Abstract:

Rapid transformations in the agri food sector have led to changes in the supply chain structures.
These changes require increased supply chain coordination and collaboration to ensure supply chain
efficiency and to meet consumers' demands. Despite the fact that the importance of building longterm
relationships has been identified in the relationship marketing literature, most previous
agriculture-related research in Africa has focused mainly on either collective action or contractual
arrangements, which limits the understanding of the effect of other governance mechanisms, such
as relationship building, on chain performance. Therefore, the aim of this research was to examine
the effectiveness of building long-term relationships and horizontal coordination on smallholder
performance. To this end. we employed a cross-sectional study design using semi-structured
interviews and structured questionnaires. 600 farmers involved in the production and marketing of
mango were interviewed. Data were analyzed using structural equation modeling, factor analysis
and ordinary least squares regression in order to understand the relationships between the producers
and the buyers. Propensity score matching was used to analyze the impact of collective action on
smallholder welfare and probit and negative binomial regression were used to assess the
determinants of smallholders' participation in collective sale and producer group governance.
First, the results showed that smallholders’ perceived price satisfaction is a multidimensional
concept and the three dimensions price fairness, price reliability and relative price are important
determinants of the producers' trust in the buyer. Moreover, trust moderates the relationship
between smallholders' price satisfaction and producer loyalty to the buyer. Second, we found that
fairness, closeness and trust are key determinants of supplier/producer performance, while trust
plays a moderating role between fairness and producer financial performance. Third, we showed
that collective action through producer organizations increases smallholder income and asset
holdings thereby reducing rural poverty. Lastly, we found that the determinants of smallholders’
participation in collective sale are trust in other producer group members, the farmer's level of
education and the production capacity in terms of the number of trees owned. Similarly, group size,
farmer age and trust in the producer group leadership were identified as determinants of
smallholder’s participation in group governance. The thesis concludes that improving the
performance of value chains involving smallholders requires both increased collaboration and
coordination through the building of long-term relationships between producers and buyers and
effective horizontal coordination among farmers through producer organizations.