Third-party facilitation of supply chain linkages: evidence from the Armenian vegetable industry

Abstract

This paper presents an empirical examination of investment responses to external facilitation of supply chain linkages between agricultural producers and processors. Specifically, it analyzes the impact of participation in the USDA Marketing Assistance Program (MAP) facilitated formal marketing channel on farm-level investments in tomato production. The analysis involves mixed method approach utilizing a case of the USDA MAP in the Armenian vegetable industry and the survey data from 427 Armenian tomato growers. The main results indicate that the tomato growers linked to USDA MAP facilitated formal marketing channel (i.e. processors) invested significantly more in expanding tomato planting area compared to growers in informal channel (i.e. direct-to-consumer markets, middleman, and barter). The lessons from the USDA MAP’s supply chain facilitation strategy and the results of quantitative analysis provide insights on incentive structures and enforcement mechanisms for designing more effective supply chain linkages.