Agribusiness supply chains: Smallholder participation and implications : A thesis submitted in partial fulfilment of the requirements for the Degree of Doctor of Philosophy at Lincoln University

Recent agribusiness literature has drawn attention to the rapid rise of institutional market channels for high-value crops in developing countries. Several driving factors are responsible for the transformation of traditional multilayer agribusiness systems into new coordinated value chains; these are; agribusiness industrialisation (Cook & Chaddad, 2000; Reardon & Barrett, 2000), changes in agribusiness technology (Reardon, Barrett, Berdegué, & Swinnen, 2009; Saxowsky & Duncan, 1998), trade liberalisation (Pingali, 2007), rising urbanisation, the rising per capita income of the middle class, changes in consumer preferences (Reardon & Hopkins, 2006), and increased consumer awareness of nutrition (Gulati, Minot, Delgado, & Bora, 2007). Traditionally, agribusiness transactions are conducted through spot markets. However, these markets are increasingly transitioning into vertically coordinated markets, thus transforming existing marketing relationships in the process (Peterson, Wysocki, & Harsh, 2001). While these new food systems offer fresh fruit and vegetable (FFV hereafter) growers opportunities to improve their incomes, their participation depends on a variety of factors, such as the structure and dynamics of these chains, and the institutional settings within which they are embedded (Barrett, 2008). Agribusiness literature indicates that institutional channels procure goods from large farmers/specialised traders to lower their transaction costs (Singh, 2009). While there is a very real risk of smallholder exclusion, there are numerous opportunities for value participation (Reardon & Hopkins, 2006). This research adopts a New Institutional Economics (NIE) framework to investigate smallholders’ participation in institutional channels. The NIE framework provides insights into transaction problems among supply chain partners (Williamson, 2004). Previous studies on this issue focus on the transformation of food systems in developing countries and the impact of institutional channels on farmers’ incomes and poverty reduction (Barrett, 2008; Fenwick & Lyne, 1999; Jayne, Mather, & Mghenyi, 2005; Louw, Vermeulen, Kirsten, & Madevu, 2007; Weatherspoon, Cacho, & Christy, 2001; Weatherspoon & Reardon, 2003). However, many studies treat Fresh fruit and vegetable farmers as a homogeneous group when, in fact, they appear to be more heterogeneous in nature. This research firstly identifies the factors influencing market participation for smallholders in institutional channels. Secondly, it determines the mode of market engagement and finally, the role of collective action in ensuring smallholder farmers’ participation. The study collected data from 200 fresh produce growers (specifically potato and tomato croppers) in the Punjab region of India using an interview-survey method. The research identifies several factors which impact upon farmers’ participation in institutional channels: these are, guaranteed price (contract farming), the operational land size, farmers’ education levels, formal sources of credit and technical assistance. This research also suggests that re-engineering traditional cooperatives into new generation marketing cooperatives will enable smallholder farmers to achieve better returns. In particular, this research highlights the need for investment into more processing plants, enhance the capacity of existing ones and deploy new generation marketing techniques. The role of transaction costs and collective action for determining smallholders’ participation in the institutional channels has assessed in new geographic location Punjab region of India. The empirical results of this research provide policy, methodological and theoretical contributions for various stakeholders.