Epsilon Open Archive

Abstract

Like most of the Western-Balkan countries, the Former Yugoslav Republic (FYR) of Macedonia experienced significant difficulties in adapting and modernizing its agricultural production in accordance to the highly competitive regional and EU markets. By examining the dairy value chain of the FYR Macedonia, this thesis presents the challenges and changes in the organizational and institutional setting of the agri-food value chains in post-socialist Balkan countries. Various theoretical approaches are applied to assess the competitiveness levels on each segment in the industry, as well as to characterize the institutional environment, the governance and the organizational structure, and the overall level of development and competitive prospects. A general conclusion of this thesis is that the dairy industry in FYR Macedonia is still under its competitive potentials. The institutional setting and governance, as well the organization of the chain, and the market structure and level of modernization, indicate that the dairy industry in the country requires further modernization and consolidation in order to reach its competitiveness potentials on both domestic and international markets.

The findings of this study are valuable for the actors in the dairy supply chain, since they provide information of each actor’s position in the supply chain, the market structure, and the development of the chain in general. Two main contributions of this study are the analysis of contracts and the social network, both based on primary data collected from farmers in the FYR Macedonia. The analysis of contractual arrangements with dairies shows that transaction costs are main determinants of the choice of contracts. The analysis of the Social Network, in which the patterns of activation of social capital can contribute to finding a solution to the problems with the functioning of the farm associations and cooperatives in countries with similar socialistic background. The conclusions of these studies can be extended to other countries wedged in a long transition, and could easily transfer to the experiences in the countries from the Western Balkan region.