Value capture analysis of small organic growers and their distribution channels in California

The United States has recorded strong growth in organic produce, as measured both by arable land devoted to organics and the value of the organic products market. Among the countries that produce such products, it is the third largest country in terms of arable land devoted to organic production. Furthermore, the U.S. has the highest consumption of organic products. The decision made by small producers when choosing which sales channels to access is a complicated issue. In California, the state with the largest amount of land used for organic farming, small organic producers use between two and four distribution channels to sell their products. The principal objective of this article is to identify the extent to which the main distribution channels used by producers to sell their products result in value capture by the producer or its distribution channels. The study finds that producers concentrate their sales in channels where they capture the most value and use secondary channels to dispose of product that cannot be readily sold through priority channels. Furthermore, producers use direct sales channels, such as farmers’ markets – despite the highly specific assets involved in this transaction due to the large investments needed to access them – because they provide the greatest return in terms of product value among the various distribution channels.Keywords: organic; produce; value capture; distribution channels; supply chain.SCALCO, Andrea Rossi; BAKER, Gregory A. Value capture analysis of small organic growers and their distribution channels in California. Estudos Sociedade e Agricultura, v. 27, n. 3, p. 566-589, out. 2019.Submitted in March 2019.Accepted in July 2019.