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Marketing Cooperative vs Producer's Agent: The Turkish Dilemma in Modern FFV Market

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  • Lemeilleur, Sylvaine
  • Bignebat, Celine
  • Cordon, J.M.

Abstract

Since the rapid expansion of modern retailers in Turkish agro-food market, competent intermediary's forms are required to match up their exigent demand in fresh fruit and vegetables (thereafter FFV) procurement - namely, volume, regularity or quality- with a very fragmented national supply provided by small family farms. In this context, the aim of this paper is twofold: it first develops a unified theoretical framework that compares the costs incurred by producers when deciding to market their produce through a private agent or through a marketing cooperative. Drawing on marketing cooperatives theories and transaction cost arguments, we put forward that these systems do not prove the same ability to allow for quality upgrading, above all at the producer's level. Second, we analyze on this basis the recent evolution of the FFV sector in Turkey: the Turkish Wholesale Market Law enacted 1995 establishes commission producer's agents on FFV wholesale market halls who effectively collect an atomized supply and guarantee the access of small producers to large scale markets. Moreover, the simultaneous attempt to promote traditional cooperatives as alternative channels turns out to be less successful: small size, lack of funding and skill shortage hampered their development. However, public authorities recently promote the emergence of new types of marketing cooperatives whose initial endowment in capital and technical skills is high. The latter progressively turn to offensive strategies of quality upgrading and market access to new opportunities, whereby they have to set screening rules marginalizing small and vulnerable producers in order to achieve this goal. In our view, this evolution in the governmental intervention illustrates a determinant trade-off faced by the public authorities: namely, the choice between assuring the inclusion of the major part of producers in the market and boosting productivity and quality upgrading at the production level for more demanding markets.

Suggested Citation

  • Lemeilleur, Sylvaine & Bignebat, Celine & Cordon, J.M., 2007. "Marketing Cooperative vs Producer's Agent: The Turkish Dilemma in Modern FFV Market," 103rd Seminar, April 23-25, 2007, Barcelona, Spain 9405, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa103:9405
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    References listed on IDEAS

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    1. Bontems, P. & Fulton, M., 2005. "Organizational structure and the endogeneity of cost : cooperatives, for-profit firms and the cost of procurement," Economics Working Paper Archive (Toulouse) 200507, French Institute for Agronomy Research (INRA), Economics Laboratory in Toulouse (ESR Toulouse).
    2. Sexton, Richard J. & Iskow, Julie, 1988. "Factors Critical to the Success or Failure of Emerging Agricultural Cooperatives," Information Series 11921, University of California, Davis, Giannini Foundation.
    3. Michael E. Sykuta & Michael L. Cook, 2001. "A New Institutional Economics Approach to Contracts and Cooperatives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1273-1279.
    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, September.
    5. E. G. Nourse, 1922. "The Outlook for Cooperative Marketing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 4(2), pages 80-88.
    6. Porter, Philip K & Scully, Gerald W, 1987. "Economic Efficiency in Cooperatives," Journal of Law and Economics, University of Chicago Press, vol. 30(2), pages 489-512, October.
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    Cited by:

    1. Céline Bignebat & Ahmet Ali Koç & Sylvaine Lemeilleur, 2009. "Small producers, supermarkets, and the role of intermediaries in Turkey's fresh fruit and vegetable market," Agricultural Economics, International Association of Agricultural Economists, vol. 40(s1), pages 807-816, November.

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    Keywords

    Agribusiness;

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