Contract design for small scale mussel growers in Saldanha Bay : a transaction cost approach

[摘要] ENGLISH ABSTRACT:This study examines the role of contracting in reducing transaction costs in smalIscalemussel farming in Saldanha Bay. Masiza Mussel Growers (Masiza), an initiativeby the public and private sector to address the imbalances of the past throughentrepreneurial development, are used as a case study hence a case study approach isfollowed. Two transactions were considered, one between Masiza and Blue Bay AquaFarm (Blue Bay) and another between La Vie Sea Food Products (La Vie) andMasiza. These transactions form the basis for analysis.Market risks, uncertainties, environmental risks, information incompleteness,illiteracy, limited technical knowledge of farming, lack of appropriate infrastructureand lack of transport facilities are identified and examined as possible sources oftransaction costs that constrain the existing supply chain relationship. The studyshows that asset specificity, time specificity, and site specificity playa positive role inthe supply chain as they result in relative dependency amongst parties. Opportunisticbehavior within the existing supply chain is neutral, but appears to be relatively highon the spot or fresh live market. Characteristics of market transactions for mussels andassociated transaction costs suggest that fresh-live spot market trading for Masiza isdifficult to attain. This therefore motivates parties (Masiza) to contract or verticallyintegrate, as it is costly and risky to rely on spot live markets. Interviewees (Masiza)pointed out that the benefits associated with contract farming outweigh the transactioncosts associated with this governance structure. Hence a market specification contractwith the La Vie (a processing company), and a production management and resourceprovision contract with Blue Bay (a larger producer) were designed. They reducetransaction costs associated with fresh-live markets and ensure a more stable andreliable market for growers.

[发布机构] Stellenbosch University