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Contents

Tables and Figures................................................................................................................................................ iii

Acknowledgement................................................................................................................................................ iv

Affiliation ............................................................................................................................................................. iv

Preface.................................................................................................................................................................. iv

1. Introduction................................................................................................................................................... 1

2. Theoretical Background of Vertical Coordination and Contract Farming....................................................2

2.1. Integration and Vertical Coordination ................................................................................................. 2

2.2. Theories of Vertical Coordination......................................................................................................... 5

2.2.1 Theory of Life Cycle .................................................................................................................. 5

2.2.2 Transaction Cost and Principal-Agent Theory............................................................................. 5

2.2.3 Strategic Management ................................................................................................................ 7

2.2.4 Negotiating Power and Performance Incentives .......................................................................... 7

2.2.5 The Capabilities Approach.......................................................................................................... 8

2.2.6 Convention Theory and Contract Economics .............................................................................. 9

2.2.7 Value Differentiation and Complementarities.............................................................................. 9

2.3. Contract Farming ................................................................................................................................. 10

2.3.1 The Concept of Contract Farming............................................................................................... 10

2.3.2 Reasons for Contract Farming and Disadvantages....................................................................... 11

2.3.4 Content ofContract .................................................................................................................... 13

3. General Structure of Food Industry and Contract Farming in Turkey and in the USA ................................ 13

3.1. General Structure of Food Industry and Contract Farming in Turkey ................................................. 13

3.1.1 General Overview....................................................................................................................... 13

3.1.2 Vertical Integration and Contract Farming in Turkey .................................................................. 15

3.1.2.1 Broiler Industry........................................................................................................... 16

3.1.2.2 Beet-sugar Industry..................................................................................................... 17

3.1.2.3 The Structure of Contract Farming in the Studied Region ............................................ 17

3.1.2.3.1 Contents of Contracts...................................................................................... 18

3.1.2.3.2 Contracts From the Producers' Point of View .................................................. 19

3.1.2.3.3 Contracts From the Processors' Point of View ................................................. 19

3.2. General Structure of Food Industry and Contract Farming in the USA ............................................... 20

3.2.1 General Overview.......................................................................................................................20

3.2.2 Vertical Coordination and Contract Farming in the USA.............................................................21

3.2.2.1 Broiler Industry...........................................................................................................22

3.2.2.2 Pork Industry .............................................................................................................. 24

3.2.2.3 Dairy Industry.............................................................................................................25

3.2.2.4 Vegetable Processing .................................................................................................. 25

3.2.2.5 Beet-sugar Industry.....................................................................................................26

3.3. A Comparative Analysis.........................................................................................................................27

4. A Cooperative Approach to Contract Farming ............................................................................................. 28

5. Conclusions and Suggestions for Marketing Efficiency............................................................................... 30

References ............................................................................................................................................................ 32

Food Marketing Policy Center Research Report Series Ordering Information....................................................40

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