Tomato Farmer Participation in Supermarket Market Channels in Guatemala: Determinants and Technology and Income Effects
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.
|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (517) 355-4563
Fax: (517) 432-1800
Web page: http://www.aec.msu.edu/agecon/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Heckman, James J, 1979.
"Sample Selection Bias as a Specification Error,"
Econometric Society, vol. 47(1), pages 153-61, January.
- Lau, Lawrence J & Yotopoulos, Pan A, 1971. "A Test for Relative Efficiency and Application to Indian Agriculture," American Economic Review, American Economic Association, vol. 61(1), pages 94-109, March.
- 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 255-98, January.
- 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.
- Manski, Charles F & Lerman, Steven R, 1977. "The Estimation of Choice Probabilities from Choice Based Samples," Econometrica, Econometric Society, vol. 45(8), pages 1977-88, November.
- 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.
- Eswaran, Mukesh & Kotwal, Ashok, 1985. "A Theory of Contractual Structure in Agriculture," American Economic Review, American Economic Association, vol. 75(3), pages 352-67, June.
- Heckman, James J, 1978.
"Dummy Endogenous Variables in a Simultaneous Equation System,"
Econometric Society, vol. 46(4), pages 931-59, July.
- James J. Heckman, 1977. "Dummy Endogenous Variables in a Simultaneous Equation System," NBER Working Papers 0177, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:ags:midasp:11771. 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)
If references are entirely missing, you can add them using this form.