the Fight against Poverty,” Development Research Group, World Bank 1818 H Street NW, Washington DC, 20433, USA, 2008
[74] S. Chen and M. Ravallion, “The developing world is poorer than we thought, but no successful in the fight against poverty,” World Bank Policy Research Working Paper Series 4703, 2008
[75] S. Jungcurt, M. Padmanabhan, C. Klockenbring and A. Berghoefer, “Biocomplexity-conceptual challenges of institutional analysis in biodiversity governance,” In Paper presented at the Seventh Annual BIOECON Conference on Economics and Analysis of Biology and Biodiversity (BIOECON), Cambridge, September 20-21, 2005
[76] S. Kaufman, “The search for laws of self-organization and complexity” Oxford: Oxford University Press, 1995
[77] S.D. Amundson, “Relationships between theory-driven empirical research in operations management and other disciplines”, Journal of Operations Management 16, 341–359, 1998
[78] S.J. Goetz, “A Selectivity Model of Household Food Marketing Behavior in Sub-Saharan Africa.” American Journal of Agricultural Economics 74 (2): 444–452, 1992
[79] Chikweche and R. Fletcher, “Understanding factors that influence purchases in subsistence markets,” Journal of Business Research Vol. 63 (3) 643-650. Elsevier, 2009
[80] W.J. Leonardo, J. Bijman and M. Slingerland, M. The windmill approach: Combining transaction cost economics and farming systems theory to analyse farmer participation in value chains. Outlook Agric. 2015, 44, 207–214, 2015
[81] World Bank, “Agriculture for Development,” World Development Report 2008. The International Bank of Reconstruction and Development/World Bank, Washington DC, USA, 2007