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2014-06-01 | Peer Reviewed

Strategic alliances in Kenyan smallholder farming

MacGregor, James, Asa Nordin and Jesper Stage. 2014. “Strategic alliances in Kenyan smallholder farming.” Business Excellence 8:1: 49-63.
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Implementing and complying with standards and certification often increases costs for supply chain actors. These increased costs are caused by upgrading production, logistics and marketing needed to achieve compliance, and can lead to the exclusion of actors from the supply chain.

In particular, the exclusion of small-scale growers in developing countries as the result of the expansion and proliferation of private voluntary standards (PVS) used by large procurers has been extensively reported. Costs of PVS are per certification and the unit is usually the individual farm, regardless of its size. In much of the developing world smallholder production dominates domestic food production, and these small farms face proportionately higher costs per unit area for certification and compliance. Benefi ts of PVS are per
production unit, giving benefits to larger farms. Developing world smallholder production tends to be on less than one hectare, giving relatively small production. Compared with the costs per farm, there is an inherent bias in many  standards and certification towards larger farms. Standards in export horticulture can, potentially, incentivize a more active role for the private sector in investing in small-scale growers in ways that are mutually beneficial for growers and exporters. Such co-investment is a feature of trading relationships and business models that are inclusive of small-scale growers. In Kenyan horticulture, donors, exporters and smallholders have in some cases managed to leverage PVS requirements into profitable local agricultural developments. In this paper, we use resource-based strategic alliance theory to explain the patterns that have evolved. We propose greater use of cooperation theory to help make more efficient economic development interventions which are complementary with private-sector investments. We explore how standards might be used to accelerate development initiatives.