The impact of private food standards on trade and development: Evidence from Peru

Abstract

Private food standards are increasingly governing international agricultural trade and thereby affect developing countries. With this chapter we contribute to two ongoing debates on this issue for which the empirical evidence is still mixed. The first is on the trade effects, and whether standards act as barriers or catalysts for developing countries’ export. The second one is on the welfare effects, and whether standards have an excluding or including effect on small-scale farmers in export supply chains. We address both the trade effects for firms and welfare effects for small-scale farmers in the Peruvian asparagus export sector, using company-level data for the period 1993–2011. While we find no evidence for a trade-enhancing effect of certification to private standards, we document that adoption of standards leads to more vertical integration and significantly reduces the share of produce that is sourced from external producers, with a larger effect for small-scale producers.