Tomatoes and Courts: agro-industrial strategy in the face of weak property rights

Decio Zylbersztajn; Ligia Bello Nadalini

Tomatoes and Courts: agro-industrial strategy in the face of weak property rights

In: Dynamics in chains and networks

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Decio Zylbersztajn

Decio Zylbersztajn School of Economics and Business – University of São Paulo, PENSA-Agribusiness Program, Av. Prof. Luciano Gualberto 908, 05508-900 – São Paulo – SP, Brazil

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Ligia Bello Nadalini

Ligia Bello Nadalini School of Economics and Business – University of São Paulo, PENSA-Agribusiness Program, Av. Prof. Luciano Gualberto 908, 05508-900 – São Paulo – SP, Brazil

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Type:: Chapter

Pages:: 518–531

DOI:: https://doi.org/10.3920/9789086865260_062

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For years Brazilian small-scale tomato growers supplied a processing industry under contract. In view of the large number of contract hazards and weak enforcement of contract clauses, managers decided to move to the Midwest, where a smaller number of larger farmers were contracted. The industry blamed high transaction costs of private and public enforcement mechanisms. Some farmers sold the product at the market for fresh consumption. Also, farmers blamed the industry for taking advantage of asymmetric information related to quality. This study presents an analysis of contract architecture and an evaluation of effects of scale, source of credit, distance from the plant, and farmers´ reputation on the likelihood of contract breaches. A panel study with 1,523 observations and limited dependent variable models was formulated to test a hypothesis based on transaction cost theory. Results show that opportunism precluded the possibility of achieving a stable contract relationship in the region.

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Dynamics in chains and networks

E-Book ISBN:: 9789086865260

Publisher:: Wageningen Academic

Print Publication Date:: 10 Oct 2004

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- Life Sciences

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Tomatoes and Courts: agro-industrial strategy in the face of weak property rights

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Dynamics in chains and networks

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