Economic and social importance of vertical and horizontal forms of agricultural cooperation in Hungary

Abstract

In the development of a market economy, the ability to cooperate is a major factor determining the competitiveness of economic actors. With complex instruments intended to stimulate cooperation among the actors in farming, the agri-food chain, forestry and rural development, strengthening cooperation is a priority of the Common Agricultural Policy in the current European Union programming period. This paper evaluates the development of different forms of vertical and horizontal cooperation between actors in Hungarian agriculture in the period 2007-2013. Our defi nition of cooperation is based on a regular market relationship, and our analysis includes not only formal forms of horizontal and vertical cooperation but also the informal networks offering business benefi ts for producers. The main conclusion is that, owing to the continuing low level of horizontal cooperation in Hungary, high-level vertical integration ensures that producers can achieve a favourable negotiating position, and this in turn reduces the potential for the development of horizontal cooperation. Informal relationships, such as doing favours without charge, are not negligible ways of accessing resources, especially for small farms. A development path for agricultural cooperation in Hungary might be for actors to make collective investments in order to increase value-added and utilise economies of scale, and to organise themselves into alliances, associations, networks and clusters. Beyond the benefi ts originating from market concentration, these steps could stimulate the dissemination of expertise, improve effi ciency and increase innovation capacities.