The markets for special crops in western Canada are not yet mature. A farmer faces a choice of either signing a production contract with a buyer prior to planting the crop or selling the crop after harvest to a limited number of buyers. This paper examines both methods using a transaction cost approach. The evidence suggests that neither method will lead to an efficient level of investment in the production of special crops. As a result, the full potential for diversification into special crops may nor have been realized in western Canada.
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