Impact of agricultural global value chains trade policies on livelihood and : the case of coffee and sugar in Tanzania
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Date
2024
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Publisher
Sokoine University of Agriculture
Abstract
Agricultural global value chains (GVCs) are “organizational systems
that operate across multiple nations and are always integrated”. The
GVCs commodities link producers to consumers worldwide through
a global network of multinational enterprises (MNEs). GVCs trade is
managed using trade policies both in producing and importing
countries. GVCs trade policies in developing countries, including
Tanzania, must optimally deliver social, economic, and
environmental benefits to trade participants. The socio, economic
and environmental benefits realized sometimes are offset by socio
and environmental costs. This happens to all trade policies, whether
in trade agreements, trade rules, regulations, or global standards
such as certifications. It is thus essential to assess the impact of
GVCs trade policies to suggest appropriate policy levers that can
optimise social, economic, and environmental benefits. Thus, this
study uses coffee and sugar GVCs in Tanzania to assess the impact
of certification policy, which is one of the GVC‟s trade policies, the
trade policies landscape of the country (trade governance), and the
role played by GVCs in ensuring delivery of social, economic, and
environmental benefits. Specifically, the study evaluates how
governance affects the sugar trade, determines the impact of coffee
certification policy on livelihood and environmental conservation and
finally analyzes the contribution of the coffee trade to livelihood
improvement and gender equity. The study hypothesizes that trade
governance does not affect Tanzania's sugar trade and trade policy
landscape; coffee certification does not improve household incomes
and environmental conservation. Coffee production and trade do not
contribute positively to livelihood improvement and gender equity.
The study uses data collected from randomly sampled 400 coffee
farmers and 375 randomly selected sugar supply chain actors in
Tanzania. The study used a mixed method of data analysis. The
endogenous switching regression (ESR) model is used to ascertain
the impact of the coffee certification policy. Exploratory (factor
analysis) and confirmatory (weighted least square regression)
models are applied to evaluate the level of trade governance in
Tanzania and ascertain its effects on the sugar trade. The Oaxaca–
Blinder decomposition and Gini coefficient models evaluate coffee
income distribution and how general coffee production and trade
contribute to gender equity and livelihood improvement. The major
findings are that trade governance is essential in ensuring the
delivery of benefits to all participants in trade. The study confirms
that governance affects the sugar trade, with the magnitude of its
effects being felt differently between farmers and traders. The
findings show further that abrupt trade policy change significantly
(p<0.05) reduces sugar trade by almost half (47.7%) and lowers the
overall level of efforts to invest within the sugar supply chain. The
study shows further that the evaluated GVCs certification trade
policy does not offer socio-economic benefits but contributes
significantly to environmental conservation. This is because the
study rejects the hypothesis of certification to improve household
income but accepts its contribution to improved awareness and
environmental conservation practices among coffee farmers.
Additionally, GVCs trade contributes positively to livelihood
improvement and gender equity since the study found coffee to have
income inequality-reducing effects. Therefore, using sugar and
coffee GVCs and one of the GVC policies, certification, the study
has confirmed that certification does not optimally deliver social,
economic, and environmental benefits to trade participants.
However, participation in trade is essential for inclusive
socioeconomic benefits. The study confirms further that good sugar
trade governance is a panacea for Tanzania to achieve optimal
trade policies in the sugar sector. Predictability of the trade policies
in the sector is a major factor for allowing forward contracting of
imports and/or exports and investments. Thus, the study has
provided the importance of trade governance in shaping how
countries should implement trade policies. The study recommends
ensuring trade policies are stable and predictable for increasing
trade and allowing forward contracting and investments. It is also
essential to create awareness of institutions and organizations
managing the GVCs by encouraging transparency in trade policy
administration and practices. The certification policy should be
implemented by easing the transmission of price premiums to coffee
farmers for an increased supply of sustainably grown coffee,
improving coffee farmers‟ livelihood and helping attain environmental
sustainability goals within the coffee supply chain. This must be
supported with awareness creation and making certification services
accessible and cost-effective to coffee farmers. In striking a balance
between people and nature, participation in the GVCs trade is
encouraged. This is because coffee is an essential crop with an
inequality-reducing effect, contributing to livelihood improvement.
Investing in supporting the coffee supply chain impacts poverty
reduction, as the income earned from coffee favours people
experiencing poverty more than other income sources. Participation
should be supported through empowerment for equal access to land
and credit. Production and trade policies should also be gender responsive by providing opportunities to offer trade facilitation
services to increase the participation of women in coffee supply
chain activities and control their participation benefits
Description
PhD Thesis
Keywords
Value chains, Policies, Coffee and Sugar, Impact of agriculture, Trade policies