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Liang, Se, 2009. Farmers' perceived transaction costs in relation to slaughterhouses : the case of the Swedish slaughter business. Second cycle, A2E. Uppsala: SLU, Dept. of Economics

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Abstract

What are the key factors driving farmers' choices of whom to sell to? This study searches for an answer. Transaction costs are hypothesized as the determinant of pig producing farmers’ choice of trading partner in this study. The farmers have a choice between two types of slaughterhouse. One of these is Scan, which used to be a farmer co-operative, but is now a so-called FCB (Farmer Controlled Business). This implies that it is fully owned by the farmers who supply their animals to the slaughterhouse. The other type of firm is IOFs (Investor-Owned Firms), which are profit maximising firms. There are many IOF slaughterhouses in the Swedish pig slaugher industry, such as Ugglarps, KLD, Dahlsjöfors, and Skövde.

As it is impossible to measure transaction costs objectively focus is directed towards the farmers’ perceived transaction costs. Various socio-psychological concepts are used to interpret farmers’ perception on their transaction costs. The combination of transaction cost theory and socio-psychological theory generates a number of economic and social variables which may determine farmers’ perceived transaction cost. These variables are suggested in a series of the dependent or independent hypotheses. The hypotheses are tested by an empirical investigation which is based on a large number of quantitative data from the farmers. The data is processed by some particular statistical methods, such as chi-square test and t test.

According to the results of the statistical analysis, this study supports the initial assumption that transaction costs are essential to farmers’ choices of trading partner. The socio-psychological attibutes such as attitudes are expressions of the farmers’ perceived transaction costs. Other factors, like ownership structure, pricing strategies, and loyaly affect the farmers’ choice of trading partners as well.

The findings of this study indicate that farmers’ perceptions of their transaction costs are various. Farmers delivering to Scan perceive higher transaction costs than the farmers who are suppliers to the investor-owned slaughterhouses. Based on the findings, it concludes that Scan would have to perform more efficient to reduce farmers’ perceived transaction costs.

Main title:Farmers' perceived transaction costs in relation to slaughterhouses
Subtitle:the case of the Swedish slaughter business
Authors:Liang, Se
Supervisor:Nilsson, Jerker and Lind, Lena Westerlund
Examiner:Andersson, Hans
Series:Thesis / SLU, Department of Economics
Volume/Sequential designation:560
Year of Publication:2009
Level and depth descriptor:Second cycle, A2E
Student's programme affiliation:NM002 Agricultural Economics and Management - Master's Programme 120 HEC
Department:(NL, NJ) > Dept. of Economics
Keywords:Sweden, slaughterhouse, pig farmer, transaction cost, socio-psychology
URN:NBN:urn:nbn:se:slu:epsilon-8-143
Permanent URL:
http://urn.kb.se/resolve?urn=urn:nbn:se:slu:epsilon-8-143
Subjects:Trade, marketing and distribution
Cooperatives
Agricultural economics and policies
Language:English
Deposited On:24 Aug 2009 08:22
Metadata Last Modified:20 Apr 2012 14:09

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