Abstract
Economic transitions are complex and long-term processes that exert pressure not only on individuals and macrostructures but also on collective resources and the communities that manage them. Understanding how communities influence institutional change is of particular interest. This article contributes to the extant literature through a proof of concept: the elaboration of a dynamic, multiscale framework based on JR Commons’ institutionalism, demonstrating the role of sectoral communities in the long-term restructuring of the French and German dairy sectors. This study reveals that sectoral communities contribute in all cases but that the types of resources and scales of operations vary, leading to contrasting pathways. Sectoral shared representations and governance structures frame their activities, favouring the creation and management of collective resources and, thus, supporting their capacities to elaborate productive solutions and to negotiate exchange values. This conclusion is a breakthrough, adding to the knowledge of how mesoeconomic institutions contribute to the structuring of productive activities.
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1 Introduction
The adaptation capacities and resiliencies of firms, industries and regions in liberal and volatile environments that are subject to the pressures of climate change are, increasingly, areas of focus for researchers, (Jongeneel et al. 2010; Kitson et al. 2004; Latruffe 2010; Porter 1989). From this perspective, the role of organisational and institutional innovation is increasingly acknowledged (Aoki 2007; Geels and Raven 2006; Truffer and Coenen 2012). In particular, cooperation among firms in terms of both knowledge (Malerba 2002; Touzard et al. 2015) and value creation (Ménard 2012; Ménard and Klein 2004) is also an area of increased interest. More broadly, the role of mesoregulation as a mediator of change is also proposed. Indeed, to be able to grasp complex and dynamic systems, given that micro-decisions do not combine to form a macro-structure, it is necessary to utilise an analytical framework with a micro–meso–macro-architecture (Dopfer et al. 2004). However, the operational means to grasp the roles of mesoregulations in their complex and multiscale dimensions are still lacking (Boschma 2015). Elinor Ostrom highlighted the polycentric governance of society, but she did not provide analytical framework to grasp the nested relationship between communities, market and state. The mesodevelopment of the regulation theory went the furthest in this direction, defining a sector as a set of actors sharing the same productive goals and rules and highlighting the complex interaction between state and professionals (Boyer 1990; Bartoli and Boulet 1990). This study aims to build on this definition to fill this knowledge gap through an innovative investigation of sectoral regulations as nested community regulations. It demonstrates that a sector benefits from being apprehended in terms of a community (a group of people who interact directly, frequently and in multifaceted ways) by harnessing its community’s specific mode of coordination and capacity to create resources and value.
The transformation of the European dairy sector over the last 60 years is used as a case study. It is of particular interest; after being emblematic of the industrialisation of food chains under public protective regulations, it is currently exposed to several forces of change. First, the gradual dismantling of public market regulation instruments (through reductions of tariff and intervention prices and gradual increases of milk quotas until their abolition) is leading to increased price volatility (Bouamra-Mechemache et al. 2008; Pouch and Trouvé 2018). Second, demand is changing due to stabilisations or reductions in domestic consumption and increased product differentiation via shifting expectations of nutritional quality (omega 3, organic products) and intangible attributes that are linked to the mode of production (equity, sustainability, etc.) (Allaire 2010; Nozieres et al. 2018). Finally, societal expectations regarding dairy farming are changing: negative environmental externalities are increasingly decried (Steinfeld et al. 2006) and animal welfare is becoming a major concern. In parallel, the geography of milk and dairy production is also changing. The recent, spatially differentiated increase in production (IDELE 2009) suggests that the liberalisation of the dairy market is weakening some production systems (in mountainous and low-density areas) and strengthening others (i.e. the Irish and northern European systems) (Nicholson 2015). However, these adjustments are not only on the part of the individuals or firms but also due to collective adaptation capacities (Derville and Fink-Kessler 2019). The present study thus aims to investigate this collective dimension of the adaptation capacities of sectoral communities. What can explain the stagnation of French dairy production compared to the growth of its German counterpart? Do the particular structures and functions of sectoral communities favour their adaptations to a changing environment? Which lessons can be learned from these contrasting adaptation capacities?
To shed light on this issue, an institutional framework aimed at comprehending sectoral communities as mesoeconomic orders is elaborated and implemented using a comparative case study. This institutional framework and methodology are detailed in Sect. 2. Comparative historical and regional analyses of the transformation of the French and German sectoral communities are provided in Sect. 3, and finally, the results are discussed in Sect. 4.
2 An institutional framework in terms of intangible sectoral property rights regimes
Building on a thematic literature review as well as on the hol-individualist view of an economy put forward by Commons (1925, 1934), we develop a conceptual framework of sectoral communities as a mesoeconomic order that is complementary to public macroregulation in its framing and in making individual strategies compatible with one another.
2.1 Communities in the economic literature
The aim of this section is not to provide an exhaustive literature review but rather to contribute to the research on mesoregulation by highlighting the distinct role attributed to communities by different strands of the economic literature. Some of the features identified will be mobilised in the present study’s elaboration of its framework. We identify four different conceptions of the role of communities, building on their definition, mechanism, scope, and relation to other economic entities while exploring their limitations and the new perspectives they foster. Table 1 summarises our analysis and presents the four groups of identified studies.
The institutionalism of Commons (1862–1945) and Veblen (1857–1929) differs from neoclassical economics in its dynamic perspective and emphasis on the role of collective action. Institution (Veblen) and going concern (Commons) mediate the relationship between individuals and collectives, supporting both change and stability. Veblen stresses the role of technology as a major determinant of economic activity and cultural change (Veblen 2005). Institutions can be “instrumental” by supporting cooperation in provisions of goods or “ceremonial” by supporting status differentiation and captures of pecuniary value (Brette 2003). Veblen sharply criticises the extorsion power of equity holders vis-a-vis scientists and workers. JR. Commons has a more optimistic view of society. Influenced by American common law, he stresses that humans have the capacity through experience and deliberation in diverse going concerns to select reasonable values and working rules that can favour the establishment of a reasonable capitalism. In other words, the tension between the going plant (the creation of use value) and the business plant (the creation of exchange or scarcity value) can be solved by the reasonable, rationing transaction of the going concern. From this perspective, communities are not only depositories of technology but also have deliberative capacities that support reasonable choices. As a result, in contrast to Veblen’s perspective, property rights not only favour the capture of value by equity holders but also grant rights to communities by acknowledging their skills and social contributions. In particular, communities monitor intangible property rights, which are defined as “the right to continue in business or of access to a labor market, whose present valuation depends on the expectations of quantities and prices to be derived from future transactions under control of collective action” (Commons 1934, p. 522). Purchasing power relates to an exchange value or, rather, to a scarcity value. It results from a withholding right that has been granted to a community. Intangible property first developed when markets and firms began to expand and large social movements of workers and employers took shape, which led to collective agreements on wages and social provisions that were recognised by law. Intangible property was extended to farmers with the creation of national agricultural policies in the 1930s and after World War II. Agricultural policies, including the European Common Agricultural Policy (CAP), introduced instruments of price support for domestic markets and for stabilising agricultural revenues (Allaire 2018).
In sum, original institutionalism provides an extended understanding of a community through specific social regulations that are complementary to economics and laws. Communities cover a diversity of social groups, from families to nations. Communities are involved in knowledge and value creation as well as in value capture (intangible property rights). However, no specific analysis of sectoral communities is provided by the literature (see Table 1, first column), which we propose to remedy here by drawing on the notion of intangible property rights.
The second group of studies focuses on the role of communities as a mode of coordination that is alternative to markets, states and firms. Despite sharing their Nobel memorial prize in Economic sciences in 2009, Ostrom (1933–2012) and Williamson (1932–2020) focus on different types of coordination. Ostrom works on use value creation and distribution among community members, while Williamson focuses on exchange value creation and distribution between economic partners. The degree of commonness among actors is mentioned in the first case but not in the second, where the characteristics of a single transaction drive the choice of the mode of coordination (Valentinov 2009). More precisely, Ostrom, building on game theory, political science and original institutionalism (notably, she refers to J.R. Commons’ definition of property rights as concerted action), highlights how communities are able to sustainably manage common pool resources and that common property rights regimes, combining de jure and de facto rights, are effective in ensuring members’ participation (Ostrom 1990). Accounting for the multiscale and multistakeholder features of the governance of common resources, Schlager and Ostrom (1992) propose a characterisation of common property regimes by identifying a hierarchy of rules (operational and constitutional), entailing five types of rights and statuses for the rights holders: access and withdrawal, both of which are defined by operational rules and characterise authorised users; the right of management attached to claimants; the right of exclusion that defines a proprietor; and the right of alienation. The latter three rights (management, exclusion and alienation) result from constitutional rules, which control the operational rules, by defining who can participate in changing operational rules and the level of consensus that is required. The distribution of these different rights frames a social hierarchy, which, notably, distinguishes a centre of rule makers from a periphery of users. These governance capacities of communities were first and extensively investigated in certain uses of natural common resources (irrigation infrastructures, forestry, fishery) before being evaluated within some intangible resources such as information (Hess and Ostrom 2003), reputation and innovation (Dervillé and Allaire 2014). In all of these cases, payoff potential, social trust, capacity to craft rules and capacity to invest in monitoring systems are put forward as key factors of cooperation (Ostrom and Basurto 2011). Favourable interactions with state regulation are also highlighted as a positive point (Ostrom 2010) but not theorised.
As an extension of Coase’s work on firms, Williamson highlights the relevance of partnerships between independent and competing organisations in relatively frequent and uncertain transactions requiring specific investments (Williamson 1979). An organisation can create value apprehended here in terms organisational rent (similar to intangible property in Commons’ work). In the field of agriculture, benefits of coordination among competing partners in a qualitative economy in particular have been stressed (Ménard and Klein 2004). Bowles and Gintis (2002) further specify that community coordination is relevant to settings that make formal property rights systems untenable and preclude an efficient, centralised determination of outcomes. Community members have diverse knowledge unavailable to states or other large formal organisations. Community coordination relies on frequent and lasting interactions among members that foster exchange of information and prosocial behaviours. The effectiveness of community governance relies on the usage of rewards and punishments (trust, solidarity, reciprocity, reputation, personal pride, respect, vengeance, and retribution, among others) that have an emotional dimension (and not simply payoff maximisation).
The third group, in line with Veblen’s view of communities as technology holders, focuses on the cognitive dimension of communities and adjusts it to the contemporary situation. Understood as informal interactions among individuals about their activities, communities can clearly valorise tacit as well as explicit cognitive devices. Acknowledging the increasing role of information in an economy that is shifting from products to services, and even to information services, research on communities as cognitive devices has developed at different scales, ranging from practice communities (Harvey et al. 2015) to national systems of innovation (Garrouste and Kirat 1995). Practice communities appear to be intermediaries between individuals and organisations, supporting both creativity and cost reductions of knowledge production.
Accordingly, the notion of an innovation system that highlights the institutional dimension of innovation has been applied at different, declining scales, from regions (Cooke et al. 1997) to sectors (Malerba 2005). Interestingly, any reference to communities that are explicit in practice and epistemic communities has disappeared from the recent research on innovation systems. Furthermore, the issue of value distributions that are related to technological innovations is not addressed.
The fourth group of studies is more heterogeneous, but all the works in it refer to a collective identity. The theory of social identity stresses that group belonging promotes the convergence of representations and the incorporation of common values and habits (Akerlof and Kranton 2000; Bessis et al. 2006; Bowles and Gintis 2002). Socioeconomists and historical institutionalist have consistently stressed that the commodifications of goods, labour and land during periods of industrialisation were accompanied by extractions from local communities, leading to a decline in their importance in the regulations of social action (Polanyi 2009; Tordjman 2008; Zelizer 1978). However, this particular form of communal organisation did not disappear. Later, following quality turns in markets, devices supporting market segmentation, including those based on identity, were put forward as ways to create consumer attachment and exchange value (Allaire 2010; Callon et al. 2002). The valorisation of production modes through market segmentation is a way to connect communities to provide use value for their members and to capture exchange value. Specific quality schemes can support the market valorisation of specific community practices. Quality conventions, defined as objectified social assessments, serve as a reference for organising economic activities (Favereau et al. 2003). Productivity conventions (building on Leibenstein’s effort convention (Leibenstein 1982)) correspond to social norms that are relative to the source of productivity gains in a sector (especially the labour/capital balance). Quality and productivity conventions coevolve and support the production and exchange of products and services (Coriat and Weinstein 2004). Therefore, communities’ shared identities and the logic of solidarity they entail are the substrates of market exchange (Barthélemy and Nieddu 2004, 2007; Biesecker and Hofmeister 2010). Finally, communities are also put forward, in contexts involving a decentralisation of public policies in accordance with the principle of subsidiarity (Atkinson and Coleman 1992; Keating et al. 2009), as a way to resolve social issues in a reflexive manner (agency) that is based on participation and solidarity (Bhattacharyya 2004).
In summary, original institutionalism provides an extended definition of communities that involves their diversities and their interactions with markets and states. The contributions of communities are highlighted both in terms of their creation of use value and their capture of exchange value. New institutional economics provides, on the one hand, a refinement of use value creation and distribution (Ostrom) and, on the other, a refinement of exchange value creation and capture (Williamson). The economy of innovation refines the ways and means through which communities contribute to knowledge creation. Finally, by relating communities to social identities, the last research group apprehends communities as necessary substrates of market relations: notably, they provide conventions of quality and productivity that frame market exchanges. However, a coherent and operational way to integrate the multifaceted contributions of communities to social relations and to articulate these contributions with economic and public regulations is still lacking. That is what we aim at in the next section; to enrich the comprehensive approach of original institutionalism through contributions from the other three strands of the literature, with a focus on sectoral communities.
2.2 Sectoral communities in intangible property rights regimes: a framework
To build our framework, we start with the four interlocking scales of socialisation identified by JR Commons: micro- (transaction), meso- (collective), macro- (public) and meta-economics (social) (Théret 2005) (Fig. 1, levels I, II, III & IV). We retain the complementarity between economics (fear of poverty), laws (fear of legitimate state violence) and ethics (fear of banishment from the group) in framing individual actions. Ethics is the main operator at the meso- and meta-levels (Fig. 1, in purple), while laws assure socioeconomic order at the macro-level (Fig. 1, red). We also mobilise the representation of any organisation (firm, administration or association) as a going concern reproduced over time by a collective authority and legitimised by public rules. Finally, we consider property rights as bundles of rights over scarce resources and intangible property rights as rights to control future prices granted to a community in favour of its competences (Commons 1934).
From this perspective, the sector can be apprehended as a going concern of sectoral organisations or as a mesoeconomic order (Fig. 1, level II). It is internally structured by a collective rationing authority and externally framed by a macro-public order and the metaethics of reasonable values (Fig. 1, level III and IV, respectively). A sectoral meso-order supervises both a going plant involved in the production of resources for its members and a going business controlling and managing the sectoral resources with the aim of generating an exchange value. A sector is defined by a specific institutional arrangement of coordination devices: "sectoral regularities act both as a permissive authority and as a resource centre for firms" (Boyer and Freyssenet 2000, p. 31). More precisely, building on the typology of market institutions elaborated by Fligstein (1996),Footnote 1 we identify the four institutions that frame a sectoral meso-order (Fig. 1-II) as follows: (i) the sectoral public regulation, derived from law; (ii) the governance structures, that is, the community rules embedded in organisations; (iii) the conception of control that results from repetitions of behaviours that are propagated by imitation and mutual adjustment and lead to a shared vision of market structuring; and (iv) the bundle of property rights made effective by different interlocking collectives (social, public and communal). While studying communities, we focus on intangible property rights: the rights granted to communities based on their skills (capacity to create use values) to monitor exchange values. Conceptions of control concern both productivity and quality conventions and shape sectoral operators’ identities and market structures. The concept of control relies on mutual adjustment and cumulative learning processes; they coevolve with “deliberative” institutions that are public regulations and governance structures. Generic public regulations, such as contract and billing laws, belong to a macro-order, while regulations specific to a sector, such as agricultural policies, contribute to the definition of a meso-order.
Thus, the mesoeconomic order established by a sectoral community within a particular macrosocioeconomic order corresponds to an intangible property rights regime that frames the rights, duties and statuses of the sectoral actors. Extending Ostrom’s inputs (Group 2) to intangible resources, an intangible property rights regime encompasses a system of resources (skills, technologies, organisations, reputations) resulting from cooperation and a system of rules (tacit and explicit) that frame actors’ rights and duties over these collective resources. The four market institutions are necessary and sufficient for comprehending the role of sectoral communities. The intangible property rights regimes that the four institutions elaborate, by framing domains and means of cooperation in the accumulation of resources and domains and the methods of competition involved in their appropriation, define, in the same movement, a resource regime and a competition regime that structures productive activities.
2.3 The adaptations of French and German sectoral communities to the liberalisation of the European dairy market: a case study
2.3.1 Case study approach
Qualitative approaches are better able than quantitative approaches to answer "how" questions (Yin 2009). They are particularly relevant for an in-depth study of contemporary processes and phenomena in real contexts. Historical studies are particularly rich because of the path dependence of past actions and their impact on current ways of thinking and acting.
Germany and France were chosen as case studies because they are the two largest agricultural producers in the EU and the two most influential political players in terms of European agricultural policies. In addition, they use different approaches to assess quality (Sylvander et al. 2007, p. 4; Valceschini and Mazé 2000, p. 37) and use different quota systems (Trouvé et al. 2016). Therefore, it is of particular interest to assess how the sectoral communities of these two leading countries emerged and how they adjusted to the evolution of the European Common Agricultural policy (CAP), to the quality turns in the dairy market and to the rise of environmental issues. Two regions in each member state were chosen, based on previous works (Derville and Fink-Kessler 2019; Trouvé et al. 2016), for their contrasting sector profiles to assess how these sectoral communities relate to their respective spaces. Brittany and Lower Saxony are specialised dairy regions (French and German, respectively) that are experiencing production developments for strong integrations with international markets, while Occitany and Bavaria are regions with contrasting agricultural potentials in mountainous areas that comprise superior-quality segmented markets.
2.3.2 Mobilised data: interviews, literature and statistics
The case studies are informed by three data sources: (i) scientific literature and secondary data (reports, press reviews, and statistical data); (ii) semidirective interviews with various stakeholders of the chains in the four regions; and iii) interviews with selected farmers and some of their upstream and downstream partners. Seventy-three interviews were conducted in 2018 (for more details, see Annex 1). Both statistics (national and regional) and interviews (all transcribed and coded) were used to identify community members, governance structures and conceptions of control (quality and productivity conventions, social identities and market structures in particular). European and national instruments of public policy were identified to characterise public regulations and their sectoral dimensions in particular. Finally, farmers’ intangible property rights (PR) were assessed by considering prices, subsidies and service availabilities. For brevity, the indicators are described in detail in the Annexes, Figs. 1 and 2 and Tables 2, 3 and 4. Only our synthetic views of these results are presented in the results section: the main European reasonable values and regulations and the related economic dynamics are displayed in Fig. 2, while national regulations and the sectoral communities’ conceptions of control and governance structures that result in PR are presented in Figs. 3 and 4, respectively, for France and Germany. Shifts in European regulation are used as the timeframe in all figures. This European timeframe, combined with national and/or regional changes in regulations and communities’ adjustments to them, supports the identification of contrasting periods that are characterised by how a specific combination of market institutions frames different sectoral meso-orders.
3 Results: the adaptive capacities of sectoral communities
Section 1 of the results addresses levels III and IV of social regulation (laws and metaethics). Three periods of public regulation that lead to contrasting social rights for sectoral operators (level I) are distinguished. Sections 2 and 3 focus on the mesoeconomic order (level II). More precisely, Sect. 2 focuses on the emergence and transformation of French sectoral communities, while Sect. 3 highlights the specific, regional structuring of German sectoral communities.
3.1 European rules and a metaethical framing of the European dairy sector
As highlighted in Fig. 2, the change in public regulation, together with changes in economic dynamics, frames three macrosocioeconomic orders: (i) administered industrialisation, from the Stresa Conference to the introduction of quotas; (ii) quality turns under rationing (quotas system); and (iii) liberalisation through the gradual dismantling of public market management tools. These evolutions are more or less concomitant with a change in reasonable values regarding the roles of agriculture and public intervention, as summarised in Fig. 2.
3.1.1 Period 1: the public administration of a market under development
Following World War II, food safety was considered strategic, and agriculture was taken out of international trade negotiations. Nations developed protective public agricultural policies. In Europe, the Common Agricultural Policy (CAP) introduced instruments of protection (tariffs), price support (intervention mechanisms and subsidies for exports and internal disposals) and standardisation to organise and stabilise domestic markets. The dairy sector benefited from a Common Market Organisation in 1968. Collectively, these market instruments reduced competition and constrained market logic, so farmers' incomes did not depend solely on competition and were guaranteed for any farmer who could meet the relevant professional standard (Barthélémy 2000). In addition, public policies invested in agricultural research and favoured the development of cooperative innovation systems (Aggeri and Hatchuel 2003), supporting the widespread use of intensive and industrial technologies (at the farm level: productive specialised breeds, maize cultivation, silage and feeds; at the processing level: pasteurisation, standardisation and industrial processing). In addition, the public stabilisation of the European agricultural market favoured the diffusion of a Fordist model in agriculture (Allaire 2002) that was characterised by (i) the standardisation of agricultural and agri-food products; (ii) the substitution of capital for labour and dynamic economies of scale (through increasingly specialised farms, enterprises and territories) (Krugman 1987); and (iii) the emergence of new identities linked to the separation and industrialisation of upstream (productions of inputs) and downstream (manufactures of food products) activities (Malassis 1977) (Fig. 2, first period, economic dynamics in black). Prices that have been stabilised by public interventions and generic productive solutions can be referred to as social rights (Allaire 2018; Muller 2000; Servolin 1989). They have contributed to a definition of social status for European dairy processors and producers (Fig. 2, I-social rights in green).
3.1.2 Period 2: qualitative turns under market rationing
The saturation of the European dairy market, the increasing costs of storage and export subsidies and the subsequent market rationing modified the terms of trade in 1984. Production rights (quotas) were created, notably, at the request of Germany, to bring the levels of supply closer to that of European demand and to reduce the costs of export subsidies. Quotas ended the extensive growth of the sector. Controversies regarding the economic efficiency of quotas led to freedom in their national implementations (Barthélémy 2000).
The end of extensive growth, combined with the creation of a unique market (1986), led to an intensification of and to a later change in the form of competition. Gradually, cost and noncost competitiveness were combined (Allaire and Boyer 1995; Porter 1989; Reynaud 2009). In 1995, the start of the Uruguay Round reinforced this trend. The legitimacy of public interventions in agricultural market regulations was also questioned. Because of the quotas, it was only from 2003 onwards that tariffs on dairy products gradually declined and were partially substituted for by direct subsidies. The change in public instruments corresponded to a change in the form of social rights that were granted to dairy farmers, from secured prices, to granted market accesses, to direct subsidies.
In parallel, following the outbreak of mad cow disease and the dioxin scandal in the 1990s, social trust in industrial quality declined (Fig. 2: change in reasonable value—level IV). European food policies responded in two ways. First, superior-quality labels were officially recognised (organic farming in 1991; products of geographical indications (PGI)Footnote 2 in 1992). Second, the adoption of a European food safety policy (2002) standardised the level of health safety by involving all actors in the food chain, formalising their responsibilities and optimising the controls implemented by the health authorities (Meuwissen et al. 2003). These evolutions created opportunities for specific, intangible property rights (Fig. 2 level I).
3.1.3 Period 3: the liberalisation
The 2008 CAP reform planned for the withdrawal of the quota system that was completed with its abolition in 2015, marking the entry of the dairy sector into a more liberal regime, notably marked by the spread of international price volatility within the European market. Major strikes (in Germany in 2008 and France in 2009) suggest that the social rights granted to dairy producers were no longer sufficient. In light of farmers’ difficulties, several measures were adopted: a milk package (2012), specific provisions within the new single common market organisation (CMO) (2013), and a market observatory (2014) was created (Fig. 2, level III in red). These initiatives strove to ensure the future of the European dairy sector, following the abolition of the quota system, by reinforcing a milk producer’s position within it. They offered a European framework to (i) establish written contracts between producers and dairy processors, (ii) encourage the creation of large producer organisations (POs) (corresponding to as much as 33% of a given national collection and 3.5% of European production), (iii) provide POs with the possibility to collectively negotiate milk prices without ownership transfers, and (iv) recognise interbranch organisations. Finally, a collective monitoring of the supply was also made possible to facilitate protected designations of origin (PDO)/protected geographical indications (PGI). These liberal measures show a transfer of the responsibility for sectoral order to the operators. In parallel, following the notable Paris Agreement on climate change (2015), the multifunctionality of agriculture was increasingly stressed, in addition to the legitimacy of public interventions regarding preservations of public goods (Barthélemy and Nieddu 2004). From this perspective, the principal challenge for the 2020 CAP reform is to provide incentives to ensure that agriculture contributes effectively to the European Green Deal and to its farm-to-fork strategy in particular (Guyomard et al. 2018).
3.2 France: nationally generic and locally specific sectoral communities
In France, the centralisation of power and the coadministration between the state and agricultural organisations has favoured the structuring of a powerful national sectoral community, which has been progressively challenged by alternative local communities, legitimised, notably, through public quality policies (Fig. 3). In France, the sectoral structuring of communities transcends regional disparities: generic and specific communities are present in both regions studied.
3.2.1 National structuring of a sectoral community
France’s industrialisation through public regulation supported the national transition from localised heritage farming to modernised agriculture (Muller 2000). Farming became more motorised and artificial, relying on the use of petrol, fertilisers, and chemicals (Daviron and Allaire 2019). CoadministrationFootnote 3 and state centralisation favoured the national structuring of sectoral communities and the spread of generic resources.
The dairy sector, which can be highly concentrated in small areas, was particularly affected by this development (Muller 2016; Mundler and Rémy 2012). It benefited from numerous complementary governance structures that framed sectoral communities and their members’ sectoral identities. The public dairy board (Milk Office) gathered representatives from the dairy sector and the industry’s administration to design national policy interventions. The National Federation of Dairy Farmers (FNPL) was created in 1946 to not only defend milk prices but also to promote a particular model—the two-worker, professional family dairy farm—through a preferential allocation of the means of production (especially land and direct aid for investment). The Godefroy Law of 1969 favoured the collective management of sectoral issues and supported the gradual institutionalisation of “all-purpose milk” (based on a national milk payment grid), which in turn supported productivity gains (the exchange of collection routes across dairies reduced collection costs). This regulation also led to the gradual structuring of a powerful and private interbranch organisation that gathered representatives of farmers, dairy cooperatives and private dairies at the national (CNIEL) and regional levels (CRIEL). The emergence of these new entities (input and processing firms and professional farms) and the structuring of governance structures (Union, FNPL, Milk office and CNIEL) favoured the adoption of intensive and industrial technologies at the farm and processing levels, respectively.
The sectoral communities remained strong throughout the second period (qualitative turns via rationing), as they managed to adjust to quota systems and qualitative market turns through a logic of solidarity (Fig. 3, second column in the first blue table). Indeed, the administrative management of quota transfers (nontradable) aimed to prevent uncontrolled restructurings and any weakening of modernisation’s social compromises (Hairy and Perraud 1988, p. 34). In addition, the interprofessional management of prices (the variations of which were marginal within the framework of the milk CMO) and quality issues limited both competition between producers vis-à-vis processors and between processors vis-à-vis producers. Therefore, although dairy processors had restructured and shifted their output towards demand-driven business models, all producers, regardless of the outlets of their collection companies, benefited from the same basic price. The French interbranch organisation managed and balanced the market power of the national dairy supply chain despite the gradual growth and concentration of supermarkets. Thus, this sectoral management of generic resources based on a logic of solidarity slowed the spatial concentration of production and favoured the maintenance of medium-sized farms throughout the territory (Dervillé et al. 2012). However, it also led to the persistence of an industrial conception of control (Ansaloni and Fouilleux 2006).
This industrialisation drastically changed the structure of dairy activity and its geography (Ricard and Rieutort 1995), putting pressure on artisanal dairy processors, particularly on artisanal cheesemakers from the mountainous areas who were now competing with the industrial cheese processors on the plain of Brittany (Delfosse 2007).
3.2.2 Gradually structuring specific, alternative communities due to quality turns
Resistance to industrialisation, organised from the 1960s onwards, sought to protect artisanal knowledge and small production structures. The early French specific quality policy, which provided normalisation devices as alternatives to industrial standards, eased the gradual structuring of alternative representations and organisations of agriculture (CC and GS). Several governance structures were created that progressively facilitated the national recognition of the terroir doctrine (Allaire and Wolf 2004): the national committee for cheese appellations of origin (1955), the national association of French dairy designations of origin (1973), and the national institute for designation of origin (INAO), which codified PDO-certification for wine and dairy (1990). Other public certifications were also elaborated: the certification of “Label Rouge” denoted a superior quality (1960); the certification of organic farming (1982), and the certification of conformity (1988). In some cases (Comte or Savoy cheeses, for example), PDO organisations managed to structure several coordination instruments to frame specific processes of value creation and distribution: research programs, national and international promotion campaigns, cheese production rights (via the tag delivery policy and road map), market monitoring methods and common price setting rules. Through these specific supply chains, dairy farmers were able to valorise specific resources (grass-based farming, artisanal cheese making) at stable and higher prices. In these particular cases, specific sectoral communities are the origin of specific, intangible property rights. Official indicators of quality are clearly the only significant sources of differentiation in the prices of milk (Desbois and Nefussi 2007). Through their development, these alternative food chains, combined with societal critiques of industrial quality (Sonnino et al. 2008) and the gradual structuring of alternative unions, have gradually undermined the domination of the main union and the supremacy of its intensive and industrial conception of control of agriculture. At the regional level in particular, local authorities have gradually considered alternative interlocutors in their elaborations of projects, opening up new opportunities for alternative conceptions of control (organic and PDO especially). However, until 2008, these alternatives represented only 15% of French milk production (Dervillé 2012). After 2008, the continuous growth of the organic sector and the multiplication of producers’ differentiation strategies led to a gradual increase in alternatives’ market shares.
3.2.3 Crisis of the generic sectoral communities since 2008 and the strengthening of alternatives
In 2008, the diffusion of international price volatility exercised pressure on French sectoral communities, including farms and firms, and collective governance structures were also affected. Moreover, in that same year, the CNIEL was compelled to conform to the competition law and to put an end to its interbranch agreement on milk prices.
The French public responses to this shock have been gradual and not systemic. First, the French choice for a historic allocation of direct subsidies reflects path dependency (the preservation of farmers’ intangible social rights) but prevents strategic reallocations. Despite a certain rebalancing in favour of livestock systems from 2008 onwards, direct subsidies have neither supported regional specialisation nor favoured environmentally friendly farms (Kirsch et al. 2017). Second, milk contracts were made compulsory in 2010, before producer organisations (POs) could negotiate them, resulting in bilateral contracts and 'de facto quotas' without price compensation (Trouvé et al. 2016). Finally, the agroecological project put forward since 2014 by the Ministry of Agriculture aims to change representations and practices, as shown by the gradual revisions of agricultural education curricula, but it remains focused on techniques without creating market opportunities (Derville and Fink-Kessler 2019).
Economic dynamics display path dependency as well. Without interbranch support and with ambivalent support from the FNPL, the POs, although promoted at the European level, fail to emerge as effective governance structures. Moreover, the end of the interbranch agreements weakened the CNIEL and limited its capacity for regulation and anticipation. The main union and interbranch that were inherited from modernisation and remain nationally structured appear in many ways to be a lock-in that limits the adaptation capacities of dairy farmers. Thus, in connection with their inability to organise a collective negotiation of market access conditions through contracts, farmers have lost part of their sectoral rights and market access conditions, which depend both on the market positions of dairies and the localised capacities of farmers grouped in POs to negotiate, and are becoming fragmented (Lambaré et al. 2018). This crisis of common generic sectoral resources can also be observed in the area of animal genetics, which is in the process of being privatised (Allaire et al. 2018).
In contrast, the localised and specific meso-orders were able to build on their specific resources to adapt to the liberalisation of the European dairy sector (Fig. 3, green table). Notably, they adjusted their coordination devices to quota removals (creating production rights attached to land, for example, in the Comté PDO) and reinforced market differentiation: specific milk currently benefits from differentiated prices (independent of the generic milk price) and not simply from a premium (Dervillé and Allaire 2014).
In sum, while the crisis of 2008 comprised a breaking point for the generic sectoral meso-order, this was not the case for the specific, local meso-orders that pursue their own development trajectories (Fig. 3, different periodisation of Tables 1 and 2). For specific meso-orders, European (1990) and international recognition (Agreement on Trade-Related Aspects of Intellectual Property Rights—TRIPS—in 1994) were the breaking points.
3.3 Germany: a regional differentiation of competition regimes
In this section, we show how German sectoral communities are more informal and regionally structured, which reduces interregional competition and favours their adaptation capacities regarding dairy market liberalisation.
3.3.1 A decentralised industrial meso-order
Prior to EEC adhesion, in Germany, the organisation of the dairy sector was structured by three laws: (i) the “Market Structure Act” (1933) and (ii) the “Milch und Fett-Gesetz” (Law of Milk and Fat) (1952), which organised production and strengthened the producer-dairy relationship through the institution of the full intake principleFootnote 4 and quality payments for milk; and (iii) the Marktstrukturgesetz (the Market Structure Act) (1958), which gave producers the right to collectively negotiate prices. In addition, Germany combined the CMO with a system of positive monetary compensation (1973) that allowed German farmers to benefit from real domestic prices that were higher than European prices. As a result, Germany progressed and became a net exporter of dairy products (Annex, Fig. 1).
In contrast to France, Germany is a federal nation. The German Ministry of Agriculture (MoA) has power over transversal issues and the Lander Ministries of Agriculture have wide room to manoeuvre in terms of education, research, extension services and CAP implementation. In combination with the regional structuring of the sector,Footnote 5 the Lander agricultural policy has preserved the regional character of quality conventions and milk transactions.
As in France, the main German union (DBV) is a governance structure that contributes to defending farmer rights and to developing a shared understanding of farming activities (conception of control). However, though the DBV also contributed to the diffusion of an intensive conception of control, it has not focused on a particular farm structure. It represents farms of heterogeneous sizes from northern and southern Germany and focuses its action on agricultural prices. It is geographically structured at the Länder and national levels, not by production methods. There is no German equivalent of either the FNPL or of the public dairy board and its private interbranch. However, the full intake principles and the producers’ right to collectively negotiate prices locally structure the bilateral relationship between producers and dairies. In addition, the representatives of dairy firms and farmers meet informally at a yearly agricultural fair or on an ad hoc basis. This informal organisation has endured, all the more that the quota system has not called into question the producer-dairy alliance in Germany.
3.3.2 The liberal turn that followed German reunification
In Germany, it was the reunification in 1990 that was the major breaking point. First, the merging of contrasting production structures stressed the economic function of farming instead of its familial character. This was supported by the development of training and skills involving production cost monitoring. Second, liberal measures, such as the creation and extension of quota markets (2007) and the decoupling of direct subsidies,Footnote 6 favoured the concentration of production in areas with comparative advantages. This reinforced the concentration of dairy production in grass-based areas, particularly in northern Germany (nearly 800 million litres in quotas were transferred from southern to northern Germany). Third, the Renewable Energy Sources Act (EEG) (enacted in 2000, with major changes in 2012 and 2015Footnote 7) was turned into a "third pillar of agriculture as important as the first pillar of the CAP" (IDELE 2015). These orientations prepared the German dairy communities for the liberal reforms of the CAP.
Furthermore, due to its similarities to the existing framework, the implementation of the European “Milk package” of 2012 did not act as a constraint (Derville and Fink-Kessler 2019). In contrast, the creation of the MEG Milch board and Bayern MEG in 2006 (national associations with northern and southern anchorage, respectively, which aimed at supporting farmers’ accesses to information and negotiation capacities) with full support from the main union reinforced farmers’ bargaining power. In addition, Germany’s basic cheese exports support a dynamic dairy industry (Annex, Fig. 2 and Table 2). Cooperatives in northern Germany in particular have invested in large processing facilities suited to mass production, while Bavarian dairies have built brands of intermediate-quality cheese for export to neighbouring markets.
In terms of quality, greater emphasis (compared to France) was placed on environmental concerns (Schritt et al. 1977). Germany started supporting organic farming as early as 1988. Following the ESB crisis and the nomination of the first “green” minister of agriculture, R. Künast, a major recovery plan for German agriculture was developed (and continuously renewed since) to support the dissemination of knowledge and the structuring of organic supply chains. In addition, the Länder of southern Germany took advantage of their autonomy in terms of agricultural policy and the CAP’s second pillar implementation to establish their own programmes to support small farms and maintain attractive rural areas: KULAP in Bavaria and MEKA in Baden-Württemberg. These proactive policies (which include incentives to preserve the landscape, to create regional brands, and to support organic farming) reinforced the qualitative turns, preserved diversified farming methods and slowed the concentration process.
3.3.3 Regional differentiation of sectoral meso-orders as a lever for adapting to liberalisation
Thus, built on federalism and on the regional structuring of the market and industry, two contrasting sectoral communities have been structured around specific arrangements of the four market institutions (Fig. 3 blue and green tables; in Annex, Table 4).
In Bavaria, the conception of control is qualitative. Smaller and more diversified dairy farms have been maintained. Private and cooperative dairies of various sizes coexist. Value creation is based on intermediate quality cheeses by solid, private brands within regional markets (Italy, Austria, Slovenia and later on, eastern Europe) (Fink-Kessler 2013 and interviews). The Bavarian MoA supported this qualitative development through proactive policies (incentives to preserve the landscape, the creation of a regional brand, and support for organic farming). The Bavarian dairy industry benefits from regional dynamism and a good national reputation, with several leading industries and clusters in the automotive, information technology, biotechnology and aerospace fields. The creation of the Bayern MEG contributed to the development of collective bargaining capacities that can counterbalance concentrations of the downstream industries. Thanks to their production of quality products and to their collective bargaining capacities, dairy farmers benefit from higher milk prices. In addition, they derive their income from various non-dairy activities (wood, tourism).
In Lower Saxony, the dairy industry has continued to export butter and milk powder to international markets. Following the reduction in export subsidies, processing firms ventured into the mass market for industrial cheese as well. Value creation continues to occur mainly in scale economies due to the regional concentration of cooperatives and farms. Milk prices are low, and farms have no choice but to cluster, specialise and grow. However, they benefit from public subsidies that are oriented primarily towards investments, which sustain the system. In Lower Saxony, the regional capacity of action relies on the pooling of generic resources.
Therefore, because of the contrasting development paths in Bavaria and Lower Saxony, the sectoral communities are different, and the resources dairy farmers marshal contrast: resources are specific in Bavaria, whereas they are generic in Lower Saxony. A qualitative turn is underway in Bavaria and offers farmers opportunities for income diversification, while farmers in Lower Saxony are being encouraged to concentrate further. The regional differentiation of sectoral communities thus allows contrasting production models to coexist. This appears to be a relevant strategy for adapting to liberalisation. However, this regional differentiation, in the absence of an effective national coordination, exposes farmers to the power of supraregional operators, especially distributors who have taken leadership over a number of differentiation strategies.
4 Discussion
Our study shows that communities did not disappear amidst the industrialisation of food chains; rather, they shifted from small, place-based heritage communities to larger sectoral communities. Sectoral communities are made of several emerging identities (professional farms, input firms, producer associations, cooperatives, and dairy firms) and are structured through informal interactions as well as within governance structures (unions and eventually interbranches and boards, as in France). Sectoral communities are diverse in terms of form and scale of operation as well as in terms of resources mobilised. They coevolve with the form of the state that legitimates them through a delegation of authority.
4.1 An innovative framework to grasp sectors as nested communities
The conceptualisation of a sector, as mesoeconomic regulation space authorised by law and structured by collective rules, is an innovative way to grasp the nested relationships between communities, market and state. The intangible property rights regime encompasses a system of tangible and intangible resources resulting from cooperation and a system of rules (tacit and explicit) framing actors’ rights and duties over these collective resources. This framework contributes in four ways to the extant literature.
First sectoral regulations can be understood as both cognitive and normative. Frequent meetings, whether informal or within specific governance structures, support the creation of new productive resources (knowledge and expertise, collective reputation, etc.) requiring a knowledge base that is too specific to be accessible by state administration (Bowles 1998; Williamson 2005). Communities also favour reciprocal adjustments and shared representations in a logic of appropriateness (Ostrom 2010).
Second, building on Commons’ scales and types of social regulations, the framework theorises the complementarity between community regulations and state regulations in establishing institutions. It supports an understanding of bundle of property rights as concerted action embedded into various collectives (going concerns). This conception comports with the three dimensions of institution—regulatory, cognitive and normative—highlighted by Scott (2013).
Third, community activities and outcomes concern not only productive resources and use value (knowledge, innovation capacities and productive solutions), as highlighted by Ostrom, but also bargaining capacities and exchange values, as stressed by Commons and Williamson. The proposed framework and methodology are thus a way to articulate Ostrom’s and Williamson’s approaches within the literature group 2.
Fourth, the intangible property rights regime approach accounts for power relations crystallized into a social hierarchy of sectoral actors with different statuses regarding to the access and usage to productive resources (operational rights) as well as the management and creation of these resources (constitutional rights).
Finally, the case study demonstrates the significant heuristic scope of the elaborated framework. The historical Franco-German comparison shows that, if communities modus operandi are similar, their diversity, in terms of degrees of specialisation and formalisation as well as in scope of action, has an impact on the way value is created, transferred and distributed. The form of the state also plays a role. In France, the governance structures (the interbranch organization, milk office and FNPL) play a key role, which is not the case in Germany, where the sectoral community is broader (agriculture and not dairy) and interactions are more informal. In the French centralised state, sectoral communities are national while they are regionalised in federal Germany. Therefore, the sectoral communities are the origin of intangible sectoral property rights that can be, depending on their structuring, regionalised (Germany) or not (France).
In sum, this framework and its mobilisation are a way to highlight the contributions of sectoral communities in the structuring of productive activities and to revise the approach to communities in research on institutional economics. They contribute to the analytical toolbox for studying institutional change (Hall and Thelen 2009; Ostrom 2011).
4.2 A differentiation of sectoral communities: adaptations to the liberal turn of the CAP
Amidst the liberalisation mandated by the CAP, public interventions have shifted, from direct market administrations to indirect framings of private orders. Therefore, sectoral communities that used to negotiate for and then implement resources created by their state (standards, technologies, quotas, subsidies, etc.) must now implement private orders within the guideline established by their state (compulsory contracts, establishment of producers’ organisations, etc.).
In Germany, these adjustments took the form of a deepening of regional differentiations of the sectoral communities, leading to spatially contrasted but rather coherent conditions for farmers to access the market: intensification and concentration in Lower Saxony; and diversification and quality differentiation in Bavaria. In France, on the contrary, farmers lost some of their national negotiation capacities and did not gain regional capacities (mainly weak and processor-based producer organisations). Only farmers who engaged in specific quality chains have benefited from stable and remunerative prices (Bouttes 2018; Dervillé and Allaire 2014).
This Franco-German comparison reveals that it is vital to understand how sectoral communities build innovative capacities and reputations to develop remunerative productive solutions. Place-based differentiations of sectoral communities (regional, as in Germany, or local, as in the French PDO) appear to be one method to adjust to liberalisation by avoiding direct competition and concentration. This is in accordance with the literature on place-based food chains (Chiffoleau and Prevost 2012; Marsden et al. 2000; Spanu and Maréchal 2010). It echoes as well with the quality turn that took place in the wine sector in the XXs century. In this sector, mass production and consumption gradually declined, leading to a sector structured around differentiated wines in accordance with the terroir doctrine. However, such a large-scale quality turn was made possible by a disqualification of industrial products as well as by the cultural dimension of wine consumption and its role in systems of social distinction (Bartoli and Boulet, 1990). In the dairy sector, the situation is different as industrialisation actually took place, leading to a market dominated by standardised industrial dairy products. Differentiated products (geographical identification and organic products) account for less than 15% of the French production in 2008 and less than 5% in Germany.
In this context, the French and German cases show that the national structuring of sectoral communities remains relevant when extended national and international markets of standardised products are targeted. Therefore, what is at stake is not only the optimal alignment of public policies and community institutions (governance structures and conceptions of control) but also the articulation between different sectoral communities. The PDO framework supports such a multiscalar structuring with local governance structures per product and broader (national and European) multiproduct associations. Investigations of the interactions and interdependencies across different sectoral more or less territorialised communities should be pursued.
4.3 Communities in the polycentric governance of agricultural and food transitions
We have clearly shown that public policies and sectoral communities coevolve. Therefore, considering communities is key in designing effective public policies. This may be a way forward to overcome the failure of European environmental policies (Guyomard et al. 2018) and to effectively balance market power in food supply chains (Billows 2019). Could the creation of a legitimate field of action for sectoral communities be a way to implement a change of paradigm? At which conditions?
The Franco-German comparison shows it to some extent as public policies in favour of superior food quality have supported the local and regional differentiations of sectoral communities, shielding meanwhile their positive social and environmental outcomes (Bontemps et al. 2012; Belletti et al. 2015). Further promotion of such quality products could thus be a way to favour agricultural sustainability. Complementarily, research on the adoption of agroecological farming practices (based on the monitoring of biological processes at farm and territorial levels) has demonstrated the necessity to strengthen a reshuffling of the innovation and valorisation capacities to the regional level (Triboulet et al. 2019). In other words, agroecology and deep sustainability could require a “desectorilization” of agricultural communities to be able to valorise the diversity of plants, breeds, agroecosystems and food cultures (Leach et al. 1997; Rajeswari 2021). On the contrary, further digitalization and robotization of farming may lead to a desectorilization without reterritorialization of agricultural communities.
In all cases, the elaborated framework can help investigate and support the reconfiguration of agricultural communities around the valorisation of the diversity of agroecosystems and the multifunctionality of farming. It could offer, as well, a way to overcome the identified literature gap regarding the institutional dimensions of regional resilience (Boschma 2015).
5 Conclusion
Building on a thematic review of the literature on communities in institutional economics, we elaborated a multiscale framework to comprehend the multidimensional roles of sectoral communities in their contexts. The comparative analysis of the transformation of sectoral communities in the French and German dairy sectors is a proof of concept and highlights the contributions of sectoral communities to institutional changes.
We showed that communities did not disappear with industrialisation and state structuring; rather, they shifted from place-based, heritage communities to wider sectoral communities. Interventionist public policies have supported and favoured the structuring of sectoral communities to better suit the industrialisation of dairy activities. Contrasting political choices in France and Germany have led to contrasting sectoral conceptions of control (identities, quality and productivity conventions, etc.) and governance structures. The French sectoral communities are highly structured and centralised, with governance structures dedicated to milk production that have favoured the structuring of a national conception of control, whereas the German sectoral communities are looser and regionalised, which have favoured the coexistence of contrasting conceptions of control. In both countries, the quality turns and the development of public quality schemes have supported the segmentation and the reterritorialisation of sectoral communities at different levels: locally in France (notably in the case of PDO) and regionally in Germany. The regional or localised differentiation of sectoral communities appears to be a way to adjust to markets’ liberalisation as well as to evolving societal demands. However, this does not invalidate the relevance of a wider sectoral community to target global markets.
This institutional insight into sectoral communities is a breakthrough; it enables us to highlight that communities can do more than improve outcomes for their members: as flexible, nested action arenas, they can extend public action and support institutional change. Sectoral communities, by framing their internal orders, pooling their resources and spreading collective knowledge, have contributed to solving productive problems (creating use value for sectoral community members); at the same time, by negotiating and legitimizing their insertions into a macro socioeconomic order, they negotiate the exchange values of their activities (that is, they capture value through the transfer of intangible property rights). These findings pave the way for further investigations regarding institutional change. Studying the coevolution of more or less territorialised sectoral communities could be a way for researchers to study the transition towards sustainable agriculture in particular. Finally, considering regional and sectoral communities when framing public policies is a way to enhance both their relevance and efficiency.
Data availability
Not applicable.
Code availability
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Notes
Even if we keep a typology of four market institutions, the Commons distinction between laws and ethics leads us to delimit, more strictly than Fligstein, (i) the rules of exchange as public rules derived from law and (ii) governance structures as community rules embedded in organisations that differ from conceptions of control because of their deliberative nature. We stick as well to the definition of property rights as bundle of rights.
Protected Geographical Status (PGS) is a legal framework that is defined by European Union law to protect the names of regional foods. Protected Designation of Origin (PDO), Protected Geographical Indication (PGI) and Traditional Speciality Guaranteed (TSG) are distinct regimes of geographical indications (GI) within the PGS framework. PDO, PGI and TSG are differentiated products that can satisfy a specific and remunerative demand. The reputation and the potential of value addition are collective goods. PGS is based on a specific history and knowledge that is embodied in publicly acknowledged terms of reference. In France, it is managed at the national level by the National Institute for Origin and Quality (INAO) by the Ministry of Agriculture. It has been granted through third party certification since 2008.
Coadministration is a sociopolitical model of relations between representatives of the state and part of the agricultural leadership (Colson 2008). This practice was imposed by a legislative framework (orientation law of 1960, 1962 and 1966), supported by the structuring of powerful governance structures (the main unions, FNSEA and JA, agricultural chambers and cooperative and credit organisations) and materialised via annual conferences. The objective was to promote a new model of agriculture (conception of control) that was intended to serve the general interest: the rapid modernisation of farms was a prerequisite to allow productivity gains and to ensure improved incomes. An agricultural exodus was accepted on the condition that it was accompanied by social measures.
The full intake principle implies that all the milk of a member of the cooperative must be delivered; therefore, the dairy is obliged to purchase all the milk from a member. The same type of relationship exists between dairy farmers and private dairies.
The dairy industry developed in southern Bavaria in the 1820s, and the land that had been used for flax production was redirected towards permanent grassland and milk production. Thanks to the know-how imported from Swiss cheese makers, a cheese business developed in the foothills of the Alps. In northern Germany, on the contrary, the butter industry was initially developed for the international market (Jürgens and Fink-Keßler 2015).
Minister R. Kunast decided to fully adopt the 2003 reform, gradually reducing the coupled payments and standardising the amount of decoupled aid provided to farms. This standardisation was gradually carried out at the Länder level from 2005 to 2013 and then at the German level from 2014 to 2020, leading to a significant increase in the value of aid assigned to grassland areas and dairy farms with historically low per hectare production, as well as the Länder and "natural regions" (in Lower Saxony) with the historically lowest average yields.
Between 2004 and 2009, the EEG gave farmers a major incentive to invest in biogas installations (20-year contracts with relatively high electricity feed-in prices). The EEG was then modified in 2012 and 2015 to reduce negative effects on the environment and increases in land prices: it capped the use of corn at 60%, provided incentives for smaller installation, and employed a 10% price reduction (Torries 2016).
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Dervillé, M. Institutional insights into the adaptation capacities of sectoral communities: evidence from the restructuring of the dairy sectors in France and Germany. Ann Reg Sci 71, 61–91 (2023). https://doi.org/10.1007/s00168-022-01132-y
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DOI: https://doi.org/10.1007/s00168-022-01132-y