Abstract

The ability to determine the fragility of agribusiness value chains is valuable to agribusines management practitioners and scholars in a context where risk and uncertainty are increasingly pervasive, consequential and unpredictable. The paper argues for determining the fragility of a chain to adverse events rather than trying to predict the probability and impact of such events. The paper specifically proposes a framework to detect and quantify non-linear consequences in response to progressively deteriorating chain fragility factors. The paper’s approach is a novel alternative to the traditional value chain ‘risk assessment’. Application of the framework to the South African lamb chain reveals that a number of specific factors, like quality and safety performance and cash flow position, have consistently high fragility scores throughout the chain while some factors are uniquely localized to a specific role-player or activity, which highlights the techno-economic uniqueness of individual activities in a chain.

A survey of 52 smallholder fresh produce farmers was conducted in the Gauteng province of South Africa to grasp how risk and its management affect the mainstreaming of smallholder farmers into formal, high-value markets. The study employed a supply chain analysis approach, which focused on the functions and risks that occur along the fresh produce chain. The results highlight the risks that impede the participation of smallholder farmers in formal, high-value chains. At the production level, risk is prominent from input procurement through to the post-harvest stage of the chains. At the retail and consumption level, risks are linked to the adherence to quality and quantity standards, including prescribed packaging, grading, labelling and traceability and transport requirements. As a result of these risks across the formal chain, smallholder farmers often resort to distributing their products in low-value informal markets. The consequence is that smallholder farmers tend to remain trapped in poverty, in part, because of their risk appetites and their ability to bear risk. 8Further research is required in the areas pertaining to smallholder farmers’ risk appetite and risk-bearing ability and mechanisms to deal with the particular risks in the value chain that impede their all-round ability to escape the “smallholder dilemma”.

We use a primary data set from a survey of medium and large firms and farms in the beef, citrus, and maize value chains in South Africa during March-June 2020, the early and late phases of the initial COVID-19 lockdowns. We have five main findings. (1) The initial lockdown regulations declared as "essential" the product (vertical) value chains but left as "inessential" the important "lateral" value chains delivering labour, materials, and logistics to the segments of the vertical value chains. This hurt the three vertical value chains as constraints in the laterals choked key segments of the verticals. (2) Vulnerability of the whole value chain emanated from vulnerability to shocks of critical "hotspot" linchpin segments (such as livestock auctions) or infrastructure (such as at ports). (3) Collective, industry-level "pivoting" was crucial both to organize the private sector response and to interact with government to course-correct on COVID-19 policies. (4) Responses to pre-COVID-19 challenges (such as drought and international phytosanitary rule changes) had prepared the beef and citrus value chain actors to respond collectively to the pandemic challenges. (5) Individual firm-and segment-level "pivoting" was also crucial for resilience, such as cattle auctions going on-line with the help of e-commerce firms.

No abstract