Title page for ETD etd-06082007-131653

Type of Document Master's Thesis
Author Jano, Pilar Alejandra
Author's Email Address pjano@vt.edu
URN etd-06082007-131653
Title Quality Incentives and the Development of High-value Agrifood Markets: Ecuador's Cacao Marketing Chain
Degree Master of Science
Department Agricultural and Applied Economics
Advisory Committee
Advisor Name Title
Mainville, Denise Y. Committee Chair
Alwang, Jeffrey R. Committee Member
Norton, George W. Committee Member
Parmeter, Christopher F. Committee Member
Taylor, Daniel B. Committee Member
  • Ecuador
  • quality
  • marketing chain
  • small farmers
  • market
  • cacao
Date of Defense 2007-05-02
Availability unrestricted
This thesis explores constraints to the development of markets for high quality cacao in Ecuador. It focuses on the role of market level constraints, particularly the transmission of quality incentives along the marketing chain and their effects on farmers’ incentives to invest in quality production. Chapter 1 introduces the reader to the problem, demonstrating that Ecuadorian farmers are not responding to international incentives to produce high quality cacao, and outlines the objectives, hypotheses, and structure of the thesis. Chapter 2 provides background to the market, detailing Ecuador’s role in world commodity and high-value cacao markets and gives a detailed description of the cacao market in Ecuador. Chapter 3 uses a subsector analysis to develop and test hypotheses that specific market level constraints, such as transaction costs, market power, and institutional constraints, impede the transmission of incentives to produce quality to farmers. The subsector analysis failed to support the hypotheses that intermediaries are able to exert market power but found that transaction costs and weak institutions presented significant constraints to the transmission of quality incentives. Chapter 4 examines the determinants of farmers’ market channel choice and the prices that they receive. In addition to determinants that are commonly found in the literature, such as the characteristics of the transaction and farmer’s characteristics, hypotheses testing of quality incentives makes a unique contribution. Analysis of survey data of Ecuadorian farmers found minimal transmission of quality incentives to farmers—only the cultivar Nacional as a quality indicator was found to affect the farmers’ market channel choice out of six indicators selected to represent quality. The quality indicators selected were pre- and post-harvest practices, variety, having received technical assistance, credit, belonging to a cacao association, and discounts at sale by the buyer. Also, pre- and post-harvest practices, having received credit, and belonging to a cacao association out of similar quality indicators were found to affect the price paid to the farmer. Finally, Chapter 5 summarizes the main points discovered through the research, discusses policy implications, and proposes further research needs.
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