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Investment responses to third-party market facilitation in Armenia

Aleksan Shanoyan (Department of Agricultural Economics, Kansas State University, Manhattan, Kansas, USA)
R. Brent Ross (Department of Agricultural, Food, and Resource Economics, Kansas State University, Manhattan, Kansas, USA)
Hamish R. Gow (School of Economics & Finance, Massey University, Palmerston North, New Zealand)
H. Christopher Peterson (Department of Agricultural, Food, and Resource Economics, Michigan State University, East Lansing, Michigan, USA)

Journal of Agribusiness in Developing and Emerging Economies

ISSN: 2044-0839

Article publication date: 11 November 2014

Abstract

Purpose

The purpose of this paper is to assess the role of a third-party market facilitation strategy in creating sustainable market linkages and revitalizing an important agri-food sector in a developing country setting. More specifically, this study evaluates a third-party facilitator’s ability to assist producers and processors in developing internal private enforcement mechanisms through stimulating investments in relationship-specific assets.

Design/methodology/approach

This paper uses mixed methods approach. The research is grounded by a case study of the USDA Marketing Assistance Program (MAP) in the Armenian dairy industry. Qualitative evidence from the case study is combined with data from a survey of 745 Armenian dairy farmers to examine the impact of participation in the USDA MAP-facilitated marketing channel on farm-level investments.

Findings

The main results indicate that over the four-year period of the USDA MAP facilitation of dairy supply chain, farms linked to the formal milk marketing channel have invested in approximately twice as many assets specific to milk production compared to farms in the informal channel. This finding supports the hypothesis that third-party market facilitation strategy pursued by the USDA MAP has stimulated investments in private enforcement capital between dairy producers and processors and implies that an external third-party market facilitator can play an important role in enhancing performance of supply chain linkages.

Originality/value

These findings and the lessons from the case of USDA MAP contribute to better understanding of third-party market linkage facilitation strategies and will be useful for the development community and agribusiness decision makers.

Keywords

Acknowledgements

The authors would like to acknowledge the contribution of Dr Roy Black and Dr Judith Whipple and to thank for their insights and many valuable comments. The authors also thank colleagues in the Center for Agricultural and Rural Development and the International Center for Agribusiness Research and Education for their assistance during research fieldwork in Armenia.

Citation

Shanoyan, A., Brent Ross, R., R. Gow, H. and Christopher Peterson, H. (2014), "Investment responses to third-party market facilitation in Armenia", Journal of Agribusiness in Developing and Emerging Economies, Vol. 4 No. 2, pp. 98-114. https://doi.org/10.1108/JADEE-01-2014-0003

Publisher

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Emerald Group Publishing Limited

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