Measuring the fragility of agribusiness value chains: a case study of the South African lamb chain

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.

The trade-off between chain performance and fragility considering coordination strategies of agri-food chains: a South African egg chain’s case study

“…He emphasises that 'a fragile chain implies that a 'break', or 'adverse event', in one link in the chain results in an accelerating impact, or nonlinear feedback, into the rest of the chain'. This means that the unforeseen detrimental event's impact on either one or more chain players can have similar effects on the next chain players because of interdependencies between these chain members brought on by increased vertical coordination (Jordaan and Kirsten, 2019). This paper propositions that there is a trade-off between the performance of the agri-food chain and its fragility.…”

“…Consequently, transaction mechanisms such as contracting, alliance formations and vertical integration seem to be the most preferred governance mechanisms that massively reduce transaction costs in firms' value chains and in return contributes positively to firms' supply chain performance (Cadot, 2015;Martinez, 1999Martinez, , 2002bPieri and Zaninotto, 2013;Weseen et al, 2014;Zhong et al, 2018). Although these mechanisms are costefficient strategies and improve chain performance, they become sources of exposure for risks, uncertainty and chain disruptions (Bailey, 2016;Gray and Boehlje, 2005;Jordaan, 2017;Jordaan and Kirsten, 2019).…”

“…The conceptualisation of fragility in agri-food chains is vital because, just like businesses, a chain can be either fragile or anti-fragile (Jordaan, 2017). Jordaan and Kirsten (2019) have assessed the fragility of the South African lamb value chain to address the concept of fragility in the value chain context. So, Jordaan (2017) comments that 'a fragile chain implies that a 'break' or 'adverse event' in one link in the chain results in an accelerating impact or non-linear feedback (negative impact) into the rest of the chain'.…”

“…The sensitivity of a system not only results in negative impacts (losses), but it also results in a positive impact (gains). This positive impact is known as anti-fragility (Jordaan and Kirsten, 2019;Taleb, 2012;Taleb et al, 2012). Taleb (2012) highlights that anti-fragility refers to a potential gain from exposure of something related to the beneficial occurrence.…”

“…This study adopted the tool to measure value chain fragility by Jordaan and Kirsten (2019), which entailed presenting each of the listed value chain fragility factors explained above. The same procedure with the respondents is followed as that used by Jordaan and Kirsten (2019): …the respondents' reactions were elicited in response to a progressively worsening adverse event, concerning the specific factor.…”