Institutional economic analysis of vegetable production and marketing in northern Philippines: social capital, institutions and governance

This study examines vegetable production and marketing among indigenous communities in northernPhilippinesusing an institutional economics approach. It develops a framework that analyses the four levels of institutions; Social Embededdness, Institutional Environment, Governance Structures and Resource Allocation alongside the Structure, Conduct and Performance of the vegetable sector. Using this integrated framework, the thesis engages on a range of topics from the structure of the sector to sales and margins, from trust to favoured-buyer systems and from transaction cost analysis to farmer's decision-making processes. Also, a framework that aligns efficient contract types with governance structures based on observable transaction attributes was developed. The modeling approach that determines how farmers choose trading partners based on farm and farmer characteristics, transaction attributes and social capital was likewise used.The first important finding of the study is that a dual structure - in terms of farm-size and total sales - exists in the province. On the one hand, several small farmers own small farm sizes and share a small percentage of total market sales. On the other hand, a few big farmers own big farms and share a big percentage of total market sales. Three governance structures dominate trade; the most common are commissioner-based followed by wholesaler and contractor-based organization. Another important finding of the research is that many farmers turn to wholesalers for loans because of difficulties accessing or complying with formal credit institutions. At harvest time the repayment scheme forces farmers into trading arrangements with wholesalers which in turn, lowers search, negotiation and enforcement costs. This locked-in effect reduces trading alternatives for farmers and lowers total transaction costs. Not surprisingly, wholesaler-based governance structure is the most efficient marketing arrangement from a transaction costs perspective. A third important finding of the thesis is that the social capital of farmers and traders in the province, aggregated from scores on trust, associatedness, common goals and optimism, is low. Current social capital is ineffective in facilitating market information exchange and providing countervailing power to farmers in selling crops. With regards to decision-making, the study showed that farmers with relatively higher social capital select traders differently from farmers with lower social capital. Moreover, ethnicity is a significant factor that influences trust, volunteerism and social networking as well as trading partner selection. This thesis shows that bringing in social elements such as social capital and culture in institutional economic analysis yields richer results in the explanation of behaviour of the market and its participants.

Bibliographic Details

Main Author:	Milagrosa, A.
Other Authors:	Oskam, Arie
Format:	Doctoral thesis biblioteca
Language:	English
Subjects:	agricultural production, economic analysis, government policy, horticulture, institutional economics, marketing, philippines, social capital, vegetable growing, economische analyse, filippijnen, groenteteelt, institutionele economie, landbouwproductie, overheidsbeleid, sociaal kapitaal, tuinbouw,
Online Access:	https://research.wur.nl/en/publications/institutional-economic-analysis-of-vegetable-production-and-marke
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