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Producers, Processors, and Procurement Decisions: The Case of Vegetable Supply Chains in China

  • Stringer, Randy
  • Sang, Naiquan
  • Croppenstedt, André
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    Summary This study examines how different supply chain characteristics impose different coordination costs on vegetable processors. The results provide a basis for understanding the relative importance of four alternative supply chain characteristics to vegetable processors: (1) the size of the producers' production base; (2) the distance between the producer and the processing plant; (3) the level of detail specified in the contract between processors and grower; and (4) whether the producer has food safety certification. Vegetable processors from Laiyang County, Shandong province, China's largest horticultural production and export region, provide the data underlying the following analysis. Conjoint analysis suggests that the vegetable processors consider the size of the production units as the most important supply chain characteristic influencing their choice of producers, followed by distance to producer, type of contract and food safety certification.

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    File URL: http://www.sciencedirect.com/science/article/B6VC6-4X8HGT3-1/2/f6e34aa3eee76316d9d1ebc3cae3a9b1
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    Article provided by Elsevier in its journal World Development.

    Volume (Year): 37 (2009)
    Issue (Month): 11 (November)
    Pages: 1773-1780

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    Handle: RePEc:eee:wdevel:v:37:y:2009:i:11:p:1773-1780
    Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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    1. 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.
    2. Henson, Spencer & Reardon, Thomas, 2005. "Private agri-food standards: Implications for food policy and the agri-food system," Food Policy, Elsevier, vol. 30(3), pages 241-253, June.
    3. Dinghuan Hu & Thomas Reardon & Scott Rozelle & Peter Timmer & Honglin Wang, 2004. "The Emergence of Supermarkets with Chinese Characteristics: Challenges and Opportunities for China's Agricultural Development," Development Policy Review, Overseas Development Institute, vol. 22, pages 557-586, 09.
    4. Liesbeth Dries & Thomas Reardon & Johan F. M. Swinnen, 2004. "The Rapid Rise of Supermarkets in Central and Eastern Europe: Implications for the Agrifood Sector and Rural Development," Development Policy Review, Overseas Development Institute, vol. 22, pages 525-556, 09.
    5. David Neven & Thomas Reardon, 2004. "The Rise of Kenyan Supermarkets and the Evolution of their Horticulture Product Procurement Systems," Development Policy Review, Overseas Development Institute, vol. 22(6), pages 669-699, November.
    6. Berdegue, Julio A. & Balsevich, Fernando & Flores, Luis & Reardon, Thomas, 2005. "Central American supermarkets' private standards of quality and safety in procurement of fresh fruits and vegetables," Food Policy, Elsevier, vol. 30(3), pages 254-269, June.
    7. David Boselie & Spencer Henson & Dave Weatherspoon, 2003. "Supermarket Procurement Practices in Developing Countries: Redefining the Roles of the Public and Private Sectors," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1155-1161.
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