Export contracts for non-traditional products: Chayote from Costa Rica

Abstract

This paper focuses on the determinants of market and contract choice for non-traditional crops and the possibilities for involving local producers in global agro-food chains through delivery relationships with packers and brokers. Main attention is given to the importance of quality for entering the export market and the impact of contractual arrangements on loyal behaviour. Core stipulations in the contract regarding the frequency of delivery and the provision of technical assistance are mediating factors between quality and loyalty. The study among traditional and recently established producers of chayote in Costa Rica confirms the importance of production scale and experience for engagement in exports. The export share is positively related to quality performance but inversely related to delivery frequency and sales at the local market. Apparently, traditional producers rely on market diversification to maintain a certain bargaining power vis-à-vis traders and processors. Verbal contractual arrangements are mainly offered to newly established but less-experienced farmers living in settlements that try to reduce risk and demonstrate a high commitment. These farmers cultivate on better soils and have more family labour available. Further quality improvement requires technical assistance and a high frequency of delivery. Supplier arrangements that guarantee timely collection, input support and flexible credit services are therefore of critical importance. Additional support from packers and exporters could enable farmers to improve product quality and is likely to be rewarded with a high degree of loyalty.