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Abdul Majid Sepahian, Seyed Mehdi Hosseini, ,
Volume 10, Issue 36 (summer 2021 2021)
Volume 10, Issue 36 (summer 2021 2021)
Abstract
Introduction
Horticulture is one of the sub sectors of agriculture, which plays an important role in ensuring food security and livelihood of villagers. Horticultural products such as tropical fruits are produced to a significant extent in Iran, and some of these fruits in Iran are originated in Sistan and Baluchestan Province. Due to the climate condition, especially in the southern region, tropical fruits of this region still has the first rank in provision of these products. Mango and banana are the most important products, each of which has a crucial role in the household food basket due to its characteristics. In this study, considering the economic significance of tropical mango and banana products in the villages of Sistan and Baluchestan, the structure, behavior and market performance of these products are identified using the Structure-Conduct-Performance (SCP) model to exploit the maximum economic capacity. The SCP model considers structure, conduct and performance as the three elements of the market that indicates the overall market situation, and the interrelationships between the elements, and their analysis, which helps to improve the market situation. Indeed, appropriate policies and mechanisms both helps maximize the producers’ benefits and satisfy the consumer and other components of the market cycle. Accordingly, this study seeks to answer the question of what is the structure, conduct and performance of the tropical mango and banana fruit market in the villages of Sistan and Baluchestan?
Methodology
In order to reach the answer that the market structure of tropical mango and banana products in Iranian villages follows the SCP model or not, the relationship between the components of this model has been investigated. For this study, the cross-sectional data of the manufacturers of these two products are estimated using a system of simultaneous equations. According to the existing empirical studies on the relationship between market elements as well as the methods used by different researchers, three equations for the variables of structure, behavior and performance has been defined for the system of simultaneous equations. In these MS equations, it is related to market concentration variables such as Herfindahl–Hirschman Index and producer concentration ratio index. In this study, the concentration ratio index is used. R&D refers to behavioral variables such as research and development and advertising, and PF refers to the same performance variables as return on assets and equity. The three variables mentioned are endogenous or dependent variables model. And indicate the type of ownership and age. It refers to the inventory of assets and education, and performance (amount of production / area of cultivation) and income, which have been in the role of exogenous variables of the model and are analyzed by the three-stage least squares method in the system of simultaneous equations.
Discussion and conclusion
The results of model estimation showed that for two mango and banana crops in Sistan and Baluchestan villages, all three components of concentration, research and development and profitability are statistically significant. The results of SCP model coefficients for mango crop show that for concentration, research and development on mango, the number of users in this market increases and the market gets closer to competitive conditions and also profitability has a positive and significant effect on concentration. As the market gets closer to monopoly conditions, the profitability of mango producers increases and as a result the number of producers in the market decreases or the market share is more unfairly distributed among the exploiters. In the R&D equation, concentration has a negative and significant effect on R&D. As the concentration among mango producers increases and the market moves towards monopolies, the motivation of mango producers and villagers to conduct research decreases. However, profitability has a positive and significant effect on research and development activities. This result suggests that as profitability increases, there will be more incentive to spend on research and development. In the profitability case, concentration has a positive and significant effect on it. In other words, with increasing concentration, or moving to the monopoly market, the profitability of products among villagers will increase and research and development also has a positive and significant effect on profitability. As research and development increase, it is expected that the efficiency of mango production and profitability will increase.
The results of estimating SCP coefficients for banana confirm that in the equation of concentration, research and development has a negative and significant effect on concentration. The more research in the field of banana product, the more users in this product, or the market will be closer to competitive conditions. Profitability also has a significant negative effect on concentration, in other words, as the profitability increases, the concentration decreases. When the profitability increases, more producers are encouraged to work in this market among the villagers. As a result, the concentration in the banana market decreases. In the R&D equation, the concentration has a negative effect on R&D because with increasing market concentration, market has shifted to monopoly conditions. As a result, banana producers in rural areas are less motivated to conduct research activities. However, profitability has a positive and significant effect on research and development. The higher the profitability of the firm, the more the manufacturer prefers to increase R&D costs in order to increase income. Since producers and villagers know that with more research and development, they will increase their profitability. Furthermore, research and development has a positive and significant effect on profitability, conducting research activities, more opportunities will be provided to banana producers in rural areas. As a result, the profitability of farmers will be enhanced.
Horticulture is one of the sub sectors of agriculture, which plays an important role in ensuring food security and livelihood of villagers. Horticultural products such as tropical fruits are produced to a significant extent in Iran, and some of these fruits in Iran are originated in Sistan and Baluchestan Province. Due to the climate condition, especially in the southern region, tropical fruits of this region still has the first rank in provision of these products. Mango and banana are the most important products, each of which has a crucial role in the household food basket due to its characteristics. In this study, considering the economic significance of tropical mango and banana products in the villages of Sistan and Baluchestan, the structure, behavior and market performance of these products are identified using the Structure-Conduct-Performance (SCP) model to exploit the maximum economic capacity. The SCP model considers structure, conduct and performance as the three elements of the market that indicates the overall market situation, and the interrelationships between the elements, and their analysis, which helps to improve the market situation. Indeed, appropriate policies and mechanisms both helps maximize the producers’ benefits and satisfy the consumer and other components of the market cycle. Accordingly, this study seeks to answer the question of what is the structure, conduct and performance of the tropical mango and banana fruit market in the villages of Sistan and Baluchestan?
Methodology
In order to reach the answer that the market structure of tropical mango and banana products in Iranian villages follows the SCP model or not, the relationship between the components of this model has been investigated. For this study, the cross-sectional data of the manufacturers of these two products are estimated using a system of simultaneous equations. According to the existing empirical studies on the relationship between market elements as well as the methods used by different researchers, three equations for the variables of structure, behavior and performance has been defined for the system of simultaneous equations. In these MS equations, it is related to market concentration variables such as Herfindahl–Hirschman Index and producer concentration ratio index. In this study, the concentration ratio index is used. R&D refers to behavioral variables such as research and development and advertising, and PF refers to the same performance variables as return on assets and equity. The three variables mentioned are endogenous or dependent variables model. And indicate the type of ownership and age. It refers to the inventory of assets and education, and performance (amount of production / area of cultivation) and income, which have been in the role of exogenous variables of the model and are analyzed by the three-stage least squares method in the system of simultaneous equations.
Discussion and conclusion
The results of model estimation showed that for two mango and banana crops in Sistan and Baluchestan villages, all three components of concentration, research and development and profitability are statistically significant. The results of SCP model coefficients for mango crop show that for concentration, research and development on mango, the number of users in this market increases and the market gets closer to competitive conditions and also profitability has a positive and significant effect on concentration. As the market gets closer to monopoly conditions, the profitability of mango producers increases and as a result the number of producers in the market decreases or the market share is more unfairly distributed among the exploiters. In the R&D equation, concentration has a negative and significant effect on R&D. As the concentration among mango producers increases and the market moves towards monopolies, the motivation of mango producers and villagers to conduct research decreases. However, profitability has a positive and significant effect on research and development activities. This result suggests that as profitability increases, there will be more incentive to spend on research and development. In the profitability case, concentration has a positive and significant effect on it. In other words, with increasing concentration, or moving to the monopoly market, the profitability of products among villagers will increase and research and development also has a positive and significant effect on profitability. As research and development increase, it is expected that the efficiency of mango production and profitability will increase.
The results of estimating SCP coefficients for banana confirm that in the equation of concentration, research and development has a negative and significant effect on concentration. The more research in the field of banana product, the more users in this product, or the market will be closer to competitive conditions. Profitability also has a significant negative effect on concentration, in other words, as the profitability increases, the concentration decreases. When the profitability increases, more producers are encouraged to work in this market among the villagers. As a result, the concentration in the banana market decreases. In the R&D equation, the concentration has a negative effect on R&D because with increasing market concentration, market has shifted to monopoly conditions. As a result, banana producers in rural areas are less motivated to conduct research activities. However, profitability has a positive and significant effect on research and development. The higher the profitability of the firm, the more the manufacturer prefers to increase R&D costs in order to increase income. Since producers and villagers know that with more research and development, they will increase their profitability. Furthermore, research and development has a positive and significant effect on profitability, conducting research activities, more opportunities will be provided to banana producers in rural areas. As a result, the profitability of farmers will be enhanced.
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