Agri-food supply chain capabilities and smallholders’ on-farm economic viability: a moderated mediation analysis of subsidy schemes and dynamic pricing

Abstract

As the global agri-food supply chain system evolves, understanding the dynamics that influence smallholders’ on-farm economic viability (SFEV) becomes paramount. This study contributes to a better understanding of how agricultural supply chain capabilities (AGSC), subsidy schemes (SBSM) and dynamic pricing (DYPG) interact and collectively influence SFEV. Data collection involved the use of a cross-sectional questionnaire survey and stratified random sampling of 467 smallholders of staple food products across five regions in Tanzania. Structural equation modelling (SEM) and Hayes PROCESS macro model 8 were used for data analysis. The study findings revealed a relatively low AGSC among smallholders, which subsequently demonstrated a positive effect on DYPG and a negative effect on SFEV. The DYPG had a significant positive effect on SFEV, concurrently mediating the association between AGSC and SFEV. Furthermore, the interaction effect of AGSC and SBSM reduced the market prices of food products and dampens the negative impact of AGSC on the SFEV. Importantly, the results of the moderated mediation analysis demonstrated a significant positive index, providing sufficient evidence to conclude that SBSM moderated the indirect effect of AGSC on SFEV via DYPG. Given these findings, the study opens avenues for further research and recommends strategically establishing a continuous monitoring and evaluation system to assess the effectiveness of SBSM and DYPG initiatives on AGSC and SFEV. These can be tailored with training programs for improving the understanding of DYPG mechanisms and the AGSC, enabling smallholders to adapt to changing market conditions within the agri-food supply chain.

Keywords

• Agri-food supply chain
• smallholders
• on-farm economic viability
• dynamic pricing
• subsidy schemes
• food products