Reconsidering the Middleman: Asymmetries in a Direct-Contact Producer-Buyer Alpaca Fiber Roundtable in Peru

Abstract

Advocates for direct-contact encounters between producers and buyers often cite the benefits of disintermediation—that is, “cutting out the middleman” in a value chain—thereby lowering the transaction costs for buyers and producers associated with finding and matching parties, negotiating prices, setting volumes and delivery times, vouching for quality, obtaining funds for producers, and coordinating post-agreement logistics. However, disintermediation does not eliminate those transaction costs; rather, it can unevenly redistribute them, usually to producers, who must then absorb buyer-defined requirements for certification, future rather than immediate payment, and the provision of standardized, technically graded, verifiable -quality samples. This theory-informed qualitative case study examines how asymmetric bargaining power arose during a state-convened roundtable between alpaca-fiber producers and buyers in Peru. Drawing on observational field notes, analytic debriefings, and event documents, the study analyzes this exchange through transaction cost economics, information asymmetry, and market access barriers. Findings show that while direct-contact exchange successfully reduced search costs for buyers and generated public price signals for producers above traditional intermediary offers, the traditional intermediary functions around sample quality verification, liquidity provision, risk absorption, and cultural translation between the very different worlds of rural producers and urban buyers reappeared as producer-side obligations imposed by buyer-dominated asymmetries of bargaining power. The study argues that larger producer coalitions, greater access to certification, and the restoration of intermediary functions using digital and face-to-face infrastructures are needed to reduce producers’ informational asymmetries, transaction costs, and barriers to market access. However, such interventions cannot be driven solely by market logics but must instead center on, respect, and incorporate traditional pastoralism’s practical knowledge, values, and way of life, which still sustain and have long been at the heart of Peru’s alpaca-fiber value chain.