|Title||Simulating the role of trust in supply development|
|Author(s)||Verwaart, T.; Dijkxhoorn, Y.; Plaisier, Christine; Wagenberg, C.P.A. van|
|Event||12th Artificial Economics Conference, Rome, 20-21 September 2016, Rome, 2016-09-20/2016-09-21|
LEI Consumer and Chain
LEI International Policy
|Publication type||Contribution in proceedings|
|Abstract||Fostering of inclusive business aiming to involve low-income communities
in value chains is a recent approach to alleviate poverty in developing countries.
The approach requires new impact assessment tools to measure changes in
farm income and transaction cost, and behavioural change in value chain relationships.
An agent-based simulation combined with games is proposed for the
assessment of a project developing sorghum production and marketing in Meru
County, Kenya. Contracts between a local sorghum processor and smallholders
have a central role. Trust between farmers and the processor and mutual trust in
farmer groups are key success factors. The simulations indicate that the approach
can lead to increased farm incomes. Continuity of the contract system depends on
the extent to which contracted farmers can be trusted not to side-sell when market
prices are high. However, the simulated production remains at an increased level
even if the contract system breaks down.