Exploring Product Diversification: the Case of Contract and Non-contract Farmers in the Philippine Cavendish Banana Value Chain

Marie Analiz April A. Limpoco and Larry N. Digal

International Journal on Food System Dynamics, 2023, vol. 14, issue 04

Abstract: Uncertainties arising from market fluctuations limit choices of banana famers under contracts. However, they can opt not to renew their contracts with multi-national firms to sell to spot market or diversify. This paper examines optimal portfolio of Cavendish banana products of contract and non-contract farmers under uncertainty. We explore the effect of diversification by including banana flour from rejects aside from fresh banana. Constrained M-estimation of parameters and robust portfolio optimization results show that (1) non-contract farms benefit more from diversifying compared to contract farms; and (2) prices are higher for non-contract farms but profits are lower compared to contract farms.

Keywords: Agricultural Finance; Crop Production/Industries (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ijofsd:346720

DOI: 10.22004/ag.econ.346720

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