Informal markets and global value chains – the disembedding of Romanian dairy smallholders

Abstract

ABSTRACTThe Romanian dairy-farming sector is marked by subsistence and semi-subsistence farms. Through consolidation in the retail and dairy sector, the price pressure has moved toward producers of raw milk. Through new European, national and private standards and global actors tapping into the Romanian market this development is reinforced. At the same time, the smallholders, formerly accepted to be acting on an informal level, cannot access their main distribution channels anymore. Additionally, through several legal constraints being developed since Romania’s accession to the European Union, the smallholders are neither able to issue invoices, nor to access certain subsidy programmes as they are not considered juridical persons. This article focuses on the consequences of this disembedding of farmers. The peasants are pushed toward informal activities or value chain positions, in which they do not have any bargaining power with the globally sourcing intermediaries they are supplying. The contemporary approaches of global value chains and global production networks build the theoretical framework for the study. Here it is argued that informal markets must be included into these approaches more concisely.