Vol - 16, Issue - 4
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Journal of the Austrian Society of Agricultural Economics (JASAE)
Journal ID : JASAE-10-06-2020-29
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Abstract : Due to rapid transitions in the agri-food chain, collaboration and coordination between buyers and sellers are particularly important. Collaboration established on relational factors like trust. In Ethiopia banana value chain, the business relationship between farmers and local collectors is not long-lasting. They involve informal marketing relationships established based on the merits of the trading partners. Local collectors act opportunistically, and it affects producers' level of trust and their willingness to involve in a long-term relationship. Thus, this paper aimed to determine the factors that affect producers’ trust and its role to build producers' loyalty which facilitates collaboration for two groups of farmers; cooperative members and independent farmers. The study found that price satisfaction and social satisfaction are the main determinants of trust, while the former is for the independent farmers, and the latter is for the cooperative members. Trust highly determine producers' loyalty, especially for independent farmers, and it also plays a significant mediating role between two factors (price satisfaction & social satisfaction) and producers' loyalty. The cooperative members have a better level of trust and loyalty for their buyers than that of the independent farmers. Thus, local collectors need to avoid their opportunistic behavior and develop trust in their sellers by satisfying their price and social satisfaction

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