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Exploring Product Diversification: the Case of Contract and Non-contract Farmers in the Philippine Cavendish Banana Value Chain

Author

Listed:
  • Limpoco, Marie Analiz April A.
  • Digal, Larry N.

Abstract

Uncertainties arising from market fluctuations limit choices of banana famers under contracts. However, they can opt not to renew their contracts with multi-national firms to sell to spot market or diversify. This paper examines optimal portfolio of Cavendish banana products of contract and non-contract farmers under uncertainty. We explore the effect of diversification by including banana flour from rejects aside from fresh banana. Constrained M-estimation of parameters and robust portfolio optimization results show that (1) non-contract farms benefit more from diversifying compared to contract farms; and (2) prices are higher for non-contract farms but profits are lower compared to contract farms.

Suggested Citation

  • Limpoco, Marie Analiz April A. & Digal, Larry N., 2023. "Exploring Product Diversification: the Case of Contract and Non-contract Farmers in the Philippine Cavendish Banana Value Chain," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 14(04), December.
    • Handle: RePEc:ags:ijofsd:346720
    DOI: 10.22004/ag.econ.346720
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