IDEAS home Printed from
   My bibliography  Save this paper

Quality Differentiation as a Strategy for the Viability of Traditional Olive Farming in Trás-os-Montes Region


  • Baptista, Alberto
  • Biswas, Pradip


Despite special quality of the olive oil of Trás-os-Montes (TM), producers fail to create niche market and raise price commensurate with the high cost. Some local manufacturers made some attempts to establish special brands for their oil and the association of the local producers (AOTAD) made the required efforts to bring the product of the region under PDO, designated as Azeite de Trás-os-Montes DOP. Only a small part of the marketed product is sold under PDO (4%) and a fraction of which is sold under some brand till date. The cost structure of olive oil depends on multiple factors - the type of production system (traditional or intensive), plant variety, inclination of plots and productivity, among others. The harvesting cost in general represents more than 50 percent of the total costs. The massive increase of production with the use of intensive farming at lower unit cost in other regions has pulled down the overall market price making traditional farms unviable. For the modern super intensive farm unit cost is only one fourth of that of traditional farm. The issue is not of protecting an unviable traditional system from the competition of an intensive system, but of the realisation of the true value of a product that the market mechanism fails to accomplish. This kind of problem of adverse selection due incomplete/ asymmetric information in the market is often interpreted in terms of the ‘lemon effect’ or ‘Gresham’s Law’. It states that in the case of buyer failing to discriminate between the products of different qualities at the time of purchase, the producers of higher quality products cannot charge a premium price. Under these circumstances, if the cost of high quality product exceeds that of low quality product, the producers of the former cannot sustain in the market. This is precisely what happens with the good quality high cost olive oil of TM against the competition of the low quality low cost olive oil of some other places. As an exotic high quality product its characteristics must be described in most visible and attractive forms and search its niche market globally.

Suggested Citation

  • Baptista, Alberto & Biswas, Pradip, 2010. "Quality Differentiation as a Strategy for the Viability of Traditional Olive Farming in Trás-os-Montes Region," 116th Seminar, October 27-30, 2010, Parma, Italy 95325, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa116:95325

    Download full text from publisher

    File URL:
    Download Restriction: no


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:eaa116:95325. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.