Dairy farmers’ support of horizontal cooperation among dairy processors: Conceptual model and empirical test

Abstract

Small dairy cooperatives can improve their economic performance through horizontal cooperation, e.g., in joint milk collection. The approval of such a strategy by cooperative members, however, is at risk given an increasing erosion of collective action commitment documented in the literature. This paper strives to explain members’ decision to approve or disapprove of dairy cooperatives’ joint milk collection. We draw not only on economic theory, but also include psychological and sociological logics. Farmers’ decision is modeled by means of a discrete choice experiment. Relevant attitudes and relationship quality are measured using extant scales. The model is then tested on data collected from members of two dairy cooperatives. A multinomial logit regression is performed to explain farmers answering patterns, where we distinguish between Always Supporters, Selective Deciders, and Never Supporters. The multinomial logit regression to explain farmers’ specific response behavior to the proposed alternative optimization models in the discrete choice experiment reveals that especially the never- and always-supporters can be meaningfully distinguished by their levels of social interaction with other members, Supplier Relationship Quality with the cooperative, and attitude towards the project. Frequent Coop Member Interaction and Supplier Relationship Quality are both associated with an increase in the relative-risk ratios of belonging to the group of Never Supporters, whereas Attitude towards Project and Attitude towards Climate Change are associated with a decrease in the relative-risk ratios of belonging to that group. Overall, the study hints at the necessity to take into account farmers’ attitudes towards proposed strategies, but also their relationship with the cooperative, in order to predict and probably influence their decisions. For the latter, this study provides insights as to the relevance of social interaction among members, which could be exploited in member management.