4. Horizontal integration between farmers – governing cooperation through different enforcement mechanisms

In: It's a jungle out there - the strange animals of economic organization in agri-food value chains
Authors:
A. Chlebicka Warsaw University of Life Sciences (SGGW), Faculty of Economic Sciences, Chair of Economics and Organisation of Enterprises, Nowoursynowska St. 166, 02-787 Warsaw, Poland.

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J. Fałkowski University of Warsaw & CEAPS, Faculty of Economic Sciences, Chair of Political Economy, 44/50 Długa St. 44/50, 00-241 Warsaw, Poland.

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B. Łopaciuk-Gonczaryk University of Warsaw & CEAPS, Faculty of Economic Sciences, Chair of Political Economy, 44/50 Długa St. 44/50, 00-241 Warsaw, Poland.

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Cooperation between farmers has often been advocated as a potential stimulus to increase efficiency of agricultural production and strengthen farmer’s bargaining power vis-a-vis representatives of other segments in the agro-food supply chain. We propose an explorative research in an attempt to provide some evidence linking the process of establishing agricultural producer groups with the issue of trust. Using micro level data from 260 interviews with Polish farmers, we investigate to what extent farmers’ willingness to involve in formal cooperation depends on the level of general trust and interpersonal relationships. The former is associated with more formal governing mechanisms based on a third party enforcer. Instead, interpersonal relationships are related to more informal enforcement mechanism, based on reputation and mutual trust. First, we look at the extent to which participation in producer groups is driven by kinship or friendship to other group members. Second, we explore to what extent farmers being involved in producer groups differ from farmers acting on their own in their opinions on the general trust and willingness to cooperate in their neighbourhood. Finally, we also show some tentative evidence to link different types of trust to different cooperative equilibria emerging at the regional level.

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