Three essays on agricultural marketing in developing countries: An industrial organization approach

by Suzuki, Aya, Ph.D., UNIVERSITY OF CALIFORNIA, DAVIS, 2008, 139 pages; 3329675

Abstract:

This dissertation examines the behavior of agricultural markets in developing countries using an industrial organization approach. I focus on two aspects of developing-country markets that can have important impacts on the welfare of smallholder farmers: (1) high transportation costs of moving product from farm to market, and (2) smallholders' opportunities to participate in emerging high-value export markets.

Essay 1 develops a two-stage model that considers the relationship between transportation costs and buyer market power. In stage 1 a taxing authority determines the investment in infrastructure that maximizes the welfare of farmers, considering the competition between buyers that takes place in the second stage. Key implications are that: (i) market power is important in computing the optimal investment in infrastructure, and (ii) improvement of transportation infrastructure contributes to the welfare of farmers through two ways; by directly reducing farmers' marketing costs (“cost effect”) and by increasing the degree of competition between buyers (“competition effect”). I find that the competition effect is much larger than the well-known cost effect.

Essay 2 and 3 study the role played by smallholders in the export pineapple supply chain in Ghana with a particular attention to the behavior and interaction between buyers and producers. Essay 2 finds that the large-scale plantation farms are more efficient than smallholders in producing pineapples and that wealth and local network assets are significant factors that determine participation in pineapple production, as well as in contract farming.

Essay 3 analyzes why exporters only partially integrate production activity even though they are more efficient producers than smallholders. I pose three hypotheses—(i) exporters are constrained to expand their production due to the complex land institutions in Ghana, (ii) smallholders have a superior ability to dispose the unsold fruit into domestic markets, and (iii) smallholders are better able to diversify the risks associated with pineapple production. Although these abilities have not been recognized in the existing literature that examines smallholders' participation in the emerging global supply chain of high-value crops, I find these smallholders' advantages to be crucial in considering their participation in the export pineapple supply chain in Ghana.

AdviserLovell S. Jarvis
SchoolUNIVERSITY OF CALIFORNIA, DAVIS
Source TypeDissertation
SubjectsMarketing; Agriculture economics
Publication Number3329675

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