Collective action and allocation of decision rights in pesticide safety risk management: the case of tomato producer organizations in France

Pesticide safety management at the production/shipping level is a costly transaction between a farmer and a buyer. Within the safety-demanding global market, a frequent solution adopted to comply with end customer requirements is to allocate monitoring and decision rights to the shipper. Our paper aims to explain how and why farmers who are members of Producer Organizations (POs) allocate monitoring and decision rights to their managers to manage pesticide safety risks. It also distinguishes the two types of control rights (over the product and over the production process) which define a safety management strategy. Drawing on the scant empirical literature on the transfer of property rights within incomplete contracts (Arrunada et al, 2001; Hu and Hendrikse, 2009), it tests for the predictions of the theory, putting forward as main independent variables group size, reputation, customer safety demands and asset specificity. To this end, twenty POs accounting for more than 95% of French tomato production with market organization have been surveyed. Our results confirm most of the predictions, namely that the allocation of control rights increases with commercial reputation, customer safety demands and IPM technical assistance (asset specificity). Moreover, we show that the two types of control are substitutes and complementary. On the one hand, POs focus either on product control or process control while on the other hand, both controls are necessary for POs with a good reputation and demanding customers.