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Why do agribusiness firms simultaneously source from different contract farming arrangements? Evidence from the soybean industry in Malawi

Author

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  • Mugwagwa, Innocent
  • Bijman, Jos
  • Trienekens, Jacques

Abstract

This paper describes and analyzes the rationale for concurrent use of different contract farming arrangements (CFAs) by a large agroprocessor. We postulate that plural governance is determined by ambiguity over the best mode of coordination, complexity of transactions and strategic behavior by the agroprocessor. We carried out an in-depth case study of an agroprocessor that has multiple CFAs in the soybean industry in Malawi. We find that ambiguity explains the formation of plural governance structures, but strategic behavior is the main motivation for their persistence. Hence, the study findings unite hitherto opposing schools of thought on the stability of plural forms. The results imply that the incentives and disincentives of agribusiness firms to source through different CFAs should be considered in designing policies and programmes to promote contract farming.

Suggested Citation

  • Mugwagwa, Innocent & Bijman, Jos & Trienekens, Jacques, 2018. "Why do agribusiness firms simultaneously source from different contract farming arrangements? Evidence from the soybean industry in Malawi," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 22(1).
    • Handle: RePEc:ags:ifaamr:284927
    DOI: 10.22004/ag.econ.284927
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    Cited by:

    1. Fanny Widadie & Jos Bijman & Jacques Trienekens, 2022. "Alignment between vertical and horizontal coordination for food quality and safety in Indonesian vegetable chains," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 10(1), pages 1-19, December.
    2. Fanny Widadie & Jos Bijman & Jacques Trienekens, 2021. "Farmer preferences in contracting with modern retail in Indonesia: A choice experiment," Agribusiness, John Wiley & Sons, Ltd., vol. 37(2), pages 371-392, April.

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    Keywords

    International Development;

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