Coordination of supply and demand in the dairy marketing system – with special emphasis on the potential role of farmer cooperatives as coordinating institutions

Authors

• Petri Ollila The Academy of Finland, Hämeentie 68, SF-00550 Helsinki, Finland

DOI: https://doi.org/10.23986/afsci.72361

Abstract

The study attempts to gain a better understanding of matching the ultimate supply and demand for milk at various steps of the production-distribution sequence. The purpose is to assess the suitability of price or regulations in solving various coordination problems. Special emphasis is given to the cooperatives as coordinating institutions. The theory in the study draws from Transaction Cost Economics, Economics of Public Choice, and Industrial Organization approach. The application used is termed Marketing Systems Analysis. It is applied to the dairy marketing system providing explanations to the surrent structure and analyzing four problems: (1) coordination of total supply and demand if milk, (2) coordination of milk components, (3) seasonal balancing, and (4) adaptation of new consumer preferences.