Small farmers, standards, value chains, and structural change: panel evidence from Bulgaria

Abstract

Purpose – In the past decade, there has been a dramatic decline in agricultural employment in Bulgaria and several reports have pointed at supply chain modernisation and poor milk quality as the main reasons for the dramatic decline in the number of farms. However, to date the policy debate is been based on ad hoc claims, while there is relatively little micro-level evidence. The purpose of this paper is to analyse the determinants of structural change in the Bulgarian dairy sector in the period 2003-2009. Design/methodology/approach – This paper analyses the determinants of structural change in the Bulgarian dairy sector in the period 2003-2009, using a unique panel survey of 296 farm households in the North and South Central Region of Bulgaria. In order to control for sample attrition bias, the authors use a two-step Heckman model of farm survival and growth model. Findings – The data confirms the rapid outflow of agricultural labour from dairy farming activities: 55 per cent of the farm households supplying milk to a dairy company in 2003 stopped supplying in 2009. The main reasons for quitting are ageing of the household, health problems and an increase in off-farm employment alternatives and not supply chain modernisation and milk quality standards. The institutional innovations which are associated with integration in modern supply chains, such as the provision of farm assistance programmes, have a positive impact on small farms’ growth. Originality/value – The study is one of the first to use panel data to analyse the impact of standards on the survival and growth of small farms in value chains. The authors analyse the determinants of farm survival and growth in the Bulgarian dairy sector in the period 2003-2009, using panel surveys of 296 dairy farm households in the North and South Central Region of Bulgaria and panel data from interviews with dairy companies. The findings are relevant beyond the Bulgarian dairy sector as supply chain modernisation and changes in quality regulations are taken place in many other transition and developing countries.

Smallholder agriculture in transition economies

“…Further, small-scale farmers' yields in vegetable production were 20% higher than on the firm's own farms. Empirical studies that looked at the dynamics of smallholder integration in modern value chains in CEE (including Poland, Bulgaria, Romania, Slovakia, and Albania) found that (a) many smallholders were integrated in supply chains; (b) many were upgrading in terms of technology, productivity, and size; and (c) the ones that were not upgrading or growing were older farms, keeping animals for household consumption only Dries & Swinnen, 2004, 2010Noev et al, 2009;Van Berkum, 2006;Van Herck & Swinnen, 2015). The latter group gradually became smaller over time as older people stopped farming-because they were too old or had retired.…”

“…The latter group gradually became smaller over time as older people stopped farming—because they were too old or had retired. Noev et al () and Van Herck and Swinnen () surveyed more than 200 small‐scale farmers in Bulgaria in 2003, before European Union (EU) accession, and (the same farmers) in 2009, after EU accession, and found a strong reduction of smallholders, because younger, more dynamic farmers had taken over in the meantime, producing higher quality milk with larger herds, whereas the older, less dynamic farmers had semi‐retired, producing only for household consumption.…”

Exploring the potential of an Andean fruit : an interdisciplinary study on the cape gooseberry (Physalis peruviana L.) value chain

“…That important development could not be possible without the collaboration among stakeholders to conduct research and development activities. Besides the specific case of the kiwifruit value chain, the process of globalisation of agri-food value chains has been associated to the presence of strong leadership in the 5 97 decision making [246,80,254,247], the use of new technologies to deal with the high load of information related to the increased number of transactions [236], the capacity to quickly manage changing consumer preferences, and the increase of vertical integration [248,249].…”

“…Thus, the need to introduce new technologies, the leadership in decision making on only one or few actors of the value chain [246], the high load of information to be transferred [236], the failure to meet consumer needs and the need to increase vertical integration [248,249] have become crucial factors to succeed in global markets.…”

“…Complex phenomena such as globalization, liberalization of markets, increased awareness of food safety, healthiness of food and new products demands [236,77,246,80,74,75,247] have brought some issues to deal with, such as the need to introduce new technologies, the leadership in decision making on only one or few actors of the value chain [246], the high load of information to be transferred [236], the failure to meet consumers' needs and the need 6 143 to increase vertical integration [248,249].…”