Coordinating Cereal Farmers and Buyers: Evidence from Mali
May 1, 2018 - Author: Ryan Vroegindewey, Veronique Theriault, John Staatz
Ryan Vroegindewey, Veronique Theriault, John Staatz, (2018) "Coordinating cereal farmers and buyers: evidence from Mali," Journal of Agribusiness in Developing and Emerging Economies, Vol. 8 Issue: 2, pp.234-255
The purpose of this paper is to examine how various transaction-cost characteristics influence the choice of vertical coordination (VC) structures (e.g. different contract types) and horizontal coordination (HC) structures (e.g. different farmer organization types) to link smallholder farmers efficiently with buyers. It analyzes the relationship between vertical and horizontal structures, and the economic sustainability of different structure combinations.
The paper develops a conceptual framework to predict coordination structures as a function of transaction-cost characteristics, compares predictions for the Malian cereals market to empirical evidence using 15 case studies, and then analyzes structure combinations.
Asymmetric scale between farmers and buyers; uncertainty in production, prices, policy, and contract enforcement; and quality and quantity debasement lead to selections of structures with high levels of control. Vertical and horizontal structures demonstrate a complementary relationship in certain core coordination roles, while exhibiting substitutability in the provision of other coordination activities. The marketing cooperative and marketing contract pairing is the most prevalent combination.
The conceptual framework is useful for explaining the selection of coordination structures, and can be applied in other contexts to strengthen external validity.
The framework facilitates predictions and explanation of both VC and HC structures, with empirical application on a country and value chains receiving little attention in the literature.
Keywords: Contracts, Cereals, Agribusiness, Smallholder farmers, Transaction costs, Mali, Farmer cooperatives, Market coordination, B52, D02, D23, L14