SUS-CHAIN: Case Studies

LV: Rankas Piens – dairy supply chain in Ranka

The case study of Rankas Dairy illustrates the performance of regional dairies as they try to scale up and to consolidate in the dairy chain. In particular, it investigates the adjustment of regional dairies to the transformations in the dairy sector which is determined by market pressures and enforcement of EU regulations. As such, the case focuses on transformative processes in food supply chain from the perspective of processors.

The dairy Rankas Dairy was established in 1993 when the state owned milk company Valmieras Dairy, of which Ranka dairy was a branch, was privatised within the general privatisation process in the country. The joint stock company Rankas Dairy was founded by 69 dairy farmers from the nearby municipalities and employees. Rankas Dairy became the seventh largest dairy in Latvia.

In the beginning of the 1990s at its start up, there can be identified four major up-scaling adjustment strategies manifested in the case: (1) product development - including ‘healthy’, ‘organic’, ‘sustainable’, ‘quality labelled’ products, marketing – (2) development of new distribution channels and communication to consumers, organisational consolidation – (3) accumulation of resources and, lastly, reshaping of local connections – (4) strengthening of local networks and bonding capital.

Although the dairy stresses and incorporates sustainability elements in its performance, still there are the economic elements of sustainability - like technological modernisation, investment, concentration of production, and new market channels - that dominate its up-scaling strategy. This situation reflects and corresponds both to the limited understanding of sustainability among the food chain members and the limited market for sustainable products.

However, social and ecological aspects are present. Especially, there is demonstrated the role of social links and social embeddedness in company’s development. Rankas Dairy is a regional dairy and quite rooted in the local situation – it continues the regional milk production tradition, develops links with regional rural development actors and contributes to local social life.

The case illustrates the necessity for changes in the organisational nature during up-scaling process. Rankas Dairy has implemented a power consolidation strategy where the leader is keeping and expanding control over the whole organisation and production processes, whereas farmers – especially the small and medium ones – have not a great influence on decision-making process. The scaling up process of the dairy has been accompanied by an effective use of available public support – financial, consultancy or legitimation – which has been especially crucial at the start-up of a new initiative. It also allows the introduction of innovative elements in former conventional performance. Such a support reduces the related risks and shapes a more favourable environment for the initiative. The case illustrates that besides the availability of public support it is also the capacity of organisation – embracing its financial and human resources, infrastructure, social links etc. – that matters to make use of it.

All together the case illuminates the crucial milestones of sustainable chain development during transition processes in post-socialism transition country.

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