Governance and upgrading in local linkages: the case of horticultural-tourism value chain from smallholders to tourist hotels in Tanzania

Knowledge on how local value chains within a developing country context are governed and their impact on smallholders upgrading, is still lacking. Based on the GVC theory, supported by transaction cost analysis and networking theory, this study sought to explain smallholders’ participation in high value food market chains and the nature of ‘local linkages’ between agriculture and tourism sectors in Tanzania. The study employed a mixed method research design. Qualitative data were collected from tourist hotels’ procurement managers/chefs, intermediaries, individual smallholders, farmer groups/organizations and key informants through in-depth interviews and focus group discussions. A survey was used to collect quantitative data from 98 tourist hotels. Pattern-matching technique, descriptive analysis such as frequencies and cross tabulations as well as statistical tests i.e. ANOVA and t-test analyzed qualitative and quantitative data, respectively. Results from the study established that in local linkages, transaction costs other than ‘mundane’ and nature of networks created among smallholders and between them and other chain and non-chain actors are important in explaining how value chains are governed, with inclusion/exclusion of smallholders in the chain and upgrading opportunities available for participating smallholders. This is contrary to contribution proposed by the GVC framework that focuses on ‘mundane’ transaction costs in explaining linkages in global context. The study recommends future studies to critically analyze heterogeneity composition of smallholders groups such as gender and social stratification and how it affects the degree of their participation in the value chain including levels of vulnerability to risk and competitiveness. Other studies may examine the relationship between the type of governance and cost-benefit analysis for smallholders’ participation in the chain.