Contracts and cooperation: the relative failure of the Irish dairy industry in the late nineteenth century reconsidered

Abstract

Why did the establishment of cooperative creameries in late nineteenth century Ireland fail to halt the relative decline of her dairy industry compared to other emerging producers? This paper compares the Irish experience with that of the market leader, Denmark, and shows how each adopted the cooperative organizational form, but highlights that an important difference was institutional: specifically regarding the enforcement of vertically binding contracts. We argue that this failure, combined with a strong proprietary sector which was opposed to cooperation, reinforced the already difficult conditions for dairying in Ireland due to poor social capital.

Collective organisation of knowledge in the early phase of the Dutch-Friesian dairy industry (c. 1880-1914)

“…Such is the case in the inspirational studies of the Danish dairy industry, which was backed through an agricultural university near Copenhagen and a national network of schools and dairy consultants (Lampe & Sharp, 2015;Henriksen & O'Rourke, 2005). In their analysis of the difficult emergence of creameries in Ireland, Henriksen, McLaughlin and Sharp (2015) also reported on regional dimensions, but explanatory links to knowledge-based variables remained absent. The national view on economic development might be so compelling that more regional perspectives find themselves pushed to the wings of historical explanations.…”

“…The starting position of dairy farmers and companies in Friesland was far better compared to the south, where more peasants lived and where the dairy companies were initially driven by hand separators (Dekker, 1996). Secondly, literature on the cooperative dairy industry in Ireland (Henriksen, McLaughlin & Sharp, 2015) points to the concentration of companies in the South (Golden Vale) and the North, but relationships with knowledge institutions in both regions remains to be explored more intensively. Thirdly, a clear contrast to the Dutch-Friesian situation can be found in Denmark.…”

Product quality or market regulation? Explaining the slow growth of Europe's wine cooperatives, 1880–1980

“…There is a large amount of literature on early European farm cooperatives. See especially Henriksen, McLaughlin, and Sharp, ‘Contracts and cooperation’; Henriksen, ‘Avoiding lock‐in’; O'Rourke, ‘Culture, conflict and cooperation’; Beltrán‐Tapia, ‘Commons’; Fernández, ‘Trust, religion, and co‐operation’; Garrido, ‘Plenty of trust’; Henriksen, Hviid, and Sharp, ‘Law and peace’.…”

“…67–8. Significantly, and unlike Irish courts, Danish courts were willing to back up these private contracts; Henriksen et al., ‘Contracts and cooperation’; Henriksen et al., ‘Law and peace’.…”

Review of periodical literature published in 2015

“…He focuses particularly on the ways in which both forms of cooperation interacted with agriculture enterprise, arguing that cooperatives established by the latter organization offered few advantages compared to existing structures. The same author contributes to an article by Henriksen et al. which compares the adoption of cooperative creameries in the dairy industries of Ireland and Denmark in the late nineteenth century. They argue that differences in the ability of cooperative organizations in the two countries to enforce contracts explain why the adoption of cooperatives, while successful in Denmark, did not stop the relative decline of the Irish dairy industry.…”