Farmers’ Participation in Modern Supply Chains: The Case of Mandarin Profitability in Punjab-Pakistan

Abstract

In developing countries, supply chains are rapidly transforming. However, smallholder farmers, in particular, have experienced mixed impacts in inclusion and exclusion from modern supply chains (MSCs). Therefore, by taking Pakistan’s mandarin industry as a case, this study aims to analyze the farmers’ efficiency and inclusiveness in modern supply chains and compare them across the farm size categories, i.e., small, medium, and large. For that purpose, cross-sectional data from 300 farmers were collected to test the posit objectives. The empirical investigation was made using the endogenous treatment effect model and the propensity score matching approach. Findings show that large farmers prefer to participate in MSCs, driven by contractors, processors or exporters. Conversely, the smallholders are more inclined to participate in the traditional supply chains (TSCs), driven by village vendors, local retailers/consumers, middlemen, and traditional fruit and vegetable markets. The results also revealed a positive connection between efficiency and farmers’ inclusion in the MSC. Orchard size, education, off-farm income, and extension services positively impact profitability. In terms of an increase in farmers’ profitability, the efficiency improvement can benefit the resource-poor smallholders who make up 74% of the total farmers in the sample. Therefore, these results are noteworthy for devising policy actions to facilitate smallholder inclusion in the modern agri-food supply chains to alleviate rural poverty and ensure farmers’ wellbeing.