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Abstract
The dairy sector is one of the most critical sectors in Hungarian agriculture,
where independent, privately owned farm organisations cannot countervail
the market power of their business partners (processors). In theory, cooperatives
and producers’ groups are able to strengthen the position of
farmers during price negotiations. The main aim of our paper is to show
theoretical and practical possibilities for establishing private (market)
coordinating organisations in the Hungarian dairy sector. We summarise the
different coordination structures using a SWOT analysis, for which we
assumed two theoretical situations: first, when the coordination is initiated
by the processor and, second, when it is initiated by farmers. At the end of
our paper, we present the successful case of the Hungarian Alföldi Tej Kft.
(Alföldi Milk Sales and Supply Ltd.) which is a good example of vertical
integration in the dairy chain, based on the horizontal coordination of
farmers as initiators.