Organic Certification’s Contribution to a New Governance Model in the Brazilian Citrus Complex

Abstract

This paper compares governance structures in the Brazilian citrus production that appeared with the process of international certification of organic products. Both governance structures, between organic orange production and the processing plant, are analyzed through a study case methodology. These two governance structures are different from the traditional dominant structures that were consolidated with the industrial oligopoly of frozen and concentrated orange juice production along the last thirty years in Brazil. The analyzed cases (onward integration and onward partial-integration) can be used as a reference for possible penetrations of alternative organizational forms in citrus production in an agro-industrial complex predominantly directed at commodity exportation (frozen concentrated orange juice) that has been excluding thousands of citrus producers since 1990. The theoretical basis of this work is the new institutional economy (NIE), known as transaction cost approach. The results of the case studies show that organic certification of orange production and processing leads to more integrated governance structures in citrus production, as it increases agricultural products’ assets specificity and moral hazard risks in commercialization.