The grower-trader relationship: experiments with coffee value chain actors in Uganda

Abstract

In this study, we explore the nature of the relationship between smallholder growers and local traders in the coffee value chain in Eastern Uganda. Analysing the results of two lab-in-the-field experiments (trust and dictator games), we highlight the complex relationship between these two value chain actors. We develop three competing hypotheses: (1) coffee growers will send more to fellow growers than local traders due to social identity and fairness motives as well as because of past opportunistic behaviour of traders (2) coffee growers will send more to traders to curry favour, and (3) growers will send growers and traders the same amount because in a relatively competitive market setting there is little room for opportunistic trader behaviour. We fail to reject our third hypothesis. Our results highlight the importance of fully understanding value chain actor relationships and contexts to better design interventions to improve rural markets.