Supermarkets, Farm Household Income, and Poverty: Insights from Kenya

The expansion of supermarkets in developing countries may have important implications for poverty and rural development. While previous studies have compared farm profits between participants and non-participants in supermarket channels, wider income effects have hardly been analyzed. Moreover, most existing studies do not account for structural differences between the two groups. We address these issues by using endogenous switching regression and building on a survey of vegetable farmers in Kenya. Participation in supermarket channels is associated with a 48% gain in average household income, which also contributes to poverty reduction. To realize these benefits on a larger scale will require institutional support.