Paper short abstract:

Previous studies of Kenyan fresh fruits and vegetables value chain have shown that great number of smallholder farmers exited the value chain because of the food standards. However, it is unknown what happens to these farmers. This paper explores the smallholder farmers' transactional behaviour.

Paper long abstract:

Previous studies of the Kenyan FFV value chain have shown that a great number of smallholder farmers dropped out of the value chain as a consequence of introduction of food standards in the FFV export value chain. However, it is largely unknown what happens to these farmers, hence the questions what happens to the farmers who are known to have dropped out of the Kenyan fresh fruits and vegetables (FFV) export value chain? This paper, applies Oliver Williamson transaction costs economics, to relate contractual hazards in Kenyan FFV export value chain to the smallholder farmers exit of the FFV value chain. The paper shows that when the smallholder farmers exit the FFV value chain, they join the local food crops agricultural markets. However, later these farmers re-joins the FFV value chain because of the presence of contract farming in FFV and the lack of the same in the local produce markets. Hence, the overall argument is that these farmers are in-between local produce spots markets and FFV hierarchy.