Small farmers, NGOs, and a Walmart World: Welfare effects of supermarkets operating in Nicaragua

Despite more than a decade of NGO and government activities promoting developing world farmer participation in high-value agricultural markets, evidence regarding the household welfare effects of such initiatives is limited. This paper analyzes the geographic placement of supermarket supply chains in Nicaragua between 2000 and 2008 and uses a difference-in-difference specification on measures of supplier and non-supplier assets to estimate the welfare effects of small farmer participation. Though results indicate that selling to supermarkets increases household productive asset holdings, they also suggest that only farmers with advantageous endowments of geography and water are likely to participate.