Transaction Costs And Farmers Contract Selection - From Pear Agricultural Survey Empirical Evidence

With the rapid expansion of globalization,significant changes have taken place in international agriculture and food system,including changes from self-sufficient to commercial production,from roadside stalls to modern shopping malls,from food shortage to dietary diversification,from suffering hunger to paying attention to health. However,new retail system and high quality demand of food safety are not matched by corresponding producing and circulation systems.The gap between high-quality demand and low-quality supply of agricultural products led to structural surplus.The transition from low productivity,semi-subsistence agriculture to high productivity,commercialized agriculture has been a core theme of development and agricultural economics for half a century or more,which can be called as transition of agriculture.Three decades of rural reform in China has been greatly liberating the productive forces,and remarkable performances have been achieved owing to the market reform.However,an indisputable fact is that small farmers in China are still facing difficulties in market participation.One of the most difficult problems for market accessing of producers is high transaction cost,which occurred in transactions, partly to be observed.Measurement of transaction cost has always been controversial.Different methods have been adopted in transaction costs of micro-markets as well as running costs of system of macro-structure.Fortunately,both international and domestic scholars pay a keen attention to agriculture and food supply chain.Creative interpretations of the relationship between transaction costs and contract selection have been made with the development of New Institutional Economics and Information Economics. Breakthroughs in theories provide the fundamental basis for empirical research.In terms of positioning of the study:First of all,this paper located in the empirical studies,based on detailed database from face to face interviews,and verified the theoretical hypothesis by using a number of classical mathematical models and econometric models.Second,this paper focused on one single product, namely,pear industry in Hebei province and Zhejiang province.Third,the main concerns of this paper,including market structure of pear industry,available contracts for farm households,measurement of transaction costs,efficiency of different contracts in two stages of the production and marketing,whether or not transaction costs are important factors that affect choices of farmers,whether or not specific contractual arrangements would save certain kinds of transaction costs. The purpose of this study is to test and verify theoretical conclusions on relationship between transaction costs and contract selection by using survey data under the background of Chinese economy,and to provide implications for small farmer adapting changing market in such a transition economy.There are eight chapters in this paper,and arrangements of each chapter are summarized as follows:Chapter 1 is the preface.The main function of this chapter is to introduce the practical and theoretical background of this study,as well as research purpose, concepts definition,methodology and expecting innovations.Chapter 2 is a review of theoretical literatures.By recalling the major transaction cost economics and contract economics of the classical theory,this chapter summarized possible improvements of existing research framework.Chapter 3 is a review of empirical research literatures,including a commentary for measurement of transaction costs and a summary of research results of transaction costs and contract selection in the area of agricultural economy.Chapter 4 is an introduction for empirical research framework and experimental design,including framework building,details of data collection,i.e.the determination of the sample regions,sampling methods,questionnaire structure and a description of the process of data collection.Chapter 5 is the study of marketing channels of pear industry and summary of contract patterns.In this chapter,we recalled reform of fruit circulation system in both China and developed countries and regions,introduced general information of the pear industry in China and pilot provinces,analyzed supply chains of pear industry in Hebei province and Zhejiang province by using the tool of value chain analysis, including cost composition,value adding activities and profit distribution of each stage.At the end of this chapter,we summarized available contract patterns for pear growers and evaluated efficiency of each contract pattern by using the procedure of Data Envelopment Analysis.Chapter 6 is testing for the hypothesis.In this paper,the basic hypothesis is that transaction costs are important factors affecting contract choice of farm households. This section introduces the latest mathematical model in this field,followed by a detailed study of indicators of transaction costs measurement.After analyzing of advantages and disadvantages of previous studies,we proposed a system to fit the attributes of pear marketing.In terms of econometric models,this study carefully reviewed models used in previous studies,and tried to use Multinomial Logit Model to test the basic hypothesis and estimate the impact of transaction costs to contract selection.Chapter 7 is the case study of contract arrangement and transaction costs.After testing the research hypothesis,we turned around,to focus on the role of specific contractual arrangement for saving transaction costs.Case study methodology has been adopted in this chapter by taking the example of Pear Grower Cooperatives of Yuhang Township in Zhejiang Province.Chapter 8 is the last part of this dissertation.The function of this chapter is to summarize research conclusions,policy implications and research prospects.The main findings of this research are as follows:First,as a traditional fruit as pear,constitutions of value chain and available contract patterns of such industry are complicated.Second,small-scale farm households can hardly benefit from value adding.Intermediary organizations grabbed a substantial flow of profits.Third,results of DEA showed that different contract pattern has different transaction efficiency. From the highest to the lowest are group buyer contract,farmer cooperative contract, consumer contract,retailer contract and wholesaler contract.Fourth,transaction costs are important factors affecting contract selection of farm households.Fifth,the case demonstrated that implementation in contract farming of farmer cooperatives played a positive role to save transaction costs...