The successful integration of smallholders in vertical coordination arrangements : experiences of the KASCOL model in Zambia : a thesis presented in partial fulfilment of the requirements for the degree of Master of AgriCommerce at Massey University, Manawatu, New Zealand

Abstract

Agribusiness firms have been increasingly engaging in closer vertical coordination arrangements in order to better meet their customer‟s changing needs. On the other hand, as the fight against poverty in developing countries continues, policy makers seek ways in which they can reduce this poverty. One such way has been to integrate smallholders in vertical coordination arrangements. However, reports show that this has been with little success. Therefore, the purpose of this study was to examine a successful experience of smallholder inclusion in a vertical coordination chain, in order to determine the reasons underpinning such a success. The case under investigation was the Kaleya Smallholders Company Limited, a model operating within the Zambian sugar industry. The research design was qualitative in nature, with 20 in-depth interviews being conducted with representatives of the four main stakeholder groups to the model: Kaleya Smallholders Trust; Kaleya Smallholders Company Ltd; Zambia Sugar Company; and the smallholders. The results show that the model, which had been in existence for 30 years, was able to increase the smallholders‟ participation over time. The variables explaining the success of this model are classified as follows: (1) the context that created an enabling environment for profit and healthy interdependency; (2) the governance structure that allowed balance of power relationships; (3) the managerial skills, which were instrumental in operational efficiencies; and (4) the growth of social capital. The conclusion is that, although context, governance structures and managerial competence were necessary factors for the sustainability of the model, the variables related to social capital were determinant for the long-term successful integration of the smallholders. The results obtained in this study cannot be generalised to other contexts, due to the nature of the research design, but they have led to some useful implications, among them being: the need for managers to not only correctly establish their governance and management, but also to correctly establish their social capital; and the need for the government to become involved in the initial stages of developmental projects involving smallholders, in order to help reduce the power imbalance between smallholders and firms.