Responses to comments by Renato E. Reside, Jr.

UP School of Economics Below is a summary of the current supply chain for highland vegetables in the Be nguet area. This serves as a background to discussions regarding the economics o f the project. Table: Current supply chain for highland vegetables Market participant Market structure Sensitive to quality? Sensitiv e to price? Immediacy of exchange of goods Farmer Perfect competition Spot market Wholesale buyer (collector, assembler, aggregator) at trading post Perfect competition Somewhat Yes Spot market Existing cold chain in Wangal, Benguet Monopolist; price maker Spot market Wholesale seller in urban area Buying prices from wholesale buyers or farmers m ay be the subject of collusion Somewhat Yes Spot market Retailer Supermarkets Small scale Perfect competition Increasingly Yes Spot market Supermarkets Large scale Monopolist Since it passes on quality risk to wholesalers upstream, quality is not an issue for large supermarkets Since it passes on demand risk to wholesalers up stream, price is not an issue for large supermarkets Consignment contracts ar e increasing. Large supermarkets act like monopsonists, passing on quality deter ioration risk and demand risk to upstream wholesalers or farmers Pass on demand and perishability or quality risk to consignee distributors, whol esalers or farmers