Integration of dairy farms in supply chain in bulgaria

Bachev, Hrabrin (2008): Integration of dairy farms in supply chain in bulgaria.

Abstract

This paper presents a new business model for an effective market inclusion of numerous small-scale dairy farms developed by a private entrepreneur. Firstly, it gives insight on development and challenges of Bulgarian dairy sector. Next, it describes the innovation, identifies drivers and changes of inclusion, and assesses its efficiency and sustainability. Finally, it evaluates the possibilities for up-scaling of the model, and suggests business and policies recommendations. Major features of the model include: developing a competitive dairy processing enterprise for locally produced milk; installing milk collecting, cooling, and controlling facilities in the neighborhood and within farms; modernizing milk supply and processing quality according to the top industry standards; building an effective system for governing relations (coordination, stimulation, control, conflict resolution) with individual farmers; developing a company mark and reputation for high quality products; introducing a great variety of specific, original and locally produced products into regional, national, and international markets. Critical factors for evolution of the model have been identified as: private entrepreneurship, experience and skills, technological discipline, available resources, introduction of innovations, effective governance (control, incentives, adjustment) of vertical relations, building a good reputation, development of markets and formal regulations. Integration of farmers has been associated with needs of progressive changes in breed of animals, technology of production, and labor organization, and led to higher income, quality of production, stability of sells and prices, care for animals and environment, and possibility for modernization and adaptation to formal requirements.

• Item Type: MPRA Paper
• Language: English
• Keywords: chain governance, vertical integration, business innovation, farmers inclusion, dairy farming, Bulgaria
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q13 - Agricultural Markets and Marketing ; Cooperatives ; Agribusiness; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q12 - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

References

BACHEV, H. (2005): National Policies Related to Farming Structures and Sustainability in Bulgaria, in Implementing the CAP Reform in New Member States: Impact on Sustainability of Farming System, Proceedings of EU workshop, JRC-IPTS, Seville. BACHEV, H. (2006a): Impact of EU CAP on Sustainability of Bulgarian Farms, Agricultural Economics and Management 5, pp. 37-47. BACHEV, H. (2006b): Governing of Bulgarian Farms – Modes, Efficiency, Impact of EU Accession, in Agriculture in Face of Changing Markets, Institutions and Policies: Challenges and Strategies, editors J.Curtiss, A.Balmann, K.Dautzenberg and K.Happe, IAMO, Halle, pp.133-149. BACHEV, H. (2008a): Bachev H. (2007): Management of Environmental Challenges and Sustainability of Bulgarian Agriculture, in Environmental Challenges and Human Security: Recognizing and Acting on Hazard Impacts, editors P.Liota and J.Lancaster, Springer, Amsterdam BACHEV, H. (2008b): Post-communist Transition in Bulgaria – Implications for Development of Agricultural Specialization and Farming Structures, Proceedings, in Management of Rural Land, Agricultural specialization and Rural Patterns of development, EU COST Workshop, University of Rennes, Rennes. BACHEV, H., KAGATSUME, M. (2003): Governing of Marketing in Bulgarian Farms. The Natural Resource Economics Review 9, Kyoto University, pp. 55-69. BACHEV, H., I. MANOLOV (2007): Inclusion of small scale dairy farms in the supply chain in Bulgaria (a case study from the Plovdiv region), Regoverning Markets Innovative Practice series, IIED, London. BERDEGUE, J., PEPPELENDOS, L. (2005): A Method for Analysis of Innovative Practice in Connecting Smallholder Producers with Dynamic Supply Chains, Resource Paper for Component 2, Regoverning Markets. KOVACHEVA, T., PETROVA, I., MALAMOVA, N., IOVCHESKA, P. (2007): Impact of CAP on Development of Food Industry in Bulgaria. Agricultural Economics and Management 3, pp. 31-41. MLADENOVA, M., BACHEV, H., KANEVA, K., KOTEVA, N., HADJIEVA, V., RISINA, M., ATANASOVA, M., MITOVA, D. (2007): State and Perspectives for Development of Bulgarian Farms in Conditions of EU CAP. Agricultural Economics and Management 3, pp. 18-30. OECD (2000): Review of Agricultural Policies: Bulgaria, OECD, Paris and Sofia. STOYANOV, N., HADJIEVA, V., IVANOV, B.,.RUSINOV, A. (2007): State of Likely Changes in Livestock Production in Conditions of CAP. Agricultural Economics and Management 3, pp. 42-51.