| Abstract: |
The combination of transition and globalization since the early 1990s has
caused dramatic changes in supply chains globally. This paper uses survey
evidence from several Eastern European countries (Albania, Bulgaria, Poland,
Slovakia, Romania and Russia) on how these forces affect the dairy sector. In
many countries dairy farms are small family farms. Investments by foreign
companies in processing and retailing and the opening to international markets
have introduced higher standards, leading, in turn, to extensive contracting
and vertical coordination in the dairy chain. In countries close to the EU the
restructuring of the dairy chain was mostly driven by investments in dairy
processing, while in countries further from the EU, and less advanced in
transition, retail investments are playing a more important role in driving
change throughout the dairy chain. There have been significant efficiency
gains, and the vertical coordination had positive effects on farm investments
and productivity, especially since the late 1990s. Evidence suggests that
small dairy farms have generally benefited from the vertical coordination
processes. |