2012 Winter - Will corporate agriculture swallow the family farm?

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FPJ0902 - Karantininis et al., Reverse franchising, reversing the road to mega farms

Furtan, WH, Karantinis, K (2012), Reverse franchising, reversing the road to mega farms, in Farm Policy Journal, Vol. 9, No.2, Winter 2012, pp. 39-49

Reverse franchising is the business format where a number of small firms(or farms) through collective action create an entity (a firm, a cooperative, a marketing order, a joint venture, a strategic alliance, etc) which undertakes certain activities on behalf of the members’ franchisees. We use two illustrative examples of reverse franchising in the farm sector, the Danish agricultural system and the Canadian Wheat Board. Through these reverse franchise structures farmers have been able to enjoy economies of size and market power, and thus maintain the family farm. The creation of superstructures by farmers has helped them maintain a smaller scale at the primary level.These two examples illustrate that in order for the family farm to survive and become a mega farm, it will have to integrate backward and forward into mega structures, such as large cooperatives, federated structures or marketing orders. The family farm needs to achieve economies of size wherever this is necessary through external organisations. These organisations, besides production costs are loaded with transaction and agency costs. The ability of the stakeholders to minimise these costs is ‘path dependent’ and depends very much on the ‘macro-culture’ and the overall institutional framework within which the farms and their organisations operate. 

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Farm Policy Journal - Vol 9 No 2 2012 Winter - Full Journal - Will corporate agriculture swallow the family farm

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