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Contractual relationships in the Hungarian milk sector

Author

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  • Zoltán Bakucs, Lajos
  • Fertő, Imre
  • Szabó, Gábor G.

Abstract

In this paper we present an empirical analysis of farmers' contracting choice in the Hungarian milk sector using 2005 milk producer survey data, employing transaction cost economics. We focus on analysing some key determinants of farmers' contracting choices: type of contracts, duration, number of contractors, incentives provided in the contract and business history of farmers and buyers. Some of the main results include the importance and effect of farm size, quantity of milk delivered, planned short and long run or contract related investment on farm, the possibility of farmer to influence prices on the contracting choices.

Suggested Citation

  • Zoltán Bakucs, Lajos & Fertő, Imre & Szabó, Gábor G., 2010. "Contractual relationships in the Hungarian milk sector," IAMO Forum 2010: Institutions in Transition – Challenges for New Modes of Governance 52700, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
  • Handle: RePEc:zbw:iamo10:52700
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    References listed on IDEAS

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    1. Lyons, Bruce R, 1994. "Contracts and Specific Investment: An Empirical Test of Transaction Cost Theory," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(2), pages 257-278, Summer.
    2. Peter Bogetoft & Henrik Ballebye Olesen, 2002. "Ten rules of thumb in contract design: lessons from Danish agriculture," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(2), pages 185-204, June.
    3. Rachael E. Goodhue, 2000. "Broiler Production Contracts as a Multi-Agent Problem: Common Risk, Incentives and Heterogeneity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(3), pages 606-622.
    4. Hamish R. Gow & Johan F. M. Swinnen, 2001. "Private Enforcement Capital and Contract Enforcement in Transition Economies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 686-690.
    5. Zoltan Bakucs & Jan Falkowski & Imre Ferto, 2012. "Does Farm and Processing Industry Structure Matter for Price Transmission? Some Evidence From Transition Countries: A Comparison of Dairy Sectors in Hungary and Poland," IEHAS Discussion Papers 1212, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    6. Dries, Liesbeth & Swinnen, Johan F. M., 2004. "Foreign Direct Investment, Vertical Integration, and Local Suppliers: Evidence from the Polish Dairy Sector," World Development, Elsevier, vol. 32(9), pages 1525-1544, September.
    7. Erik Mathijs & Nivelin Noev, 2004. "Subsistence Farming in Central and Eastern Europe : Empirical Evidence from Albania, Bulgaria, Hungary, and Romania," Eastern European Economics, Taylor & Francis Journals, vol. 42(6), pages 72-89, November.
    8. Beckmann, Volker & Boger, Silke, 2004. "Courts and contract enforcement in transition agriculture: theory and evidence from Poland," Agricultural Economics, Blackwell, vol. 31(2-3), pages 251-263, December.
    9. Scott E. Masten & Stéphane Saussier, 2000. "Econometrics of Contracts : an Assessment of Developments in the Empirical Literature on Contracting," Revue d'Économie Industrielle, Programme National Persée, vol. 92(1), pages 215-236.
    10. Fraser, Iain, 2005. "Microeconometric analysis of wine grape supply contracts in Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(1), March.
    11. Bakucs, Lajos Zoltan & Ferto, Imre, 2007. "Spatial Integration On The Hungarian Milk Market," 104th Seminar, September 5-8, 2007, Budapest, Hungary 7832, European Association of Agricultural Economists.
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    Citations

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    Cited by:

    1. Bakucs, Lajos Zoltan & Ferto, Imre, 2013. "The role of trust in contractual relationships," 87th Annual Conference, April 8-10, 2013, Warwick University, Coventry, UK 158870, Agricultural Economics Society.
    2. Imre Ferto & Bakucs Lajos Zoltan & Sándor Elek & Csaba Forgacs, 2011. "Contracts in Hungarian Food Chains," MIC 2011: Managing Sustainability? Proceedings of the 12th International Conference, Portorož, 23–26 November 2011 [Selected Papers], University of Primorska, Faculty of Management Koper.
    3. González-Moralejo, Silvia Andrés & Muñoz, Pablo Muñoz & Miquel, Juan Francisco López, 2015. "Firm Size, Contractual Problems and Organizational Decision-Making: Logistics for Perishable Goods," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 18(4).

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    Keywords

    transaction costs; contracts; milk products; Hungary;

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