Retail Contracting And Grower Prices
Contracting directly between produce shippers and retailers is growing in importance. Retailers seek to obtain reliable supplies, while reducing their reliance on recurring market transactions. Producers seek stable prices and market access. These private transactions diminish spot market liquidity and enhance noncompetitive buying opportunities, raising concerns over the resulting impact on grower prices, whether under contract or not, and the future produce market structure. Primary data are used to test hypotheses on contract participation. Simulations on grower prices reveal that contract prices are generally lower, but less variable, than market prices, suggesting a form of risk sharing.
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