Compliance with international food safety standards: the case of green bean production in Kenyan family farms
The food safety scandals of the 1990s have led developed country governments and retailers to enact strict international food safety standards (IFSS) covering four broad areas: pesticide residue limits, worker safety, packer hygiene, and traceability. This study investigates the impact of these standards on green bean farmers in Kenya. The first essay uses econometric analysis to examine whether transitioning to safer pesticides affects farmers’ health costs of pesticide exposure, incidence of acute pesticide-induced illnesses, and use of protective gear. It finds that enforcing and monitoring developed country pesticide standards reduces the health costs of pesticide-related illnesses and also increases the use of protective gear. The essay concludes that there are health benefits to Kenyan farmers beyond the acknowledged income generation from selling to the premium developed country market. The second essay uses survey data and econometric analysis to investigate the effect of wealth on green bean farmers’ ability to obtain a contract with an exporter firm and the degree of subsequent compliance with IFSS. It finds that endowments vii with physical capital, human capital, and social capital affect both the likelihood of a green bean farmer obtaining a marketing contract from an exporter firm and the subsequent degree of compliance with IFSS. While this finding implies that IFSS marginalize smallholders, related evidence indicates that developing country smallholders can avoid being marginalized by banding together and collectively investing in costly fixed assets. The third essay uses case study techniques to analyze how small and large Kenyan green bean family farms are complying with IFSS. It finds that IFSS increase the transaction costs of producing beans and make quality verification problematic. As a result, both types of farmers use contracts to safeguard their specific investments. Buyers, on the other hand, tackle the information asymmetry of enforcing compliance with hard-to-observe IFSS requirements using closely monitored contracts, the threat of contract termination, and variable product pricing. Buyers have also required smallholders to band together into marketing groups in order to reduce monitoring costs. The essay concludes that the future of smallholders lies in banding together into cooperative groups that collectively invest in fixed and specific assets thereby attaining the scale economies needed to remain viable. This study demonstrates that IFSS can reduce farmers’ pesticide-induced morbidity. It also demonstrates that while the fixed investments needed to comply with IFSS present a major barrier to poor smallholders, such farmers can overcome this hurdle by banding together and meeting the costs of fixed investments as a group.