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Successful Producer Owned Marketing Organisations in a Transition Country: Two Case Studies from Hungarian Agribusiness

Gábor G. Szabó

Report/paper

Starting point of our analysis is that independent privately owned farm organisations in transition countries like Hungary can not countervail the market power of their business partners; therefore closer coordination (integration) of agricultural producers seems an appropriate solution. Apart from some theoretical
considerations on co-operative rationale (based on New Institutional Economics), the main aim of the paper is
presenting 2 case studies on producer owned marketing organisations from Hungarian agribusiness, one from the fruit and vegetable sector and the other one from the dairy chain. Conclusions from case studies are the followings. Such producers’ organisations, like the Mórakert Co-operative and Alföldi Milk Selling and Supplying Ltd. can be a solution for farmers to cope with their problems arising from incomplete pricing mechanisms and to reduce
transaction costs, at least at the regional level. They also are good examples for the vertical integration based on the
horizontal coordination of farmers as initiators. Despite recent liquidity problems, they also proves that by cooperation
there is an opportunity to significantly improve their countervailing power and to establish ownership for farmers in the upper part of the food chain if they can secure strict quality requirements, solid financing, loyalty and
trust in their organisations.

This publication forms part of the Regoverning Markets project.

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The Regoverning Markets project focused on the modernisation of agrifood markets in emerging economies, and implications for small-scale producers. The goal was to secure more equitable producer and trade benefits in response to those changes. It was a multi-partner collaborative research programme made up of a consortium of some 20 research organisations and funding agencies.

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