Impacts of a dual market on the relationship between dairy farmers and processors in Peruvian andes

Dairy supply chains in emerging countries are influenced by the prevalent participation of smallholder farmers, for whom milk production is considered a valuable source of income. This study investigates how a dual supply chain, operating within the same region through formal and informal markets, impacts on the interaction between smallholder farmers and processors at organizational level. Questionnaires and interviews were administered to gather information from farmers and processors in the Mantaro Valley between 2009 and 2012. The research reveals that two supply chains co-exist supplying consumers locally and also in the capital Lima. Formal markets mostly consist of supermarkets, which demand consistently high quality and safe products. Informal markets target consumers with lower purchasing power and focused on traditional cheeses. It is characterized by an absence of quality control throughout the chain. These two markets are supplied respectively by local industrial dairies and artisanal cheese-makers. Milk flows are observed between them, based on a mix of competition and cooperation depending on the time of the year and the level of consumer demand. Farmers frequently change processors, according to the milk price and services offered, as there is a lack of contracts between stakeholders along the chain. This supply chain organization is flexible enough to provide a broad range of dairy products and involve a diversity of stakeholders along the chain. However this favors opportunistic behavior, such as milk adulteration or non-payment of milk supplied. And it depends on the poor application of government quality regulations, which could disturb the informal sector. (Resume d'auteur)