Countries, Institutions, and Policies
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glossed over, as the risk is unlikely to be fully diversifiable or insurable at the household level. In the case of Senegal, this tension between sustainability at the sector level and individual risk for farmers has given rise to new contractual and market-structure arrangements. First, the relationship between intermediaries and producers has changed, so there is now more control by intermediaries over farming methods. Tighter control was implemented through increasingly precise contracts, technical assistance, and the provision of credit and farm inputs. Second, the induced changes also affected the structure of upstream farm production, with a sharp decrease in the incidence of contract farming and a rise in that of large-scale estate production. Maertens and Swinnen show, from data from a survey they conducted in Senegal’s French bean–producing region, that the share of agricultural households that took part in export production through contract farming dropped from 23 percent in 2000 to less than 10 percent in 2005, whereas the share of households that had at least one member working as a salaried employee on a plantation rose in the same period from 10 percent to 34 percent. Interestingly, Maertens and Swinnen show that these transformations have been accompanied by reductions in the incidence of extreme poverty. However, there are no data on the effect of these transformations on the volatility of income, which is one of the key potential effects of low export survival. Overall, this chapter shows the following: • A poor business environment—in particular, high trade costs—is associated with lower rates of export survival. This suggests that government interventions that seek to promote the export of particular products may have little impact in the face of a hostile business environment and a high rate of export failure. We return to policy implications later in the report. • Discretionary application of trade and regulatory policies in overseas markets increases uncertainty about market access and so has negative impacts on export survival. This chapter gives the example of standards in Western markets but applies equally to standards applied in Africa and other developing-country markets, as well as to policy instruments such as rules of origin and periodic import and export bans. • The impact of higher standards is complex, but such standards can lead to a shift of risk within export value chains to poor producers in developing countries and affect survival possibilities for particular suppliers.