Epsilon Archive for Student Projects

Abstract

In 2007 Swedish Meats, the dominant Swedish meat-producers cooperative sold its slaughtering and processing industry. The goal of a producer cooperative structure is to create value for members through vertical integration, and to strengthen members’ market position. When Swedish Meats sold the slaughtering and processing components, it ceased in some respects to serve the function of a cooperative. This is a lost opportunity for both members and non-members, because Swedish Meats as a functioning cooperative could have exploited its dominant market position to positively effect producer’s prices. Today there is no large cooperative organization in the Swedish Meat industry.

The aim of this study is to analyze why Swedish Meats sold its slaughter and processing industry. The methodology of the study includes a literature review and an empirical study. The empirical study contains three interviews with individuals with insight into the Swedish slaughter industry and an accounts analysis based on Swedish Meats’ annual reports.

The study reveals that the consequences of the Swedish entry into the European Union came as a shock to the cooperative slaughter industry. The industry had overestimated its market knowledge and the competitiveness of the cost structure. Indeed the industry structure was inefficient and costly. Furthermore, poor communication between management and owners may have precipitated a crisis of confidence among the members and a decline in both membership and slaughter volume. This in turn led to poor capacity utilization. Finally, these issues increased transaction and agency costs preventing Swedish Meats from taking advantage of its market dominance in the Swedish slaughter and processing industry.