Seminario titulado: "Relationship Building and Quality Upgrading: Evidence from the Colombian Cacao Market" . El seminario será el miercóles 8 de mayo a las 12:30hs, en la sala Dr. Ernest LLuch (Dpto de Economía)
Abstract: Developing countries have large shares of the population that rely on low productivity and small family farms as their main source of income. Access to international markets, where buyers are willing to pay for high-quality agricultural products, has the potential to reduce poverty and increase welfare in these settings. We present the case of the cocoa market in Colombia, a setting with export-quality potential but where exports are small. We study the entry of an export-quality buyer, Fedecacao, that opens progressively six buying points in the region of Santander, introducing quality measurements and a quality premium. We present a simple model where a farmer faces two buyers who have private information on their outside options and hence farmers do need to build trust before performing the necessary investments to produce quality. Using detailed transaction data, we show that despite a relatively fast expansion of Fedecacao in the cocoa export market and effort to build relationships with farmers, liquidity constraints and international price volatility challenged its sourcing capacity.
