Year: 2007
Type: conference-paper
Abstract: Commodity value chains in developing and transition countries have undergone tremendous changes in the past decades. Private traders, retailers, agribusinesses and food processing companies increasingly contract with farms and rural households to whom they provide inputs and services in return for guaranteed and quality supplies. Without this support, farmers face major constraints in realizing high-quality, consistent supplies, including financial constraints, difficulties in input markets, lack of technical and managerial capacity etc. Emerging empirical evidence suggests that these new forms of private vertical coordination can be an engine of economic growth, rural development and poverty reduction. However, at the same time there is a concern that the very nature of these contracting systems may act as an important barrier to entry for other agents and may give the dominant partner in a transaction some additional leverage. Competition could play a very important role in this process as it would enhance bargaining power of local suppliers and thereby improve contract terms, in particular where these are imposed by monopsonistic organizations. However, competition may as well undermine contract enforcement in these vertical coordination systems, as suppliers are tempted to behave opportunistically. The objective of this paper is to analyze the effects of competition on the efficiency and equity effects of contracting in high-value supply chains in an environment characterized by widespread factor market imperfections and weak enforcement of contracts. We present a conceptual model and we present evidence from case-studies throughout the developing and transition world, including India. 1.
Source: Lirias
Authors: Johan Swinnen, Anneleen Vandeplas
Institution: KU Leuven
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W25173625