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Contractual Relationships Between Small-Holder Sugarcane Growers And Millers In The Sugar Industry Supply Chain In Swaziland

Listed author(s):
  • Masuku, MB
  • Kirsten, JF
  • Van Rooyen, CJ
  • Perret, S
Registered author(s):

    This paper proposes and analyses a model of relationships between smallholder sugarcane growers and millers in the Swaziland sugar industry supply chain. In particular, it identifies the behavioural factors that contribute to the level of satisfaction that sugarcane growers perceive in their relationship with the millers. Using recursive models and multiple regression analysis, the results indicate that higher levels of trust lead to higher levels of cooperation that, in turn, lead to higher levels of commitment by the smallholder growers to the business relationship. Cooperation is also an antecedent of the benefits and of the satisfaction that these growers gained from the relationship. These results agree with a priori theory that trust, cooperation, strategic benefits, commitment and absence of opportunistic behaviour are essential elements for a successful relational exchange. The findings imply that both cane growers and millers need to focus on initiating, signalling and disclosing their behaviours in an effort to improve their relationship with each other. A relationship founded on trust and mutual respect is more likely to succeed than a relationship of convenience supported by legal contingencies. Therefore, relationships characterised by trust and physical and psychological commitment as well as cooperation between exchange parties is more important for mutual benefit and good quality relationship.

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    File URL: http://purl.umn.edu/246020
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    Article provided by Agricultural Economics Association of South Africa (AEASA) in its journal Agrekon.

    Volume (Year): 42 (2003)
    Issue (Month): 3 (September)
    Pages:

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    Handle: RePEc:ags:agreko:246020
    Contact details of provider: Web page: http://www.aeasa.org.za/
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    1. Lyon, Fergus, 2000. "Trust, Networks and Norms: The Creation of Social Capital in Agricultural Economies in Ghana," World Development, Elsevier, vol. 28(4), pages 663-681, April.
    2. Boehlje, Michael & Doering, Otto C., III, 2000. "Farm Policy In An Industrialized Agriculture," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 18(1), March.
    3. Glover, David J., 1984. "Contract farming and smallholder outgrower schemes in less-developed countries," World Development, Elsevier, vol. 12(11-12), pages 1143-1157.
    4. Contractor, F. J. & Lorange, P., 2002. "The growth of alliances in the knowledge-based economy," International Business Review, Elsevier, vol. 11(4), pages 485-502, August.
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