Integration of dairy farms in supply chain in bulgaria

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.