Structural Adjustment Processes of Farming Enterprises: The Role of Trust for Cooperation and Collaboration Strategies

As a consequence of the reorientation of the Swiss as well as the European agricultural policy, prices for agricultural products drop and farmers have to reduce their production costs or will lose income. Therefore a lot of farmers have a high incentive to change their production structures. One of the most effective strategies to reduce production costs is going into cooperation and collaboration with other farmers. Therewith farmers can profit from scale effects without changing the property rights. Several case studies as well as results from modeling reveal that farmers have more income with less workload. In reality only 3% of Swiss farmers have gone into a collective farming system. Weaker forms of cooperation like sharing machinery are more common between farmers. Their main reasons not going into cooperation are often the loss of autonomy of decision in combination with financial risks. And here trust can act as a counterbalance. Farmers with positive experiences from weaker forms of cooperation are able to assess their partners regarding trust. And their trust enhance when their partners are capable and loyal for a stronger cooperation form.