Transactions between producers and processors in the sheep sector of Mato Grosso do Sul: an approach by the Transaction Costs Economics

Abstract

Although the sheep industry has great potential for production, increasing proportion of domestic consumption is supplied by imports. This situation occurs in the Mato Grosso do Sul state, the largest producer of the Midwest. Starting from the hypothesis that the lack of coordination between producers and industries is a major problem to the development of production, the study investigated the influence of the transactions characteristics, using the theory of Transaction Economics Cost. After interviewing with the President of the sheep breeding State Chamber, a questioner has been applied to 45 farmers and to two processing industries, one in Mato Grosso do Sul and other in Sao Paulo state. The results confirm the strong involvement of family farming in the production and the large informality of the sector. The assets specificity is very low for producers and high for processors. These characteristics explain the preference of producers for spot market, while contractual relations would be advantageous for processors. The antagonism resolution between the needs of producers and industries could be achieved through the professionalization of producers and the decrease in the processors specificity by diversifying.