Milk and Milk Processing Industry in Lithuania: An Analysis of Horizonzal and Vertical Integration (original) (raw)

Despite significant progress in recent years, horizontal and vertical integration of the Lithuanian milk sector is not very much advanced. The primary sector is characterised by small-scale farming, the fragmentation of farmland and a low number of livestock per farms. These features cause severe problems regarding the restructuring and modernisation of agricultural production since only a few farmers possess the capital resources to conduct necessary investments. However, despite the unfavourable conditions Lithuanian milk producers have made significant improvements concerning milk quality. In the last decade, the processing sector was due to drastic concentration processes. These were induced by the strong competition processes on the milk market and fostered by foreign direct investors. Today, the market is dominated by three companies. About ten enterprises supply almost the entire market of dairy products. The main mode of governance in the market for raw milk is contractual a...

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