The Spatiotemporal Interrelatedness of Farmers’ Switching Decisions

Tim Viergutz and Birgit Schulze-Ehlers

No 235882, 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association

Abstract: The supply base of food processors has become increasingly unstable in the past decades. To enable buyers to reduce unfavorable events of accumulated contract terminations in the future, the factors determining farmers’ switching decisions need to be understood properly. However, the extant empirical literature suffers from a lack of information on actual switching behavior and objective indicators such as real price differences. Additionally, although reports about high numbers of farmers switching at the same time suggest that the switching decision of the individual farmer is crucially influenced by its spatial and temporal context, this has so far not been investigated. This article analyzes the spatiotemporal patterns of farmers’ actual switching behavior based on a unique dataset. Specifically, we seek to detect group-like switching decisions as indicated by clusters in space and time using the space-time permutation scan statistic. We further try to explain accumulated switching by objective indicators. The analyses reveal two groups of spatiotemporally clustered switching decisions. First, there are clusters where many farmers switch on a particular day. Second, there are clusters covering longer periods in time with farmers switching herd-like in a specific area. A comparison of famers within and outside clusters with respect to relative prices suggests a modest relation, indicating a moderate relationship between price incentives and switching decisions. Additionally, we find statistical evidence that herd-like switching includes larger farms compared to farmers switching in other points in time.

Keywords: Agribusiness; Industrial Organization; Research Methods/Statistical Methods (search for similar items in EconPapers)
Pages: 18
Date: 2016
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea16:235882

DOI: 10.22004/ag.econ.235882

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