AGAINST ALL ODDS: EXPLAINING THE EXPORTING SUCCESS OF DANISH PORK CO-OPERATIVES

Abstract

Danish pork industry should be at a considerable competitive disadvantage relative to its major international competitors, particularly Canada and the US.In fact, Denmark is a major pork exporter.Why is the Danish pork industry so successful when the relative costs of production appear to be stacked against it?The answer lies in the organization of the industry.There is close co-ordination of activities along the supply chain from breeding and genetics, to production, slaughter, processing, further processing, and exporting.This enables the industry to tailor products to the needs of specific market segments.This study seeks to answer a number of questions about the Danish pork industry.What has been the impact of recent merger activity within the Danish industry?What role does the industry's co-operative structure play in its exporting success?How have the industry's initiatives in quality assurance, traceability, food safety, and product differentiation affected its competitiveness?Finally, are there lessons for Canadian agri-food business and co-operatives?While still increasing, hog production in Denmark has consolidated in recent years, although environmental regulations limit farm size.Around 90 percent of hog production is slaughtered through three producer-owned co-operatives.Following a recent merger, one co-operative alone-Danish Crown-accounts for 78 percent of the slaughter.The merger was the subject of an EU Commission competition investigation because it created dominant positions in the Danish market for the purchase of live slaughter hogs and in the domestic retail market for pork.The commission ruled in favour of the merger, subject to a number of conditions.It is not at all clear, however, whether these conditions will be effective in increasing competition among the remaining co-operatives. Bedding Bedding inBedding in Bedding in Bedding in resting area.resting area.resting area.resting area. Outdoor areaNo No Slaughter pigs No Yes have access to outdoor area.Slaughter weight b 75.5 kg (67-79 kg) Min.80-85 kg 80 kg (72-89 kg) 87 kg (82-93.9kg) 90 kg (80-92 kg)