Economic effect of dairy processing integration in the Baltic states

Dairy sector is an important part of the Baltic States’ agriculture. Dairy sector’s structural aspects are crucial for its sustainable development as fragmentation is characteristic for dairy farming in Latvia and Lithuania, and dairy processing in Latvia and Estonia. Integration may help decrease the sector’s fragmentation. The author analyses economic effect along the main integration dimensions in the Baltic States’ dairy processing over the period of 1996-2009. In contrast to the previous research, the author uses with minor exclusions a comprehensive data set of all dairy processing companies operating in the Baltic States as of October 1, 2010. Gross value added at factor cost is used as a key indicator of the economic effect. Other financial analysis indicators, inter alia, structure of capital, liquidity, profitability, and debt management indicators are used to evaluate economic effect and performance of dairy processing companies with specific integration characteristics