Resolving recurrent imperfections in the dairy production using gaming simulation

The dairy value chain in Tunisia has been facing recurrent problems mostly related to coordination, contracting, pricing and quality imperfections. The policy focus on technology generation and dissemination, without considering the underlying problems related to market imperfections and institutional and socio-economic processes, has contributed to low technology adoption and limited development in the dairy value chain. This paper uses a gaming simulation approach to allow breeders to experiment and consider strategies of cooperation which lead to increased returns and improved quality of milk. The game allows understanding the role of trust and cooperation in improving the performance of the dairy value chain. The experiment was done in two regions and in four sessions each. Results show that benefits to breeders are derived from the price of milk which is determined by the number of cooperation in the repeated games strategies. The resulting Nash equilibrium is one where farmers cooperate without cheating. This solution avoids farmers the risk of rejection of milk and results in price increase as a result of the collective cooperative action.