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Vertical Co-ordanitaion in Transition Agriculture: a Hungarian Cooperative Case Study


  • Imre Ferto

    () (Institute of Economics of Hungarian Academy of Sciences)

  • Gabor G. Szabo

    () (Institute of Economics of Hungarian Academy of Sciences)


The agriculture is traditional risky business, but in transition countries agricultural producers should face some additional difficulties. The agri-food chains are still suffering from underdeveloped market institutions creating severe barriers for price discovery and high transaction costs to co-ordinate market exchanges. Co-operatives are usually neglected as a possible governance structure in recent empirical analyses. This study analyzes the advantages and limitations of cooperatives for establishing an appropriate vertical coordination forms in the framework of transaction cost economics. We present a case study to show that at the recent stage of development in Hungarian agriculture co-operatives can solve some problems arising from missing and embryonic market institutions. We argue that the co-operative is a good example, how an agricultural co-operative can achieve some of the potential advantages, solving many “traditional” TCE and agency problems and serving its members with a continuing growth.

Suggested Citation

  • Imre Ferto & Gabor G. Szabo, 2002. "Vertical Co-ordanitaion in Transition Agriculture: a Hungarian Cooperative Case Study," IEHAS Discussion Papers 0210, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  • Handle: RePEc:has:discpr:0210

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    References listed on IDEAS

    1. M. den Ouden & Aalt A. Dijkhuizen & Ruud B.M. Huirne & Peter J.P. Zuurbier, 1996. "Vertical cooperation in agricultural production-marketing chains, with special reference to product differentiation in pork," Agribusiness, John Wiley & Sons, Ltd., vol. 12(3), pages 277-290.
    2. George W. J. Hendrikse & Cees P. Veerman, 2001. "Marketing Co-operatives: An Incomplete Contracting Perspective," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(1), pages 53-64.
    3. Michael E. Sykuta & Michael L. Cook, 2001. "A New Institutional Economics Approach to Contracts and Cooperatives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1273-1279.
    4. Gow, Hamish R. & Streeter, Deborah H. & Swinnen, Johan F. M., 2000. "How private contract enforcement mechanisms can succeed where public institutions fail: the case of Juhocukor a.s," Agricultural Economics, Blackwell, vol. 23(3), pages 253-265, September.
    5. Gow, Hamish R & Swinnen, Johan F M, 1998. "Up- and Downstream Restructuring, Foreign Direct Investment, and Hold-Up Problems in Agricultural Transition," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 25(3), pages 331-350.
    6. Staatz, John M., 1989. "Farmer Cooperative Theory: Recent Developments," Research Reports 52017, United States Department of Agriculture, Rural Development Business and Cooperative Programs.
    7. Jeffrey S. Royer, 1995. "Potential for cooperative involvement in vertical coordination and value-added activities," Agribusiness, John Wiley & Sons, Ltd., vol. 11(5), pages 473-481.
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    Cited by:

    1. Hanf, Jon H. & Török, Timea, 2009. "Are Co-operatives a Way to Integrate Small Farmers in Supply Chain Networks? Preliminary Thoughts on Hungary," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 37(1).
    2. Gërdoçi, Blendi & Skreli, Engjell & Imami, Drini, 2016. "Determinants of Sustainable Relationships in the Albanian Apple Production Sector," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 7(1).

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