THEORETICAL AND PRACTICAL APPROACHES TOWARDS COORDINATION AND INTEGRATION MECHANISMS: THE CASE OF THE HUNGARIAN DAIRY SECTOR

Just before Hungary’s EU accession (2004), the dairy sector was one of the most critical industries of the Hungarian agriculture, which is why we chose this for our empirical analysis. Results of our price transmission analysis as well as our previous study on contractual relations in the Hungarian dairy sector obviously show that only the increase of input prices will increase the prices in the production-processing stage. Farmers cannot enforce their interest separately and act against the concentrated processing industry. High investment costs, expensive machinery, the long production cycle from the time of investment, the continuous production and the perishable dairy products are all significant risk factors and deepen the vulnerable situation of farmers. Independent privately owned farm organisations can not countervail the market power of their business partners. The different coordination mechanisms (including producers ’ groups, co-operatives etc.) are able to improve and strengthen the position of farmers in the price negotiations for a fairer selling price and for eliminating the fluctuations of the price. Furthermore, some positive effects might go beyond the industry and concern the whol