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Tomato Farmer Participation in Supermarket Market Channels in Guatemala: Determinants and Technology and Income Effects


  • Hernandez, Ricardo
  • Reardon, Thomas
  • Berdegue, Julio A.


The paper shows that in a comparison between supermarket channels (working via dedicated wholesalers) and traditional channels, farmers selling to supermarkets tend to be in the upper-end of the "small farmer" category (whereas the traditional-channel growers are in the smaller end), have more capital (in particular, irrigation, which allows them to supply all year and attain greater productivity and consistency), and be much more specialized in commercial horticulture in general and in tomatoes in particular, as compared to the traditional farmers. While they have higher yields, they also have higher input use, including use of chemicals, and these greater input expenditures (accompanied by more credit and technical assistance from the chemical companies) means that their profit rate is roughly similar to the farmers in the traditional channel. They tell us that they prefer still the more demanding wholesale-supermarket channel because it offers a lower risk and lower transaction cost outlet for the variety of their qualities and grades, all year. In turn, the supermarkets, who do not buy direct but rather source from a few dedicated wholesalers, rely on this year-round supply, lower transaction costs, and consistency. While the share of supermarkets in the produce market in Guatemala is still minor, these results mean merely that the more capitalized-tier of small farmers enjoy some advantages with the new channel, but also some entry costs that the traditional farmers as of yet do not face. As the supermarket channel grows, it is expected that more and more farmers will need to capitalized in ways that will either make them competitive in the new market, or in the traditional markets that will doubtless evolve to maintain competitiveness themselves. Development programs over the medium-long run will need to take into account the changing nature of farm-level investments thus implied.

Suggested Citation

  • Hernandez, Ricardo & Reardon, Thomas & Berdegue, Julio A., 2006. "Tomato Farmer Participation in Supermarket Market Channels in Guatemala: Determinants and Technology and Income Effects," Staff Papers 11771, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  • Handle: RePEc:ags:midasp:11771

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    References listed on IDEAS

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    5. Eswaran, Mukesh & Kotwal, Ashok, 1985. "A Theory of Contractual Structure in Agriculture," American Economic Review, American Economic Association, vol. 75(3), pages 352-367, June.
    6. Mark M. Pitt & Shahidur R. Khandker, 1998. "The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 958-996, October.
    7. Hamish R. Gow & Johan F. M. Swinnen, 2001. "Private Enforcement Capital and Contract Enforcement in Transition Economies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 686-690.
    8. Feder, Gershon & Just, Richard E & Zilberman, David, 1985. "Adoption of Agricultural Innovations in Developing Countries: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 255-298, January.
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    Cited by:

    1. Haggblade, Steven & Hazell, Peter & Reardon, Thomas, 2010. "The Rural Non-farm Economy: Prospects for Growth and Poverty Reduction," World Development, Elsevier, vol. 38(10), pages 1429-1441, October.
    2. Berdegue, Julio A. & Reardon, Thomas & Balsevich, Fernando & Martinez, Anabel & Medina, Ruben & Aguirre, Marx & Echanove, Flavia, 2006. "Supermarkets and Michoacan Guava Farmers in Mexico," Staff Papers 11474, Michigan State University, Department of Agricultural, Food, and Resource Economics.

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