Abstract
Successor states of the Soviet Union have witnessed substantial falls in agri-food production since the break-up of the USSR. Supply chain disruption has been a major factor in this decline. This paper identifies how asymmetric information between farmers and processors led to market failure in Moldova and how one dairy company has attempted to overcome such a crisis. The case study company has invested in better monitoring of milk quality to effectively supervise transactions. Milk production is a major source of income for rural households who sell to dairies via village collecting stations. The costs of monitoring milk quality to avoid market failure from adverse selection are significant. Preventing small-scale producers being marginalised from dairy supply chains is an important factor in safeguarding and improving rural livelihoods.
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