Neither Wholesale Markets Nor Supermarkets : The Transaction Problem within the Horticultural System in Argentina

This paper is focused on the commerce of vegetables in the domestic market of the Horticultural Subsystem in Corrientes. The main objective of this paper is to describe the transactions between the farmers and buyers within the Horticultural System in Argentina – especially, in the Province of Corrientes. This is the first academic paper in Argentina that proposes to analyze the constraints that exist within transactions between farmers and buyers (wholesalers and supermarkets), and it describes the transaction problem in terms of New Institutional Economics and Transaction Cost Economics, particularly. Transactions between buyers (wholesale operators or supermarkets) and farmers are described, by characterizing the attributes of transaction: Frequency, uncertainty and asset specificity. In both cases, there are conflicts in the transaction in terms of quality, quantity, price, payment method, payment security, asymmetric information. These conflicts restrict the competitiveness of farmers because, in general, they lose profits that are captured by buyers (quasi-rents appropriation). Moreover, farmers do not have the possibility to store the production – due to lack of facilities, financial problems and high perishability, which limits the capacity of settling good terms in their transactions even more. Largely, these power imbalances are the result of institutional environments where the degree of legal protection is low and creates a high degree of ineffectiveness among different law enforcement bodies. Another constraint relies on difficulties to make the transactions (in terms of formality) impacting into different levels of the market power