Using Vertically Coordinated Relationships to Overcome Tight Supply in the Organic Market
Rapid growth in the organic foods market has placed great pressure on farmers and handlers in the U.S. organic sector. Handlers are firms that produce, process, and distribute organic food. As the middlemen in the supply chain, organic handlers have been unable at times to provide as much of their final product as the market wants and have also found needed ingredients in short supply. A survey of certified organic handlers in the United States reveals that handlers widely use contracts as a means to not only procure needed ingredients but also to develop and maintain strong working relationships with their suppliers. Only a few organic handlers, however, have worked to assist farmers directly with farmers’ transition to organic production.