Transactional Analysis of Agrarian Sector

Abstract

The Russian agrarian market shows a difficult situation. We research this market with the institutional point. The food chain is rather long. We can see the following subjects: “farmers – manufacturers – wholesale merchandisers – retailers – ultimate consumers”. We can’t deny “egoistical” motive of each subject to increase his own utility (and this idea is under the neoclassical paradigm). If we speak about the first four subjects, this utility is in the desire to sell the product to the following link in a chain at higher price. We can consider such desire normal if the price extra charge at each stage of the agrarian chain doesn’t exceed on average 5% over the cost value (in one of the reports the President of Russia has said such trade extra charge as “normal” profitability for food sellers). Meanwhile, we see an essential distortion at the stage “farmers – manufacturers”. We suggest to consider this phenomenon through the institutional theory which operates with categories “contractual relations”, “behavioral opportunism”, “transactional costs”. The companies- manufacturers often hold a monopoly position at the local markets. As a result farmers have no opportunity to realize a product at reasonable price. Thus, production of a qualitative, environmentally friendly and healthy product becomes almost impossible. Farmers have no motivation to produce a qualitative and safe product, and in general to produce it. The efficiency of contractual interactions of a food chain is low already on start. Thus, researching the agrarian market since 2015, we have come to a conclusion concern such phenomenon as “a transactional rent”. This category has been introduced for scientific use. Using this category we point to the institutional imperfection of the agrarian market. More over in the article the we make quantitative analysis using developed technique. It allows to estimate the level of transactional costs at each stage of food chain.