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Relational contract decision of retailers in the grasshopper value chain in Uganda

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  • Donkor, Emmanuel
  • Mbeche, Robert
  • Mithofer, Dagmar

Abstract

Agrifood marketing in sub-Saharan Africa is associated with high inefficiencies, which emanate from high transaction costs, poor coordination and asymmetric information. These challenges lead to high food prices and limited accessibility to consumers. Formal contracts could address these challenges, but they are largely non-existent in the traditional agrifood marketing. Studies addressing the agrifood marketing challenges have focused mainly on farmers and consumers. However, the mid-stream actors who bridge the gap between farmers and consumers are ignored in scientific and policy debates. The paper therefore analyses factors that influence relational contract decision of retailers using a primary data set from 500 grasshopper retailers in Central Uganda. We find that major of the retailers procure grasshoppers through spot market transactions. However, a few of them develop relational contract with their suppliers. Consistent with the theory of relational contract, trust and close relationship reinforce relational contract between retailers and suppliers. We also find that transactional factors such as transport asset and cost prices of grasshoppers stimulate retailers to engage in relational contract with suppliers.

Suggested Citation

  • Donkor, Emmanuel & Mbeche, Robert & Mithofer, Dagmar, 2021. "Relational contract decision of retailers in the grasshopper value chain in Uganda," 61st Annual Conference, Berlin, Germany, September 22-24, 2021 317078, German Association of Agricultural Economists (GEWISOLA).
    • Handle: RePEc:ags:gewi21:317078
    DOI: 10.22004/ag.econ.317078
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    References listed on IDEAS

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    Keywords

    Agribusiness; Agricultural and Food Policy; Marketing;
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