Costs and benefits for farmers participating in innovative marketing channels for quality food products

Abstract

The extra benefits and costs for farmers participating in six innovative marketing channels for quality products in Belgium are analysed. A theoretical model serves as an analytical device to structure the qualitative comparisons with the common marketing channel and with direct sale. The analysis is mainly qualitative, because many benefits and costs cannot be quantified exactly. In the analysis, transaction costs are explicitly taken into account because they constitute a real cost when switching from a common to an innovative marketing channel. In all six marketing channels, higher costs are compensated for by higher revenues due to higher prices and a higher turnover and by reduced uncertainty. These factors encourage farmers to enter quality food projects. In addition, we found that co-operation decreases transaction costs and that collective initiatives enable farmers to enter the pathway of quality food production without investing excessive labour or capital.