Insights into the Fresh Vegetable Sector in Saskatchewan

Saskatchewan has good growing conditions, much land and water resources, minimal pest pressure and the expertise necessary for growing high-quality commercial vegetables. Statistics show, however, that commercial vegetable production occupies a relatively small place in the agricultural economy of Saskatchewan. Saskatchewan production accounts for less than 10 per cent of the total provincial market for fresh vegetables, the other supplies of fresh vegetables marketed in Saskatchewan come from sources outside of the province and imports from the southern United States, Mexico, and other warm regions. The majority of Saskatchewan produced vegetables are sold through market gardens, farmers’ markets and consumer contract sales. In light of the increasing importance of fresh vegetable demand, examining the role of a new marketing organization in the province is important as it might bring about major realignment of the Saskatchewan fresh produce market. Recently, a project supported by the Agriculture Council of Saskatchewan Inc. (ACS) encouraged producers to organize themselves into picking zones and to work together to supply larger retail markets. The Grocery People (TGP) (a retailer) has agreed to purchase vegetables grown in Saskatchewan for their distribution centre in Saskatoon. This new organization, Prairie Fresh Food Corporation (PFFC), despite its numerous benefits, will test the farmer participants’ resolve to cooperate rather than proceed alone. This poses a real opportunity for producers to expand and develop the infrastructure required, as produce can be pooled. This study uses Transaction Cost, Agency and Monopolistic Competition theories to analyze the factors that hamper farmers from participating in contracts and taking advantage of these potential opportunities. It considers the advantages and barriers or potential challenges to wholesalers and retailers cooperating with this plan. In particular, an economic model of economies of scale through collective action is developed. The model assumes that small growers can access higher market share through collective action and achieving economies of scale. The results of personal interviews with eleven members of PFFC are presented and analyzed in a case study format. The case study analysis of PFFC reveals that the organization could provide positive benefits to its members in the early period of its establishment. The results show that the market share of the PFFC is still relatively small throughout the province, but its members expect it to expand in the future. The results suggest that high relative prices in the market and trust in the buyer have a positive effect on the probability of farmer participation in the project