Rich consumers and poor producers

Quality and rent distribution in global value chains

Johan F.M. Swinnen, Anneleen Vandeplas
ifpri discussion paper

In recent years, quality standards have become crucial for developing countries’ agricultural production systems in gaining access to high-value markets abroad or at home. High-value supply chains offer opportunities for high profits, but in order to comply with the required standards, suppliers in developing countries often need extensive support from agrifood companies. We use a theoretical model to investigate under which conditions such synergies between suppliers and agrifood companies are sustainable, and how created rents are distributed, in a context of factor market imperfections and weak contract enforcement. We also derive the implications of development.