R ISKS AND RISK MANAGEMENT IN DAIRY VALUE CHAIN OF U ZBEKISTAN Zarrina Sayfi*, Utkur Djanibekov Institute for Food and Resource Economics (ILR), University of Bonn, Germany References Meuwissen, M.P.M., Hardaker, J.B., Huirne, R.B.M., Dijkhuizen, A. A. (2001): Sharing risks in agriculture; principles and empirical results, NJAS – Wageningen Journal of Life Sciences 49 (4), pp Schröder, E. (2014): Challenges and perspectives in the dairy industry of Uzbekistan. Eurotier Conference, Hannover, Germany Diagram 1: Example of small- or medium scale farm suppy chain Diagram 2: Example of registered dairy producers „Fermerskie khozyaystva“ Diagram 3: Example of limited liability company with dairy processing Diagram 4. Example of large-scale dairy processing supply chain I NTRODUCTION Despite its small pasture area for livestock, Uzbekistan´s dairy output is the highest in the Central Asia. In producing dairy products different types of agricultural producers are involved, e.g., around 95% of all cattle is owned by rural households (dekhqans), and 5% belongs to the large-scale private farms (ferms) and agricultural producers/cooperatives. Presently, 13% of milk is produced by dairy companies, while the remaining by rural households and private farms (Schröder, 2014). Production of milk involves interaction of different dairy producing actors. For instance, milk can be produced by private farms, and afterwards it can be purchased by dairy companies for further processing and retailing. However, milk production is affected by different risks such as price variability, weather changes, animal diseases, as well as uncertainty in policies during the transitional stage of Uzbekistan’s economy. As a result of risks the interactions among producers may reduce, which consequently can decrease the dairy production. Interdependencies among dairy producers and farmers might be preferred during transitional policies and under conditions of such risks. Thus, our study objectives are to: (1)Differentiate various types of producers in dairy sector and investigate their interdependencies (2)To analyze risks and risk management strategies of dairy producers M ETHODS Qualitative based study was conducted with interviews of dairy processors and farmers. The questionnaires consisted of two parts. The first part was composed of two tables with labeling risks and risk management tools assessed on five-point Likeart scale, where the most important factor has five points and the least has one point. The second part of the interview was compiled out of open-ended questions about risk and management tools that are not mentioned in the tables and could be added by responder. For example, we asked the relevant stimulation policies for producer (credits, equipment provision), level of trust between partners, and other contract specifications. As a reference point, we relied on the questions designed by Meuwissen et al. (2001). The interviews with five processing companies were conducted in Tashkent, as well as discussions with two farmers and one processing company were held in Kokand region. The interviews were conducted in April and May R ESULTS We identified following types of dairy producers: Private small/medium scale farms with heads, with own milk production (Diagram 1) Registered dairy producers – “Fermerskie khozyaystva” – where farm is integrated into production (Diagram 2) Limited liability companies with dairy processing (Diagram 3) Large-scale dairy processing enterprises (supplies all over the county) (Diagram 4) All types of the processing companies commented that the quality of milk supplied by farmers could be higher, which is their main concern and obstacle for increasing production quantities. In addition, the important risks that dairy producers perceive is related to input and output price fluctuations (5/5). Weather change, lack of irrigation and water availability constitute also important risks (5/5). Daily milk yield (4/5) as well as epidemiological/non-epidemiological illnesses of cattle (3/5) are important risk factors for both sides of the investigated part of the dairy value chain. All farmers and processors mentioned the strict hygiene control as the most important tool for addressing risks in dairy production (5/5). Among processors the diversification of product (4/5), and among farmers the off-farm work (4/5) are also preferred options for managing risks. The production at the lowest possible costs is additional supporting risk management tool for some processors, but not for all (3/5). Some enterprises stated that the lowest production costs is not a valid option, because goods are for infants and kids. Fixed price contracts are not always relevant as well (3/5), because price per liter of milk depends mainly on fat content. C ONCLUSIONS The study revealed different types of dairy producers that differ in operations and where some of them are interdependent and all face risks such as quality, price and production. As a risk management instruments it would be important to develop policies that will promote product diversification, and more off-farm working opportunities.