Determinants of market outlet choice for mango producers in Costa Rica.
Zúñiga-Arias G., Ruben R.
Author Affiliation: Universidad Nacional in Costa Rica, Heredia, Costa Rica.
: 49-67
Abstract : Different actors are involved in the mango supply chain from Costa Rica conducting transactions both at the export and the local market. Producers face strategic choice between (a) market outlets devoted to exports where quality attributes such as, size, sugar content, absence of external and internal damage are key determinants for the transaction and the business relationship, and (b) local markets (composed of wholesaler, retailer, middlemen among others), where different qualities and delivery modes can be accommodated. In this article we disentangle factors that influence market differentiation between the export and local market in the Costa Rican mango sector, to identify major determinants for differences in outlet choice. We argue that market selection is dependent on farm household characteristics, production system, price attributes and the market context. The selection of a certain type of outlet is also related to a specific contract configurations (i.e. quality control, payment mode, type of agreement, volume, rejection rate, etc.). Based on a field survey regarding outlet choice decisions amongst a sample of 94 farmers in the major mango producing region (Central Pacific zone) of Costa Rica, we use a Tobit model and ANOVA analysis to assess the determinants of market outlet choice. We discuss the structural, institutional and behavioural factors that typically determine farmers' choices for a specific market channel orientation. We find that for the export market that vertical integration is already advanced: producers deliver on demand of the buyer and face higher rejection rate, but in compensation they receive access to stable market outlets, input and (subsidised) credit, and benefit from lower transport and delivery costs. For the local market, the producers' experience and their historical knowledge and relationships with the market are of key importance for finding suitable market outlet.