Posts tagged: Advance Payments

Dimitar Madzarov dairy processing

By , July 8, 2012 6:52 am

The Context
“Dimitar Madzarov” LTD was set up in first years of the transition of the Bulgarian economy to the European common markt. It has successfully expanded and modernized up to the highest industry standards. This enterprise has managed to adapt to dynamic market and institutional environment, effectively governing relations with supplying farmers and downstream partners. Initially the firm coped with low raw materials to process milk.

The Mechanism
To increase supply and consistency, Dimitar Madzalov increased frequency of payments the company made to small scale suppliers. Often the firm also makes advance payments to the farmers.

The Outcome
Dimitar Madzarov was able to increase its daily processing by a factor of twenty because it could build a reliable milk procurement system.

According to the farmers, access to this reliable and timely source of financing is more important than merely the price of milk