Strategies and effects of milk producers' organisations in the Czech Republic

In the Czech Republic, milk producers' organisations arose spontaneously from farmers' initiatives in the late 1990s as a response to the need to secure fair market conditions for dairy farmers. At present, there are 39 milk producers' organisations operating locally, nationwide or even on the central European markets. The paper aims at a better understanding what market conditions and transaction attributes have favoured the emergence and the success of the Czech milk marketing cooperatives as well as if their current objectives and strategies are sufficient for securing their future success. The methodological approach rests largely in the theory of industrial organisation combined with the new institutional economics. Establishing marketing cooperatives, dairy farmers balanced market power with processing industry. It is showed on six case studies that the Czech milk marketing cooperatives follow traditional objectives (securing sales, fair price and payment discipline); however, their priorities and strategies differ according to their market environment. If the concentration of the dairy industry continues, there will be a need for reconsidering the objectives of milk marketing cooperatives toward a more vertical coordination in the dairy chain.