Killing the goose? The value chain for sorghum beer in Kenya

Orr, A (2018) Killing the goose? The value chain for sorghum beer in Kenya. Journal of Agribusiness in Developing and Emerging Economies, 8 (1). pp. 34-53. ISSN 2044-0839

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Abstract

Purpose The decision by the Government of Kenya in 2013 to increase tax revenue by imposing excise duty of 50 percent on sorghum beer resulted in economic losses for smallholders, the brewery, and the government itself because it effectively killed the value chain. In 2015, the government reversed the policy decision and reduced excise duty to 10 percent. The purpose of this paper is to analyze the impact of this policy decision on the value chain, adaptation by growers and the brewery, and the rationale for this policy change and its reversal. Design/methodology/approach The author analyzes this episode using a conceptual framework derived from complex adaptive systems, focusing on four properties of such systems: sudden, endogenous shocks, interacting agents, and adaptation. Findings The author shows how the nature of politics in Kenya exposed the value chain to endogenous shocks as the result of conflicts between interacting agents, where smallholder farmer organizations were important for successful adaptation. Conflicts between development and political objectives in neo-patrimonial states are sources of complexity and uncertainty in smallholder value chains. Research limitations/implications Complex adaptive systems proved a useful framework to understand decision making by government and business actors in the value chain. Originality/value The paper applies a novel conceptual framework to the analysis of an important value chain in Kenya.

Item Type:	Article
Divisions:	Research Program : East & Southern Africa
CRP:	CGIAR Research Program on Policies, Institutions, and Markets (PIM)
Uncontrolled Keywords:	Agriculture, Kenya, Value chain, Policy decision, Brewery, Policy change, Kenya Government Policy, Increase of Tax revenue
Subjects:	Mandate crops > Sorghum Others > African Agriculture Others > Agricultural Economics Others > East Africa Others > Kenya Others > Value Chains
Depositing User:	Mr Ramesh K
Date Deposited:	28 Feb 2018 05:23
Last Modified:	28 Feb 2018 06:51
URI:	http://oar.icrisat.org/id/eprint/10440
Official URL:	http://dx.doi.org/10.1108/JADEE-03-2017-0028
Projects:	UNSPECIFIED
Funders:	UNSPECIFIED
Acknowledgement:	This paper forms part of a special section “Smallholder Value Chains as Complex Adaptive Systems”. The research on which this paper is based was funded by the CGIAR Research Program on Policies, Institutions and Markets. The author is grateful to Steven Haggblade and two anonymous reviewers for helpful comments.
Links:	Google Scholar

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