Assessing the performance of a supply chain for organic vegetables from a smallholder perspective

Abstract

Purpose – The purpose of this paper is to identify factors that constrain marketing choices available to smallholders, limiting the chain’s robustness from their perspective. Design/methodology/approach – This paper draws on transaction cost economics to develop a model explaining dyadic relationships between smallholders and their buyers. The model was used to analyse a case study of the supply chain for organic fresh vegetables in Kathmandu, Nepal. Findings – This chain is characterised mainly by relational contracting between smallholders and their buyers. There was also evidence of vertical integration by some buyers, and of growers selling on informal markets. However, there was no evidence of spot market trading or of conventional contracting. These outcomes were attributed primarily to the absence effective standards and legal systems. Despite this, the chain offered smallholders a range of dyads with different risk-reward trade-offs. Research limitations/implications – This paper is based on the findings of a case study. While the results can be generalised to theory, they cannot be generalised to other supply chains. Originality/value – This study considers supply-chain performance from the perspective of smallholders. The model proposed for the study extends the traditional vertical coordination continuum to incorporate missing dyads and informal markets.