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The Sharing of Risks and Returns in Prairie Special Crops: A Transaction Cost Approach
Author(s) -
Weleschuk I. T.,
Kerr William A.
Publication year - 1995
Publication title -
canadian journal of agricultural economics/revue canadienne d'agroeconomie
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 37
eISSN - 1744-7976
pISSN - 0008-3976
DOI - 10.1111/j.1744-7976.1995.tb00121.x
Subject(s) - diversification (marketing strategy) , transaction cost , production (economics) , investment (military) , database transaction , business , agricultural economics , economics , agricultural diversification , agricultural science , microeconomics , finance , marketing , environmental science , computer science , political science , programming language , politics , law
The markets for special crops in western Canada are not yet mature. A farmer faces a choice of either signing a production contract with a buyer prior to planting the crop or selling the crop after harvest to a limited number of buyers. This paper examines both methods using a transaction cost approach. The evidence suggests that neither method will lead to an efficient level of investment in the production of special crops. As a result, the full potential for diversification into special crops may not have been realized in western Canada.