Exchange relationship between Feed Producer and Producer

Purpose of exchange:

single transaction versus long-term relationship

Nature of communication:

anonymous versus firm to firm

Formality of exchange:

formal versus informal

Type of contract:

classic (closed) versus relational (open)

Long-term relationship exist between producer and feed dealer but without contract.

Next to a transaction relation, the dealer advises the producer (e.g., about feeding schemes, production rights and general company strategic advise).

No (frequent) direct communication between feed producer and farmer.

The feed producer is represented by the dealer, which is an independent company.

An informal relation, which becomes now increasingly more formalized.

For example, the slaughterhouse requires farmers to obtain food from producers who have product liability insurance for a certain amount of coverage.

No contract exists between dealer and producer. Producers may switch to new suppliers at any time.

However, frequent switching of feed supplier is not favourable for farm management.