A recent paper on the effects of WalMart on small farmers’ welfare in Nicaragua
Despite more than a decade of NGO and government activities promoting developing world farmer participation in high-value agricultural markets, evidence regarding the household welfare effects of such initiatives is limited.
This article analyzes the geographic placement of supermarket supply chains in Nicaragua between 2000 and 2008 and uses a difference-in-differences specification on measures of supplier and non-supplier assets to estimate the welfare effects of small farmer participation.
Though results indicate that selling to supermarkets increases household productive asset holdings, they also suggest that only farmers with advantageous endowments of geography and water are likely to participate
- Not all farmers are created equal: proximity matters a lot
- Participation in supermarket supply chains represents an increase in household annual income of about 15% of mean 2007 income in the sample.
- Third, being assisted by an NGO represents no additional welfare for farmers, although there are many caveats to this assertion mostly related to unobservables
- There is no evidence of significant farmer investment productive assets or land in anticipation of entry into the new supply chain
A final caveat: the net effect on Nicaragua is more intricate. In addition to small farmers, think on the effects on consumers – especially the poor (probably positive), other retail outlets – particularly small stores (probably negative), labor markets – probably positive with formalization, government revenue (probably positive) and other local industry (probably negative, if Walmart sells mostly cheap(er) imported goods).