Economic Drivers of Legume Production: Approached via Opportunity Costs and Transaction Costs

Abstract

Crop diversification is one of the main mechanisms identified for developing a more sustainable agriculture. Legumes are interesting diversifying crops to add to crop rotations because of their many positive impacts on agronomic systems. Nonetheless, production of these crops remains relatively low in Europe, in part because of socio-economic factors. The objective of this study was to analyze how the economic attractiveness of legumes may be influenced by two factors: opportunity costs and transaction costs. The method is divided into three steps. First, we built a database of opportunity costs of legumes from a literature review. Second, we qualitatively characterized transaction costs associated with exchange of legumes between producers and collectors. Third, we qualitatively analyzed if contracts currently offered in western France decreased transaction costs. For comparison, transaction costs of linseed were also studied. Our results indicate that legumes are economically attractive at the rotation scale due to zero or negative opportunity costs, but that their transaction costs are high. The contracts studied do not decrease these transaction costs sufficiently, in particular because uncertainties in price remain high in half of these contracts. Downstream differentiation seems necessary to decrease transaction costs by creating added value along the entire agro-food chain.