THE EFFECTS OF VALUE BASED AGRO-FOOD CHAIN ON THE SOCIO-ECONOMIC SITUATION OF DAIRY FARMS IN MOUNTAIN REGIONS

Summary

The eligibility of production on dairy farms in mountain regions was analysed using empirical data on the effect of a value-based agro-food chain. The analysis focused on social and economic (i.e. socioeconomic) impacts. For this case study, we chose an agro-food chain in which the Planika Dairy plays a key role. Three different methodological approaches were used: i) econometric modelling, ii) multivariate matrix analysis and iii) constellation analysis. The results show that this agro-food chain has a positive economic impact on the dairy farms studied. In addition, a correlation exists between indirect socioeconomic impacts and well-developed relationships between the actors in the food chain, which are characterised by high levels of confidence and mutual trust. The empirical results obtained indicate the relevance of maintaining milk production in Slovenian mountain regions and the importance of preserving the value-based agro-food chain to ensure the dairy farms’ continued existence. The results of the econometric modelling show that dairy farms in the analysed value-based agro-food chain would experience a small decline in the Planika Dairy’s demand for milk, given an increase of one percent in the market price of consumption milk. A slightly higher decline in demand for milk (0.12%) would negatively affect farms that are not part of the value-based agro-food chain. The correlations between socioeconomic impacts were found through multivariate analysis, in which the ‘higher purchase price of milk’, ‘regular payment’ and ‘proximity collection point for milk’ are important factors in the existence of farms in mountain regions connected to the Planika Dairy. Constellation analysis revealed quite well developed communication about the quality of basic raw materials (i.e. milk) and dairy products, while the communication of values such as fair price, animal welfare, reduced use of pesticides and environmentally friendly farming does not exist or is lost along the chain. This study found that actors in the value-based agro-food chain analysed have forgotten the importance of communicating about values, which is a necessary element in the successful growth of value-based agro-food chains.