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Multinationals versus cooperatives: The income and efficiency effects of supply chain governance in India

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  • Vandeplas, Anneleen
  • Minten, Bart
  • Swinnen, Johan F.M.

Abstract

The impact of multinational firms on the domestic agricultural sector in developing countries is controversial, in particular in India. Relying on a unique set of household-level data from the state of Punjab, we study the biggest dairy company in the world (Nestlé) in India and compare its vertical spillover effects on upstream suppliers to other market channels (informal sector and cooperatives). We find that farmers that supply informal channels are less efficient and earn less profits per dairy animal than farmers supplying the cooperative and the multinational sector. Further, we find that farmers in the multinational channel are more efficient than farmers in the cooperative channel, but equally profitable. Hence, we do not find that supplying the cooperative channel is more beneficial for local dairy farmers than supplying the multinational channel. Overall, however, dairy productivity and profitability levels are still dramatically low, with tremendous scope for dairy development.

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  • Vandeplas, Anneleen & Minten, Bart & Swinnen, Johan F.M., 2012. "Multinationals versus cooperatives: The income and efficiency effects of supply chain governance in India," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126892, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae12:126892
    DOI: 10.22004/ag.econ.126892
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    Cited by:

    1. Astrid Sneyers & Anneleen Vandeplas, 2013. "Girl Power in Agricultural Production: How Much Does it Yield? A Case-Study on the Dairy Sector in India," LICOS Discussion Papers 34113, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    2. Sneyers, Astrid & Vandeplas, Anneleen, 2015. "A Gender Gap in Agricultural Productivity? Evidence from the Dairy Sector in India," 2015 Conference, August 9-14, 2015, Milan, Italy 212062, International Association of Agricultural Economists.
    3. Federica Di Marcantonio & Pavel Ciaian & Vicente Castellanos, 2018. "Unfair trading practices in the dairy farm sector: Evidence from selected EU regions," JRC Research Reports JRC112770, Joint Research Centre.
    4. Lijia, Wang & Xuexi, Huo, 2014. "Grower's Selling Behavior: Transaction Cost Comparison Analysis," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 15(2), pages 1-24.

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