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Regional Economics: Theory and Practice
 

Developing a regional milk processing market: A competitive aspect

Vol. 19, Iss. 7, JULY 2021

Received: 4 March 2021

Received in revised form: 7 May 2021

Accepted: 15 June 2021

Available online: 15 July 2021

Subject Heading: AGRO-INDUSTRIAL COMPLEX

JEL Classification: L1, L4, Q13

Pages: 1277–1302

https://doi.org/10.24891/re.19.7.1277

Andrei V. ANDREEV Stolypin Volga Region Institute of Administration – Branch of Russian Presidential Academy of National Economy and Public Administration (RANEPA), Saratov, Russian Federation
awvv@mail.ru

https://orcid.org/0000-0002-6006-9611

Subject. This article examines the impact of competition in the dairy industry on the formation of the regional milk processing market structure.
Objectives. The article aims to analyze the risks and threats to the economic security of the region arising from the creation of competitive advantages by different types of dairy enterprises. The Saratov Oblast is considered as a case study.
Methods. For the study, the neoclassical Structure–Conduct–Performance (SCP) paradigm is used, which is explained through the market positioning theory, resource-based view (RBV), and the transaction approach.
Results. The article notes that a moderately concentrated structure of the milk processing market has been formed in the Saratov Oblast. There are two leading enterprises that are able to influence not only the less strong local processing factories and producers of raw milk, but also the Oblast's economic security.
Conclusions. Leading dairy companies of the region, following industry leaders, are seeking to expand their competitive position in inter-regional markets. The needs of processors in raw milk constantly exceed the production capacity of dairy farming, and market power enables them to displace local processors from the market and contributes to the reduction of the number of market participants in the dairy industry. The consequences of these actions go beyond antitrust policy and relate to the broader regulation of agri-food markets.

Keywords: product diversity, competitive advantages, leading and local dairy factories, moderately concentrated milk processing market

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