What are the determinants of the commercial channel choice in the beef producers-processors transactions? The question refers to the coordination and production control problem associated to changes in consumer's awareness of specific attributes in food products. Two contractual arrangements coexist in this transaction: direct-contracting and broker-induced transactions Transaction Cost Economic offers helpful insights to understand the reason for the development and adaptations of different contractual arrangement moved by transaction cost economizing perspective. The empirical analysis is focused in the Uruguayan beef agro-industrial system. Analysis integrates (i) institutional and organizational changes in the beef industry; (ii) based on the analysis of the transaction dimensions (frequency, asset specificity and uncertainty) we address hypothesis of the determinants of the contractual arrangement in the beef producers-processors transaction; and (iii) we run a statistical test of the hypotheses based on a logit model. We used a panel data with producers-processors transaction from Uruguayan Agricultural Bureau (77,000 transactions). We confirm the hypotheses of the determinants of the contractual arrangement choice. The probability of a transaction being aligned with the direct contractual arrangement increase in transaction with higher asset specificity (i.e., young steer), lower distance between the producer and the processor, and with higher frequency of transaction.
Vertical Coordination; Beef System; Contractual arrangement; Transaction Cost Economics
