Policing Mechanisms in Agricultural Contracts
Posted: 6 Mar 2011
Date Written: March 4, 2011
In this paper we focus on mechanisms of coordination in agricultural contracts. Our approach is intended to advance understanding of social relations of production and distribution of power in agrofood systems. Through an analysis of contracts between farmers and intermediaries (e.g., processors, shippers, consignment agents) for California fruits and vegetables, we identify three functions of contracts: they help to coordinate production, they provide incentives (and penalties) to induce particular behaviors, and they allow farmers and intermediaries to share risk. These functions are implemented via four policing instruments: input control, monitoring, quality measurement, and revenue sharing. The instruments are employed by intermediaries to mitigate “blind spots” in contracts and to control farmers' actions and the quality of their output. This mechanism design approach is complemented by a sociologically oriented analysis emphasizing the embeddedness of economic institutions. We problematize the stylized fashion in which the concept of authority has been treated in the contract farming literature, and propose an alternative approach to studying new organizational forms and divisions of labor among farmers and intermediaries.
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