Does Quality Pay?

Abstract

Quality is extremely important to the processors of horticultural and agricultural commodities. It is important from the standpoint of producing high-quality end-products as well as resulting in lower costs and higher profits. However, producers of commodities receive few benefits from the production of higher quality for several reasons. One important reason is that producers lack information about the qualities processors require. In addition, producers are uninformed of the end-user quality their crops manifest. Presently, little incentive exists for producers to improve quality, other than that provided by USDA Grades and Standards. Using experimental economics, empirical evidence is provided demonstrating that increased awareness of crop quality requirements of processors by producers influences market efficiency, pricing efficiency, and crop quality management strategies of producers.