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Agricultural Marketing Systems and Sustainability

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Agricultural Marketing Systems and Sustainability agricultural marketing systems and sustainability Study of small scale Andean hillside farms Jairo Castano Propositions (Stellingen) 1. Vertical marketing systems (VMS) are a more appropriate marketing scenario than conventional marketing channels (CMC) when aiming at soil conservation (this thesis). 2. The time horizon of the strategy of the marketing channel leader is a significant factor for farm soil sustainability (this thesis). 3. It is possible to reconcile efforts to increase the profitability and competitiveness of the agricultural sector while improving the management of natural resources (this thesis). 4. Environmental hazards in small-farms in less developed countries are often difficult to control by regulatory approaches only. Marketing mechanisms seem well suited to deal with these hazards because of the economic benefits that help offset investment and effort devoted to land conservation (this thesis). 5. Government intervention aiming at soil conservation in small farms in less developed countries will be better achieved by focusing on the improvement of the marketing environment of small farms (this thesis). 6. A full understanding of the different aspects of soil management is vital for the formulation of appropriate policies towards sustainable farming (this thesis) 7. Increased environmental concerns in consumer markets and growing urbanisation in developing countries imply that markets are increasingly driven by demand rather than by production issues (ISNAR, 1998). 8. Reduction of tariff barriers for forest products could, in the long run, raise stumpage values, which may increase the economic incentives to invest in more efficient wood processing and in better management of production forest in tropical timber producing countries. Barbier, E.B. (1996). Trade and environment relating to forest products and services. Paper prepared on behalf of the ITTOfor the 3rd. Session of the IPF, Geneva, 9-20 September 1996. Nordtrdm, H., Vaughan, S. (1999). Trade and environment. WTO's special studies. Geneva. 9. Income growth, while being a necessary condition for allowing countries to shift gear from more immediate economic and social concerns to more long run sustainability issues, is not sufficient to reverse environmental degradation. It must be accompanied by adequate environmental policies. Nordtrdm, H., Vaughan, S. (1999). Trade and environment. WTO's special studies. Geneva. 10. The factors that have led Colombia to being a major drug exporter are not only economic and geographic factors but also social, political and cultural factors. The Colombia state has been weak and unable to guarantee basic individual rights such as education, health, work, justice, etc. This has driven society towards individualism, where individual well-being prevails over the society well-being. Thoumi, F.(1999). Lucha antidrogas: en busca del tiempo perdido? http://www. analitica. com/vas/1999.12.4/intemational/l 0. htm. Propositions presented with the doctoral thesis Agricultural Marketing Systems and Sustainability. Study of Small Scale Andean Hillside Farms of Jairo Castaflo, Wageningen, 24 October 2001. Agricultural Marketing Systems and Sustainability Study of Small Scale Andean Hillside Farms CENTRALE Promotor: Prof. dr. ir. M.T.G. Meulenberg Hoogleraar in de Marktkunde en Consumentengedrag Co-promotoren: dr. A. van Tilburg Universitair hoofddocent bij de Leerstoelgroep Marktkunde en Consumentengedrag dr. ir. W.G. Janssen ISNAR Samenstelling promotiecommissie: prof. dr. ir J. Viaene, Universiteit Gent, Belgie' prof. dr. A. Kuyvenhoven, Wageningen Universiteit prof. dr. W.J.M. Heijman, Wageningen Universiteit prof. dr. ir. G. van Dijk, Wageningen Umversiteit 3 o 4 Agricultural Marketing Systems and Sustainability Study of Small Scale Andean Hillside Farms Jairo Castano Proefschrift ter verkrijging van de graad van doctor op gezag van de rector magnificus van Wageningen Universiteit, Prof. Dr. Ir. L. Speelman, in het openbaar te verdedigen op woensdag 24 oktober 2001 des namiddags te vier uur in de Aula. To Nhora, Emmanuel and Christian David CONTENTS List of acronyms and abréviations............................................ ......................................vi Abstract vii Acknowledgements.................................................... ..............................—.................—.viii 1 INTRODUCTION AND AIM OF THE RESEARCH 1 1.1 Introduction 1 1.2 Formulation of the problem 4 1.3 Aim of the study 5 1.4 Outline of the study 6 2 AGRICULTURAL MARKETING CHANNELS IN DEVELOPING COUNTRIES ....9 2.1 Basic characteristics of marketing channels 9 2.2 Coordination in marketing channels 11 2.3 Marketing channels for small farmers in developing countries, a functional approach 15 2.4 Marketing channels for small farmers in developing countries, a marketing management approach 19 2.5 Final remarks on marketing in developing countries 22 3 SUSTAIN ABDLITY AND AGRICULTURE: AN OVERVffiW 25 3.1 The evolution of societal environmental concern 25 3.2 Sustainability and developing countries, particularly soil degradation 27 3.3 Farm environmental hazards 30 3.4 Underlying reasons for farm environmental degradation 34 3.5 Sustainability and agriculture: research on actual farmers' decisions 37 3.6 Sustainability and agriculture: research on optimising farmers' decisions 42 3.7 Defining and focusing sustainability in this study 44 4 FARM SUSTAIN ABDLITY AND MARKETING, IN PARTICULAR THE INFLUENCE OF MARKETING CHANNELS 48 4.1 Research and viewpoints on marketing and sustainable agriculture 49 4.2 Impact of actors in the marketing channel on environmental issues 54 4.3 Improving agricultural sustainability by marketing policies 56 4.4 Improving agricultural sustainability by marketing channel organisation 57 4.5 Promotion of sustainable marketing policies by government and industry 61 5 MARKETING SYSTEMS AND SOIL SUSTAINABILITY: HYPOTHESES AND ASSESSMENT METHODS 65 5.1 General hypotheses 65 5.2 Methods employed to appraise farm soil sustainability 68 5.3 The Econometric Model 68 5.4 The multiple goal LP model 70 6 CABUYAL: THE STRUGGLE OF HILLSDDE FARMERS IN FRAGILE LANDS ..73 6.1 Site Location 73 6.2 Agriculture 77 6.3 Soil environmental problems and management 80 6.4 Labour 83 6.5 Infrastructure 84 6.6 Marketing 85 6.7 Marketing channels 89 6.8 Financing 95 ii 6.9 Risk avoidance 96 6.10 Sampling in the Cabuyal Watershed 96 6.11 Discussion 100 7 A NEW METHOD FOR MEASURING THE ADOPTION OF SUSTAINABLE AGRICULTURAL PRACTICES: AN APPLICATION TO THE CABUYAL WATERSHED 102 7.1 Introduction 102 7.2 Review of the literature 102 7.3 A proposal for measuring ASAP 107 7.4 A descriptive analysis of the soil sustainability dimensions of ASAP 114 7.5 Soil management typologies in Cabuyal 115 7.6 Description of the soil management typologies 117 7.7 Discussion 120 8 AN ECONOMETRIC ANALYSIS OF THE IMPACT OF MARKETING FACTORS ON THE ADOPTION OF SUSTAINABLE AGRICULTURAL PRACTICES ....122 8.1 Introduction 122 8.2 Conceptual model of factors affecting ASAP 122 8.3 The hypotheses to explain ASAP 124 8.4 Model estimation: lessons from the past 133 8.5 The principal component regression of ASAP 135 8.6 Discussion of results 144 9 THE COOPERA HOUSEHOLD MODEL 150 9.1 The purpose of farm household models 150 9.2 Underlying assumptions 152 9.3 A description of the Cabuyal farm 153 9.4 Farm household model structure and time horizon 155 9.5 Farm household possibilities 156 9.6 Farm household objectives 158 9.7 Farm household constraints 161 10 THE COOPERA MODEL: SCENARIO ANALYSIS OF THE RELATIONSHD? BETWEEN MARKETING, SOIL SUSTAINABILITY AND DISCRETIONARY INCOME 168 10.1 Market scenarios 168 10.2 Specification of the market scenarios 171 10.3 The analytical procedure for the COOPERA model 176 10.4 The results of the CMC and VMS market scenarios 177 10.5 The results of the MO market scenario 184 10.6 Trade-off between discretionary income and soil erosion 191 10.7 Discussion of results 192 11 CONCLUSIONS AND IMPLICATIONS OF THE STUDY 194 11.1 Problem area and objective of the study 194 11.2 Main findings from the empirical research 194 11.3 General conclusions regarding the research hypotheses 196 11.4 Study implications 198 11.5 Suggestions for further research 199 References. 202 Appendices 214 Summary............................................................................................................................^ Samenvatting........... ..................................................................................................—.242 iii Resumen .„.„„„..........—.....................—„ 245 About the author 248 APPENDICES Appendix A Appendix to Chapter 4. Organic markets and other sustainability adoption efforts 214 Appendix B Appendix to Chapter 6. Data collection and study questionnaire 216 Appendix C Appendix to Chapter 9. The COOPERA household model 228 Appendix D Appendix to Chapter 10. The COOPERA model, analytical procedure 233 TABLES Table 2.1 Functional characteristics of CMC 13 Table 2.2 Functional characteristics of VMS 14 Table 2.3 Selected indicators from a number of developing economies in 1998 15 Table 3.1 Causes of public environmental concern 26 Table 3.2 Human-induced soil degradation (in percentage) 29 Table 3.3 Root causes of farm unsustainability 36 Table 4.1 Observed environmental burden caused by agro-food activities 54 Table 4.2 Marketing responses to societal environmental concern 57 Table 4.3 Legal-based 'push' strategies to promote environmental adoption 62 Table 4.4 Market-based 'push' strategies to promote
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