World Food Policy
The mixed governance pattern of the Ba-Vì dairy value chain
Importance of product characteristics in the governance of the local value chain
Coupled with the functional characteristics of chain actors , the technical properties of the milk products affect inter-firm relationships and governance patterns . First , the perishability of raw milk and unsterilized dairy products localizes collecting and processing facilities close to production areas . This perishability restricts marketing flexibility for farmers and traders but increases their marketing risks . Marketing fresh milk products is thus characterized by physical proximity and contractual relationships , whereas sterilized products can be sold very far away through market adjustments . Second , seasonal variation in milk production and consumption raises concerns about the adjustment of milk collection , processing and storage , and more generally about balancing supply and demand . This seasonality creates trading risks for farmers , puzzles cost-efficient utilization of labor and processing facilities and complicates the structure of products for processors . IDP upgraded its processing line to diversify its products and to handle the abundance of raw milk in the off-season and contracted to purchase surplus milk from external collection points of semi-industrial processors and cottage industry . The UHT line installed in 2010 , which manufactures storable dairy products , plays a significant role in this respect . Third , although milk is a relatively homogeneous product , its nutrient content varies considerably among producers , upon cow breed , feeding , and farm management practices . The heterogeneous quality requires significant investments and extra costs for grading , especially measuring the fat and dry matter content of the milk procured .
Relational governance : linkage between dairy farmers and collectors
The governance of the milk collection schemes is mainly relational . Linkages between farmers and collectors are defined by physical proximity , organizational proximity and functional proximity ( Table 2 ).
Table 2 : Characterization of transactions determining proximity between farmers and collectors
Type of proximity Physical proximity
Organizational proximity
Functional proximity
Characteristics of transactions Distance between farmers and collection points is less than 2 km
Family relationships between producers and collectors Moral factors that shape mutual confidence
Agreed sharing of collection areas between collectors ( and processors )
Source : RUDEC ’ s survey ( Revalter , 2014-2015 ) 68