Economic Performance In The Canadian Tomato Processing Industry

The Canadian tomato processing industry is located almost entirely in Ontario because of that province's comparative advantage in growing them. By Ontario law, tomato sales by growers to processors have been carried out according to the regulations of the Ontario Vegetable Growers' Marketing Board since the late 1930's. The Board cannot set quotas nor can it unilaterally set price; rather, it specifies the rules for the negotiation between growers and processors of conditions of sale. As the name indicates, the Board represents the interests of growers and it is the purpose of this thesis to evaluate its impact on the economic performance of the industry. Economic performance is assessed on the basis of allocative and technical efficiency, reward, progress and full employment of resources.;There are four products of interest produced in the Canadian tomato processing industry: raw tomatoes, tomatoes packed whole, tomato juice and ketchup. The thesis first describes the basic conditions, market structure and conduct of producers of each of these products. This information serves as the basis for a description of the economic performance of each producer group; it also provides a background for building and estimating a model of industry behavior. The purpose of the model is to provide quantifiable measures of rents and deadweight welfare losses.;The overall performance of the industry is found to be good and the marketing board has played an important role in that performance. The Board is able to capture economies of scale in research and in the dissemination of new technical knowledge. More importantly, its regulations have promoted grower-processor cooperation that has significantly reduced the transaction costs of growing and marketing a fragile crop. Growers have received rents that average at most about 6.5 million dollars per year (in 1981 dollars). The corresponding reduction in outputs has generally been less than 10% and the associated deadweight welfare loss has at most averaged about {dollar}400,000 per year. These calculations are maximum values yet are not large relative to findings in other industries.