Producer organizations, family farms and market connection. Lessons for emerging biodiesel supply chains in Brazil

Producer organizations (POs) are often recognized as a pathway to boost rural development by enhancing farmers' access to market opportunities. Smallholder production and marketing of new crops (such as those for biodiesel feedstock) are constrained as farmers and buyers face high transaction costs. By investigating cases of POs outside the biofuel industry, the authors explore the extent to which POs could reduce transaction costs. The findings indicate that POs are capable of linking farmers effectively to markets in cases in which high value is added to farm products and/or farmers are highly specialized. However, the scope for POs in linking farmers to biodiesel markets is limited due to organization-specific characteristics, the low value added of the feedstock, plus multiple trade-offs with current farm activities.