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Abstract
The Armenian dairy sector has until recently remained in a sub optimal
equilibrium characterized by low quality milk, delayed payments, deep
financial distress and a general lack of investment. The decision of the
USDA MAP to expand their agribusiness programs into the dairy sector in
1999 however initiated a rapid revitalization and expansion of the sector.
The USDA MAP used various organizational models at both the processor
and farmer level to facilitate this revitalization. Given the lack of FDI and
successful ODA initiated restructuring, the USDA MAP project provides an
instrumental case study for analyzing where an ODA-induced public
solution rather than a FDI-induced private solution has been used to link
farmers to markets and solve the related contracting, investment, and
enforcement problems. The paper analyzes the impact of third-party
facilitated marketing channels on economic and social outcomes of small,
financially distressed farmers and examines the factors affecting farmers’
choices among alternative marketing channels.