Integrating Bottom-of-the-Pyramid Producers with High-Income Markets: Designing Institutional Arrangements for West African Shea Nut Butter Producers

Abstract

To reduce poverty, policy makers in developing and emerging markets have tried to connect producers at the bottom of the pyramid (BoP) to high-income markets. With supermarkets and exporters stretching their influence in these markets, policy makers can build their policies on the arrangements that companies offer to BoP producers. Although studies show that this approach is generally effective, no studies address the design of arrangements to increase their acceptance among BoP producers. This study tests the effects of three components of such arrangements (payment on delivery, third-party control, and marketing competence) on female processors of shea nuts in Benin. The results show that all three components have significant effects on the intended sales to the high-income channel, that the effects of some components are contingent on the remoteness of the BoP producers, and that the components interact. Two variables pertaining to institutional support (microcredits and information provision) show counterintuitive effects, suggesting that policy makers should be careful when combining institutional arrangements with other interventions.