Evaluation of the Governance Structure in the Swine Integration System in Goiás

Abstract

Since the opening of trade in the 1990s, Brazilian pig farming has gained great importance in the national economy ever since. The studies dealing with contractual agriculture focus mainly on large export-oriented contracts that are operated by large private companies. In terms of contractual agriculture, the small producer is still underrepresented in the literature. The objective of this study is to evaluate and analyze the  governance structure and its coordination mechanisms adopted in the integration system of swine farming in Goiás (Brazil). To achieve the proposed objective, the case study method composed of two pig farms in the region of Rio
Verde (Goiás) was elaborated. The study was carried out following the theoretical assumption of Oliver Williamson’s discriminating alignment of Transaction Cost Economics. The field data indicated that the coordination mechanism adopted in the relationship between producer and processor occurs through contracts, named integration contracts. The integration contract is structured with guarantee mechanisms that contribute to the reduction of productive costs, that is, the agro-industry ensures the supply of pigs, inputs, transportation and technical and veterinary assistance, and the producer ensures the supply of production, acting as well as a means of sharing risks of the productive activity.