To Contract or not Contract: Implications for Farmer–Buyer Trading Relation Performance

Abstract

The paper analyses the value chain coordination of greenhouse vegetables in Albania, which has a strong export orientation. Based on a structured farm survey, the study constributes to the value chain literature of the vertical coordination of agricultural products by addressing the question of how chain governance modes differ in terms of exercised power and farmers’ satisfaction (an indicator of performance) with the trading relationship. The results point out that farmers operating with agreements show higher levels of satisfaction with the trading relationship than do farmers selling on the spot market. On the other hand, those operating with agreements are under higher levels of exercised power over product quality.