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23.05.2012
Contractual Relationships and Inter-firm Co-operation in the Agri-food Sector
Author Antonio Iannarelli
Year 2011
In recent years, the most meaningful expression of the industrialization process of the agricultural sector has been represented by the growing development of contract farming: contracts and vertical integration now govern the production and marketing of most agricultural products. Under these contracts, potential buyers secure a network of suppliers of raw materials and, at the same time, promote the modernisation of agricultural structures through the supply of particular inputs (technologies and knowledge), while orienting the farmers'productive choices. There are many factors that have contributed to the development of these contractual relationships that are typical of the modern agro-industrial and food system and which structure the chain relationships between agricultural and industrial operators. These factors have also been clarified and analysed by contemporary institutional economics and by the so-called hybrid governance structures theory. Recourse to these contracts has proved useful, also to the agricultural operators, for other specific reasons: they are linked, first of all, to certain structural characteristics of the agricultural markets. In fact, agricultural markets are particularly prone to fluctuations both in product prices and in how the supply itself is absorbed.
Publisher IFLA