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Vertical Coordination Of Pork Supply Chain: A Case Study Of Jiangsu Province

Posted on:2004-06-27Degree:MasterType:Thesis
Country:ChinaCandidate:Y C DaiFull Text:PDF
GTID:2156360122493236Subject:Agricultural Economics and Management
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This paper is to study vertical coordination of pork supply chain using transaction cost economics. The three dimensions of transaction including uncertainty, frequency and asset specificity are used to determine the characteristics of transactions between actors in pork supply chain. Case study is used to get an insight of the vertical coordination of innovative pork supply chains in Jiangsu province. A survey of 289 hog producers was conducted in order to analyze vertical coordination between pig finishing stage and slaughtering stage. Principal component analysis was employed to analyze factors influencing producers' choices of marketing channels and binomial logit models was employed to determine factors influencing producers' willingness to adopt a type of production contract.Case study on innovative supply chains shows that innovative pork supply chains have characteristics of cool chains, branding and closer vertical coordination. Between slaughtering stage and retailing stage, vertical coordination takes forms of contracts, joint ventures, vertical integration and other closer means. Between slaughtering stage and finishing stage, although diversified vertical coordination forms can be found, the main mechanism is open market mode. Open market mode not only leads to uncertainty of price, quality and quantities for packer, it also brings uncertainty of production decision and price to producers. The innovative supply chains still do not solve the cooperation problem with hog producers.Data analysis from survey shows that open market is the dominant channel of producers to procure piglets. With regard to marketing channel of market hogs, open market is the dominant vertical coordination method of finishing stages. 66.1% of producers mainly sell market hogs to agents, collectors or butchers and only 4.8 % of producers sell directly to slaughters. It is the high transaction cost that limits the choices of producers. The reasons of producers' choices on marketing channel can be divided into three factors: price factor, payment factor and trust factor. The most important motivations are to reduce uncertainty on price and payment.Producers agree that closer vertical and horizontal coordination of pork supply chain will be beneficial to pork industry. Result of producers' willingness to adopt a type of production contract indicates that the older the producer, with off-farm work of family members and those located in developed areas are less likely to adopt contract production. However, those producers with larger production scale are more likely to adopt production contract.
Keywords/Search Tags:supply chain, vertical coordination, transaction cost, pork, Jiangsu province
PDF Full Text Request
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