The impact of transaction costs on farms’selection of circulation mode of agriculturall products based on the investigation of farms planting gannan navel orange

Author(s): Wang Xuefeng, Yang Fang, Zhang Guangcun

The planting and marketing of navel orange has already become a pillar industry in Jiangxi province of China. Farmers are confronted with the problem how to select circulation mode to sell their navel orange for maximum advantage. We exploit the survey data of farmer planting navel orange, based on the multinomial regression method, to study the effect of transaction cost on farms’ circulation mode choice. The results show that the farmer’s characteristics and the transaction costs, including information cost, negotiation cost, execution cost and transportation cost et al., have significant impact on farm’s choice, but different characteristics and costs show diverse influences. In order to dispose of the problems current existing in the circulation of navel orange, the relevant departments of government should take great efforts to cultivate the leading processing and sales enterprises, and enhance their market competitiveness. The organizational degree of farmers and the construction of farmer cooperatives can be strengthened to improve the farmers’ ability of acquiring information and reduce their transaction cost. Moreover, the transaction information platform of navel orange should be constructed to reduce farmers’ obtaining formation cost and executive cost

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