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Commercializing Small Farms: Reducing Transaction Costs

Prabhu Pingali, Yasmeen Khwaja and Madelon Meijer
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Madelon Meijer: Agricultural and Development Economics Division, Food and Agriculture Organization

No 05-08, Working Papers from Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA)

Abstract: Broad changes are taking place in agrifood systems worldwide. These changes are driven by economic development, increase in per caput incomes, changing technology and urbanization. Consumers are changing their dietary preferences and shopping habits, resulting in substantial organizational and institutional changes throughout the food marketing chain. Growing concentration at all levels is taking place, particularly in the retail sector, and private sector standards for food quality and safety are proliferating. Increasingly exchange is arranged through the use of contracts. These changes have significant implications for growth, poverty and food security. For the small farmer in particular there are difficulties to meet the standards and contractual requirements. They are faced with a new set of transaction costs that emerge from dealing with a food system characterized by different rules, regulations and players. Increased transactions costs deter entry of small farmers into the market. This paper looks at required interventions aimed at reducing transaction costs to encourage increased farmer participation in competitive markets.

Keywords: Food systems; Agricultural commercialization; Transaction costs; Small farmers; Policy. (search for similar items in EconPapers)
JEL-codes: D23 Q13 Q18 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2005
New Economics Papers: this item is included in nep-agr, nep-cfn and nep-mkt
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Citations: View citations in EconPapers (57)

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