Vertical Linkages in Agri-Food Supply Chains: Changing Roles for Producers, Commodity Groups, and Government Policy

Abstract

Market developments arising from closer vertical linkages in agri-food supply chains have given rise to a variety of issues. This paper outlines key issues and discusses possible responses by producers, their associations, and government. A vision of the future organization of agricultural production serves as a basis for discussion. The continued increase in contracting between producers and processors is accompanied by issues of contract transparency, terms, negotiation, and dispute settlement. Other ramifications include producer access to supply chains and the decline of spot markets. Furthermore, the development of agricultural biotechnology products may force a rethinking of the rationale for public investment in agricultural research and development. Evaluation of market power needs to account for efficiency gains from nonstandard forms of organization to achieve a balanced appraisal of the public interest. Agricultural economists are urged to evaluate new forms of firm and industry structure on the basis of how they work in practice rather than in comparison to an ideal form.

Supply Chains and Rural Communities: Applying Terroir to American Rural Development

“…al., 2007). Along with bulk production and shipping, and extremely high competition between producers as posed by downstream actors, these conditions result in inexpensive goods for consumers (Gibbon;Hayes, 2004).Vertical coordination is reflected in a rise in contracting, greater product differentiation, and the increased importance of supply chain relationships (Young & Hobbs, 2002). These organizational trends hold true for terroir product chains.…”

“…Identity-preserved supply chains are tightly governed supply chains intended to protect the integrity of a specialty, high value product (Young & Hobbs, 2002). For terroir products, they are used to insure shipments include only those products from certain geographies, though in the United States they are most often used to protect other types of high quality agricultural products (Young & Hobbs, 2002;Smith, 2007).…”

“…For terroir products, they are used to insure shipments include only those products from certain geographies, though in the United States they are most often used to protect other types of high quality agricultural products (Young & Hobbs, 2002;Smith, 2007). There are high costs associated with constructing the infrastructure--physical and organizational--necessary to protect terroir.…”

“…While it can be used for commodity-type products, contracting is often associated with differentiated products such as terroir (Tilburg, et. al., 2007;Young & Hobbs, 2002). It is this concern, with quality as a motivating factor, that separates modern supply chain as buyer-driven instead of producer-driven and therefore between commodity and differentiated products.…”

“…al., 2007;Young & Hobbs, 2002). Retailers and distributors seek to ensure their reputations as a means to indicate to and inform consumers of quality (van Tilburg, et.…”