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Possible Ways of Market Coordination and Integration in the Hungarian Dairy Sector

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  • Szabó, Gábor G.
  • Popovics, Péter

Abstract

The dairy sector is one of the most critical sectors in Hungarian agriculture, where independent, privately owned farm organisations cannot countervail the market power of their business partners (processors). In theory, cooperatives and producers’ groups are able to strengthen the position of farmers during price negotiations. The main aim of our paper is to show theoretical and practical possibilities for establishing private (market) coordinating organisations in the Hungarian dairy sector. We summarise the different coordination structures using a SWOT analysis, for which we assumed two theoretical situations: first, when the coordination is initiated by the processor and, second, when it is initiated by farmers. At the end of our paper, we present the successful case of the Hungarian Alföldi Tej Kft. (Alföldi Milk Sales and Supply Ltd.) which is a good example of vertical integration in the dairy chain, based on the horizontal coordination of farmers as initiators.

Suggested Citation

  • Szabó, Gábor G. & Popovics, Péter, 2009. "Possible Ways of Market Coordination and Integration in the Hungarian Dairy Sector," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 37(01), pages 1-20.
    • Handle: RePEc:ags:jlorco:163776
    DOI: 10.22004/ag.econ.163776
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    References listed on IDEAS

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    1. Royer, Jeffrey S., 1999. "Cooperative Organizational Strategies: A Neo-Institutional Digest," Journal of Cooperatives, NCERA-210, vol. 14, pages 1-24.
    2. Peter Vitaliano, 1983. "Cooperative Enterprise: An Alternative Conceptual Basis for Analyzing a Complex Institution," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(5), pages 1078-1083.
    3. Popovics, Peter Andras, 2008. "Analysis of economic issues relating to the dairy sector, with emphasis on price transmission," APSTRACT: Applied Studies in Agribusiness and Commerce, AGRIMBA, vol. 2(01-2), pages 1-10.
    4. Gabor G. Szabo & Krisztina Bardos, 2005. "Vertical Coordination by Contracts in Agribusiness - An Empirical Research in the Hungarian Dairy Sector," CERS-IE WORKING PAPERS 0515, Institute of Economics, Centre for Economic and Regional Studies.
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    2. Bošková, Iveta, . "Collaboration in the Czech Dairy Chain," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 5(4), pages 1-11.
    3. Filippo Sgroi & Matteo Candela & Anna Maria Di Trapani & Mario Foderà & Riccardo Squatrito & Riccardo Testa & Salvatore Tudisca, 2015. "Economic and Financial Comparison between Organic and Conventional Farming in Sicilian Lemon Orchards," Sustainability, MDPI, vol. 7(1), pages 1-15, January.

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