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Transaction costs and slaughter cattle procurement: Processors' selection of supply channels

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  • Jill E. Hobbs

    (Excellence in the Pacific Research Institute, University of Lethbridge and Faculty of Management, University of Calgary, 4219 Village Terrace SW, Calgary T3H 2L4, Canada)

Abstract

This article investigates the hypothesis that different supply channels impose different types (and levels of) transaction costs on beef processors in the United Kingdom. The choice of supply channel is therefore influenced by these transaction costs. Recent food safety legislation and increasing consumer concerns over farm animal welfare may have altered the transaction costs arising from different supply channels. Conjoint analysis is used to measure the relative importance of selected transaction costs in a processor's procurement decision. A survey of UK beef processing firms is used to collect data for the conjoint analysis. The results suggest that the monitoring costs arising from the traceability of cattle to the farm of origin are particularly important. The implications for vertical coordination in the beef marketing chain are discussed. © 1996 John Wiley & Sons, Inc.

Suggested Citation

  • Jill E. Hobbs, 1996. "Transaction costs and slaughter cattle procurement: Processors' selection of supply channels," Agribusiness, John Wiley & Sons, Ltd., vol. 12(6), pages 509-523.
    • Handle: RePEc:wly:agribz:v:12:y:1996:i:6:p:509-523
    DOI: 10.1002/(SICI)1520-6297(199611/12)12:6<509::AID-AGR2>3.0.CO;2-7
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    References listed on IDEAS

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    1. William G. Tomek, 1980. "Price Behavior on a Declining Terminal Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 434-444.
    2. Mighell, Ronald L. & Jones, Lawrence A., 1963. "Vertical Coordination in Agriculture," Agricultural Economic Reports 307164, United States Department of Agriculture, Economic Research Service.
    3. Scott W. Fausti & Dillon M. Feuz, 1995. "Production Uncertainty and Factor Price Disparity in the Slaughter Cattle Market: Theory and Evidence," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 533-540.
    4. Dillon M. Feuz & Scott W. Fausti & John J. Wagner, 1993. "Analysis of the efficiency of four marketing methods for slaughter cattle," Agribusiness, John Wiley & Sons, Ltd., vol. 9(5), pages 453-463.
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    Cited by:

    1. Jason R.V. Franken & Joost M.E. Pennings & Philip Garcia, 2018. "Graphical Illustration of Interaction Effects in Binary Choice Models: A Note," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(3), pages 852-858, September.
    2. L. Tsourgiannis & M. Warren & A. Karasavvoglou & J. Eddison, 2012. "Marketing Strategies for the Primary Sector: An Empirical Study," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 147-178.
    3. Ward, Ruby A. & Bailey, DeeVon & Jensen, Robert T., 2005. "An American BSE Crisis: Has it affected the Value of Traceability and Country-of-Origin Certifications for US and Canadian Beef?," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 8(2), pages 1-23.
    4. Fernando Mata & Maria Dos-Santos & Jack Cocksedge, 2023. "Attitudinal and Behavioural Differences towards Farm Animal Welfare among Consumers in the BRIC Countries and the USA," Sustainability, MDPI, vol. 15(4), pages 1-18, February.
    5. Freeman, Gusta, 2010. "Economics of Fertilizer Utilization in Small-Scale Farming Systems and Appropriate Role for Policy," Research Theses 157509, Collaborative Masters Program in Agricultural and Applied Economics.
    6. Harrison, R. Wes & Gillespie, Jeffrey M. & Fields, Deacue, 2005. "Analysis of Cardinal and Ordinal Assumptions in Conjoint Analysis," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 34(2), pages 1-15, October.
    7. Jan Fałkowski, 2008. "Vertical coordination from the angle of farmer loyalty and access to credit. Evidence from the Polish dairy sector," Working Papers 2008-01, Faculty of Economic Sciences, University of Warsaw.
    8. Gerdoci, Blendi & Skreli, Engjell & Panariti, Suzana & Repaj, Ermira, 2016. "Relational Ties and Transaction Costs – The Moderating Role of Uncertainty," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(2), pages 1-18, May.
    9. Darren Barber & Jill Hobbs & James Nolan, 2008. "Assessing Producer Stated Preferences for Identity Preservation in the Canadian Grain Handling and Transportation System," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(3), pages 243-256, September.
    10. Harrison, R. Wes & Gillespie, Jeffrey M. & Fields, Deacue, 2001. "Theoretical And Empirical Considerations Of Eliciting Preferences And Model Estimation In Conjoint Analysis," 2001 Annual meeting, August 5-8, Chicago, IL 20680, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Martinez, Stephen W. & Zering, Kelly D., 2004. "Pork Quality And The Role Of Market Organizaton," Agricultural Economic Reports 33973, United States Department of Agriculture, Economic Research Service.
    12. Stringer, Randy & Sang, Naiquan & Croppenstedt, André, 2009. "Producers, Processors, and Procurement Decisions: The Case of Vegetable Supply Chains in China," World Development, Elsevier, vol. 37(11), pages 1773-1780, November.
    13. Wijnands, Jo H.M. & van der Lans, Karin & Hobbs, Jill E., 2006. "International Flower Networks: Transparency and Risks in Marketing Channel Choice," 99th Seminar, February 8-10, 2006, Bonn, Germany 7759, European Association of Agricultural Economists.
    14. Dickinson, David L. & Bailey, DeeVon, 2005. "Experimental Evidence on Willingness to Pay for Red Meat Traceability in the United States, Canada, the United Kingdom, and Japan," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 37(3), pages 1-12, December.
    15. Noelke, Corinna M. & Caswell, Julie A., 2000. "A Model Of The Implementation Of Quality Management Systems For Credence Attributes," 2000 Annual meeting, July 30-August 2, Tampa, FL 21874, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Alpay, Savas & Yalcin, Ismet & Dolekoglu, Turker, 2001. "Export Performance Of Firms In Developing Countries And Food Quality And Safety Standards In Developed Countries," 2001 Annual meeting, August 5-8, Chicago, IL 20521, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. Holleran, Erin & Bredahl, Maury E. & Zaibet, Lokman, 1999. "Private incentives for adopting food safety and quality assurance," Food Policy, Elsevier, vol. 24(6), pages 669-683, December.
    18. Fertő, Imre & Szabó G., Gábor, 2004. "Értékesítési csatornák választása a magyar zöldség-gyümölcs szektorban. Esettanulmány [The choice of supply channels in the Hungarian fruit and vegetable sector - a case study]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 77-89.
    19. Bailey, DeeVon & Slade, Jeremy, 2004. "Factors Influencing Support For A National Animal Identification System In The United States," 2004 Annual meeting, August 1-4, Denver, CO 20293, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Naiquan Sang & Randy Stringer, 2003. "Food Safety Concerns and Changing Procurement Arrangements by Food Processors: A Conjoint Analysis," School of Economics and Public Policy Working Papers 2003-02, University of Adelaide, School of Economics and Public Policy.
    21. Liddell, Sterling & Bailey, DeeVon, 2001. "Market Opportunities And Threats To The U.S. Pork Industry Posed By Traceability Systems," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 4(3), pages 1-16.
    22. Bensemann, Jessica & Shadbolt, Nicola, 2015. "Farmers’ Choice of Marketing Strategy: A Study of New Zealand Lamb Producers," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 18(3), pages 1-33, September.
    23. Assoc. Prof. Dr. Le Nguyen Doan Khoi, 2021. "Solutions for quality seafood products exporting to the EU markets," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(08), pages 124-127, August.
    24. Nielsen, Niels Asger & Jeppesen, Lisbeth Fruensgaard, 2001. "The beef market in the European Union," MAPP Working Papers 75, University of Aarhus, Aarhus School of Business, The MAPP Centre.

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