1 12th Congress of the European Association of Agricultural Economists – EAAE 2008 Risk Governance in Bulgarian Dairy Farming

Abstract — This paper identifies and assesses the efficiency of major modes for risk governance in Bulgarian dairy farming. Firstly, New Institutional Economics is incorporated and framework for analyzing governance of natural, market, private, and social (institutional) risks presented. Next, major types of risks faced by the dairy farms are specified and dominant market, private, public and hybrid modes of risk governance assessed. Finally, principal forms of risks caused by the dairy farms are identified, and efficiency of governing structure assessed. The development of Bulgarian dairy farming has been associated with quite specific risk structures facing by and causing from this sector. The huge market and institutional instability and uncertainty, and the high transaction costs, blocked evolution of effective market and collective modes for risk protection. A variety of private modes (internal organization, vertical integration, interlinking) emerged to deal with the significant natural, market, private, and social risks faced by the dairy farms and the other affected agents. Nevertheless, diverse risks associated with the dairy farming have not been effectively governed and persist during transition now. That is a consequence of ineffective public (Government, international assistance) intervention to correct market and private sector failures in the risk governance. The later have had considerable negative impacts on the evolution of farms, development of markets, structure of production and consumption, state of environment etc. Certain risks related to the dairy sector “disappeared ” due to the lack of effective risk governance and the declining dairy farming. That would lead to further deformation in development of the dairy and related sectors unless effective public measures are taken to mitigate existing problems and risks. Keywords—risk management, dairy, Bulgaria. I