COMPLIANCE WITH EUREPGAP STANDARDS: DETERMINANTS, COSTS AND IMPLICATIONS ON PROFITABILITY AMONG SMALLHOLDER FRENCH BEANS EXPORTERS IN KIRINYAGA DISTRICT, KENYA

Horticulture provides many developing countries with opportunities for export diversification, poverty alleviation and rural development. However, stringent public and private-sector food-safety standards, for example EurepGap, pose a challenge especially to small export farmers. Compliance with these standards entails costly investments that may be a burden to smallholder farmers, failure to which might lead to their exclusion in the global market. A number of questions which require empirical research arise to confirm or refute these concerns. The study assesses awareness of the EurepGap standards among smallholder farmers and analyzes the critical factors influencing their compliance. It also identifies the costs of complying with these standards and their implications on profitability of smallholder French bean farming business in Kirinyaga District in Kenya. The study uses simple random sampling technique to collect primary data from 103 respondents. Descriptive statistics, costbenefit accounting (partial budgeting) and binomial probit model are used to analyze the data. The results show that an information gap exits as regards to awareness of EurepGap standards especially among the non-compliant farmers. Compliance with the standards requires high costs of investment and this is a major constraint to the smallholder farmers. Strategies such as contract farming and collective action through group membership were found to enhance compliance among smallholder farmers. Further, empirical analysis shows that compliance with the standards is positively influenced by socio-economic and farm characteristics such as area under French beans production, and availability of external support from extension services, but negatively influenced by access to off-farm income. In addition to high cost of compliance, farmers face other constraints such as high cost of recommended chemicals and that of hiring extra personnel. Results also show that compliance is not for profit enhancement but may be for market assurance. However, farmers are enjoying non-financial benefits from compliance such as skills on good farm management and record keeping. Since the standards require high cost of compliance with EurepGap standards, the study suggests that the government and other stakeholders in this sub-sector should assist the smallholder farmers to ensure their continued access to the lucrative markets. The government should lead in disseminating information about the standards through extension training, besides encouraging farmers to form groups to share the cost of compliance. A policy to ensure the right prices translate to the farmers should be put in place. It is also worth exploring less strict market where Kenyan products can be channeled to.