Impacts of the business associations on organizations and agriculture-based systems

Abstract

With the deregulation of the coffee market toward the late 20th century, a new scenario emerged in the coffee Agroindustrial System. This context prompted a demand for better organization of the agents, with the support of business associations that spread at a rapid rate in order to meet the interests of specific groups.The discussion in this paper demonstrates that, in order to understand the role of business associations in the support to specialty coffee growers, we need to put them into the institutional environment context. In deregulated markets, the initiatives from business associations are essential to develop opportunities in distribution channels composed of customers willing to pay a premium for the product. The institutional support provided by business associations in distribution channels of differentiated products is an important element in provisioning competitive power, since these organizations help build up trust among members, lessen information asymmetries and reduce transaction costs.