Abstract
ABSTRACT: In Brazil, the conflict between cattlemen and the slaughterhouse industry is evident and historic in the beef cattle Agribusiness System, in which opportunistic behavior is commonplace. Accordingly, the role of trust is significant in trade decisions, which makes the analysis of trust in the construction process of governance structure an important factor. The present article aimed to identify the influence of trust in selecting the contractual arrangement in transactions between cattle ranchers and abattoirs. This qualitative and descriptive study used semi-structured interviews, done in loco, along with 30 beef cattle ranchers and five abattoirs in the west of São Paulo State. It was observed that transactions involve opportunistic behavior, and that trust is critical in selecting the contractual arrangement.
Highlights
The beef cattle industry plays a significant role in the Brazilian agribusiness
All the sampled cattlemen had the option of transitioning from a large scope of abattoirs or cattle buyers, 17 of them reported supplying beef cattle to more than one abattoir
Considering the beef cattle transactions between cattle ranchers and abattoirs, it was concluded that trust is critical in selecting the contractual arrangement
Summary
The beef cattle industry plays a significant role in the Brazilian agribusiness. Brazil holds the second biggest cattle herd in the world, and it specializes in cattle meat production and export (USDA, 2017). It is relevant in domestic and global contexts, empirical evidence highlights competition problems in the Brazilian beef cattle Agribusiness System, specially associated with coordination flaws (FERREIRA & PADULA, 2002; CALEMAN & ZYLBERSTAJN, 2012). The coordination difficulties of the bovine Agribusiness System are amplified by the conflicting environment in which the transactions occur. Conflicts between farmers and the slaughterhouse industry are evident and historic (PASCOAL et al, 2011). Farmer’s reports cite many causes for the distrust of abattoirs, such as bankruptcy with consequent payment defaults, the absence of transparency over the products’ attributes and appropriation of value (PASCOAL et al, 2011)
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