The Economics of Vertical Coordination in the Organic

Wheat Supply Chain

Shon Ferguson

Thesis Defense

University of Saskatchewan

Sept 29, 2004

The Beginning

• Idea:– Compare the profitability of different

governance structures in the organic grain supply chain

• Started with brainstorming by Simon Weseen and Richard Gray

Why I Chose the Topic

• Interested in questions of organization

• Interested in empirical studies

• Research potential for organic food supply chains– In their infancy– Issues of information asymmetry

Challenges

• Developing a method of comparison

• Developing the organic producer survey

• Conducting the survey

“Novel Traits”

• Empirical Comparison of governance structures

• Analysis of price dispersion

• Quantification of transaction costs

Interesting Results

• The POF performed well for producers

• Price dispersion for the POF was not lower– Possible further research

• “Direct” transactions performed poorly

Research Opportunities

• Incorporate quantity into analysis– Important when marketer data is available

• Effect of risk– Risk premium– Efficient risk-sharing

• Residual analysis– More rigorous

• Determinants of marketing choice for organic wheat producers