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This paper analyzes the vertical relationship between growers and processors in the Algerian tomato processing industry. We use extensive data on production contract outcomes for processing tomato growers (including 3,740 coordinated contracts) to examine the performance of grower-processor vertical contracts. The results indicate that the tomato grower-processor vertical relationship undergoes some deficiencies resulted in social welfare losses and lower level in contractual performance. From the side of processors, the industry has an oligopsonic structure (with CR4: 57%). From the side of tomato growers, the results indicate a relatively higher contractual default (with 53% in average). These findings suggest that public policy should pay more attention for the performances levels of the used vertical coordination mechanism in order to provide more incentive instruments and by leveraging vertical contract for tomato growers’ benefit.
