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Commercializing Small Farms: Reducing Transaction Costs

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Author Info
Prabhu Pingali (Agricultural and Development Economics Division, Food and Agriculture Organization)
Yasmeen Khwaja
Madelon Meijer (Agricultural and Development Economics Division, Food and Agriculture Organization)
Abstract

Broad changes are taking place in agrifood systems worldwide. These changes are driven by economic development, increase in per caput incomes, changing technology and urbanization. Consumers are changing their dietary preferences and shopping habits, resulting in substantial organizational and institutional changes throughout the food marketing chain. Growing concentration at all levels is taking place, particularly in the retail sector, and private sector standards for food quality and safety are proliferating. Increasingly exchange is arranged through the use of contracts. These changes have significant implications for growth, poverty and food security. For the small farmer in particular there are difficulties to meet the standards and contractual requirements. They are faced with a new set of transaction costs that emerge from dealing with a food system characterized by different rules, regulations and players. Increased transactions costs deter entry of small farmers into the market. This paper looks at required interventions aimed at reducing transaction costs to encourage increased farmer participation in competitive markets.

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Publisher Info
Paper provided by Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA) in its series Working Papers with number 05-08.

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Length: 42 pages
Date of creation: 2005
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Handle: RePEc:fao:wpaper:0508

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Related research
Keywords: Food systems Agricultural commercialization Transaction costs Small farmers Policy.

Other versions of this item:

Find related papers by JEL classification:
Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  11. Carter, Michael R. & Mesbah, Dina, 1993. "Can land market reform mitigate the exclusionary aspects of rapid agro-export growth?," World Development, Elsevier, vol. 21(7), pages 1085-1100, July. [Downloadable!] (restricted)
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