The Effect of Unfair Trading Practices on the Performance of Agricultural Cooperatives

Abstract

In the European agri-food sector, operators with substantial bargaining power often engage in unfair trading practices (UTPs). Our paper aims to empirically examine the occurrence of UTPs and their influence on the performance of cooperatives. To fulfill the goal of our paper, we collected responses from 109 cooperatives in Greece after the transposition of a specialized EU Directive (i.e., Directive (EU) 2019/633). We found that, on average, the sampled cooperatives encountered three prohibited (“black”) UTPs, while all reported at least one prohibited UTP. Moreover, the two most commonly reported practices (i.e., “unduly late payments” and “buyers’ demand that suppliers pay for the deterioration or loss of products that occurred after ownership transfer”) exerted a significant negative influence on cooperative performance, even in the presence of a proficient Board of Directors. Consequently, policymakers may need to pay more attention to UTPs and ensure that the national enforcement authorities are well-equipped to act rapidly and effectively against offenders.

Keywords

• unfair trading practices
• agricultural cooperatives
• performance