Social Networks, Governance And Transaction Costs Effects On Organic Tomato And Sweet Pepper Tourist Hotels Market In Arusha And Unguja

EXTENDED ABSTRACT

The objectives of this study were to (i) determine the social networks of the main actors in the organic food value chain in the tourism sector (ii) determine governance in the value chain of organic tomatoes and sweet peppers for the tourism sector in Arusha and Unguja and (iii) to evaluate production and transaction costs of actors in the organic tomatoes and sweet peppers value chain in Arusha and Unguja. The study was conducted in Arusha and Unguja. A preliminary survey was conducted in 2014. Then a stratified sampling procedure was used to select a sample of producers, tourist hoteliers and traders/suppliers. Key informants interviews and snowballing sampling procedures were also used. The results indicated that producers were close to other actors by closeness centrality of 2.12 in Arusha and 3.12 in Unguja. Suppliers/traders were central in the marketing of tomatoes and sweet peppers by betweenness centrality of 91 in Arusha while in Unguja producers‟ organization was central by betweenness of 533. Producers‟ organizations had many actors connected to them by a degree of 17 in Arusha and 28 in Unguja. The density of networks was low 0.01 due to fewer supporting institutions and lack of organic input suppliers. About four forms of governance structures were prominent in organic tomato and pepper value chain: market, modular, rational and captive. The probit results from the Heckman‟s two-stage process show that ownership of assets such as storage facilities, transportation assets and being under contract farming increased the probability of market participation, while experience in marketing increased the quantities of tomatoes and sweet peppers marketed. High marketing costs such as market levy, brokers and mobile phones costs decreased the quantities of tomatoes and sweet peppers marketed. Institutional arrangements (contract farming) were the possible solutions to reduce transaction costs effect, improve access to the tourist hotels market, increasing shelf life by having collective storage facilities and transport. Producers‟ cooperatives and iii companies enabled the promotion and production of organic tomatoes and peppers. The choice of captive and modular governance structure by lead actors ensured access to organic input and market.