Trade, Standards and Poverty: Evidence from Senegal

Trade, Standards and Poverty: Evidence from Senegal

25-27 October 2007 | Miet Maertens and Johan F.M. Swinnen
This paper examines the impact of high-standards trade on poverty in Senegal, focusing on the vegetable export sector. Despite increasing standards in the EU, exports of fresh and processed fruits and vegetables (FFV) from Senegal have grown significantly. The study uses household and company survey data to analyze the effects of these exports on income and poverty. Key findings include: 1. **Export Growth**: FFV exports to the EU have increased sharply over the past decade, despite rising standards. 2. **Poverty Reduction**: These exports have contributed to higher incomes and poverty reduction, with poverty estimated to be 14 percentage points lower due to FFV exports. 3. **Supply Chain Changes**: Tightening food standards have led to consolidation and increased vertical coordination in the FFV supply chain, shifting from smallholder contract farming to large-scale integrated estate production. 4. **Labor Market Effects**: The shift has altered the mechanism through which poor households benefit, with more income gains coming from labor markets rather than product markets. 5. **Equity in Income Gains**: The poorest households benefit relatively more from working on large-scale farms compared to contract farming, ensuring a more equitable distribution of gains. The paper concludes that high-standards FFV trade can directly reduce poverty and improve welfare, even when it is realized through large-scale agro-industrial production. This challenges the view that increasing food standards and agro-industrialization lead to the marginalization of small farmers and the poorest households.This paper examines the impact of high-standards trade on poverty in Senegal, focusing on the vegetable export sector. Despite increasing standards in the EU, exports of fresh and processed fruits and vegetables (FFV) from Senegal have grown significantly. The study uses household and company survey data to analyze the effects of these exports on income and poverty. Key findings include: 1. **Export Growth**: FFV exports to the EU have increased sharply over the past decade, despite rising standards. 2. **Poverty Reduction**: These exports have contributed to higher incomes and poverty reduction, with poverty estimated to be 14 percentage points lower due to FFV exports. 3. **Supply Chain Changes**: Tightening food standards have led to consolidation and increased vertical coordination in the FFV supply chain, shifting from smallholder contract farming to large-scale integrated estate production. 4. **Labor Market Effects**: The shift has altered the mechanism through which poor households benefit, with more income gains coming from labor markets rather than product markets. 5. **Equity in Income Gains**: The poorest households benefit relatively more from working on large-scale farms compared to contract farming, ensuring a more equitable distribution of gains. The paper concludes that high-standards FFV trade can directly reduce poverty and improve welfare, even when it is realized through large-scale agro-industrial production. This challenges the view that increasing food standards and agro-industrialization lead to the marginalization of small farmers and the poorest households.
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