Farmer Relations with Input Suppliers - Some Evidence from the Dairy Sector in Poland
FARMER RELATIONS WITH INPUT SUPPLIERS - SOME EVIDENCE FROM THE DAIRY SECTOR IN POLAND

Summary/Abstract: The paper aims at improving our knowledge about farmers’ relations with inputsuppliers and analyses the backward vertical spillovers between the “boundary” chains. Ituses a micro-data on dairy sector in Poland to elicit farmers’ opinions on their cooperationwith feed suppliers and confront them with farmers’ actual behaviors. We find that dairyfarmers have on average a long and stable cooperation with feed suppliers. A great majorityof the respondents perceive their relationship with feed supplier as either good or very good.The relation between farmer and feed supplier is usually not formal (over 90% of farmersdo not have any written contract). Price level and the quality of feed is the most importantfeature of the relation mentioned by farmers. However, we observe significant differencesin the farm characteristics, obtained discounts, possibilities of the price negotiations, etc.depending on the channel of the feed supply. Despite no significant difference in farmlandsize, farmers who purchase feed directly from feed producer have a significantly larger milkproduction and receive significantly higher discount from the feed supplier than farmerspurchasing feed from an intermediary. This group of farmers is also more active in pricenegotiations and more often considers changing their supplier.

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