17 research outputs found
Investigating alternative governance systems for the South African mohair supply chain
Mohair is an exclusive natural animal fibre with niche market appeal. It is, however, questionable whether it is inherently suited to a commodity-based marketing system in a marketing environment that requires marketing systems to convey far more information than commodity-based systems do. Historically, mohair has been considered a commodity and the marketing system for mohair has been structured accordingly. It is, however, argued that, the exchange between mohair growers and the buyers of greasy mohair requires increased levels of coordination to govern the exchange in a transaction costs efficient manner. The inefficiencies created by an inappropriate or incomplete marketing system for South African mohair are expected to lead to a loss of consumer value and a loss of potential profit throughout the mohair supply chain if a more coordinated governance structure is not implemented to curb these costs and augment the current spot market exchange.Mohair, marketing, governance structure, supply chain,
A critical analysis of the South African mohair marketing system in the evolving global agribusiness environment
The primary marketing of South African mohair has been the topic of much discussion and it has become a contentious issue since producer prices became unusually unstable, producer returns increasingly uncertain, and production consequently began declining. This dissertation has aimed to structure these discussions and issues and to critically analyse the South African mohair marketing system in the evolving global agribusiness environment. It is widely documented that the intangible attributes of products are growing in importance as retailers and consumers become increasingly interested in and concerned about safety, provenance, welfare, society and sustainability. Marketing systems are consequently compelled to convey not only objective but also subjective product quality attributes. Mohair is an exclusive product with niche market appeal and the central question of this dissertation is whether mohair is inherently suited to the current fifty-five year old commodity-based marketing system in a marketing environment that requires marketing systems to convey far more information than commodity-based systems do. This, in effect, boils down to the question whether the mohair clip can be considered a commodity or a niche product. Historically, mohair has been considered a commodity and the marketing system for mohair has been structured accordingly. Mohair is, however, one of the scarcer animal fibres globally, diverse in its physical properties and is suitable for use in many products all of which have different market and demand characteristics. It is therefore argued that mohair currently boasts with the characteristics of a product despite its historical development as a commodity. Mohairâs unit type (whether it is a product or a commodity) informs two theoretical frameworks used to determine an appropriate governance structure for the exchange between producers and processors. Both these frameworks reveal that the exchange between mohair producers and processors should be governed by more intensively coordinated governance structures than the current spot market. This is in accordance with global trends where there is a shift away from open market trading to more stringent coordination of the supply chain. In view of this it is proposed that the spot market, which this dissertation contends to be a âvalue bottleneckâ in some instances, be augmented by a number of hybrid governance structures like long term contracts, cooperation agreements or some form of vertical ownership to offer additional exchange structures, where necessary, to transmit all of mohairâs attributes more effectively between producers and processors and ultimately the whole mohair supply chain when required to do so. It is proposed that these additional options should function in tandem with the current spot market which continues to be a critical exchange mechanism for mohair that is used as a generic input to the production of multi-purpose blended fibres where price and availability are the major determinants of demand and not the type of fibre or its intangible attributes. In such instances the conveyance of any attributes other than price and quantity (within the respective classing standards) is superfluous and a spot market to facilitate the exchange would suffice since it provides sufficient coordination control for the specific transaction. The discontinued or diluted use of a spot market as proposed is, however, not without pitfalls. The spot market price for mohair is the only public price forming mechanism. If the use of the spot market were to be discontinued or diluted there would be no reliable yardstick to use for negotiating prices for mohair that is exchanged by means of other governance structures and alternative mechanisms would need to be developed to determine such prices. In an attempt to keep up with global trends in agricultural marketing a South African mohair producer group recently established an âinnovativeâ approach to the marketing of mohair. This innovation in marketing is, however, not quite complete although the producer group have instinctively made huge strides in the right direction. The producer group also continues to make use of a spot market to exchange their niche quality mohair, resulting in relatively high transaction costs that could be reduced by more coordinated governance structures. Over and above the theoretical arguments to this effect, mohair producers are also demanding vertical coordination structures that require increased levels of coordination to govern the exchange between themselves and mohair processors. The implementation of such strategies would be best undertaken by brokers or producer groups given the superior levels of trust that producers have expressed in brokers and the fact that the levels of transaction costs are the lowest between parties where the greatest levels of trust are exhibited. The inefficiencies created by an inappropriate or incomplete marketing system for South African mohair are expected to lead to a loss of consumer value and a loss of potential profit throughout the mohair supply chain. In anticipation of the ever changing, and now consumer driven agricultural marketing environment the South African mohair industry would therefore be well advised to collectively consider and to encourage the creation of exchange mechanisms that offer greater coordination within the mohair supply chain to function in tandem with the current spot market exchange mechanism and to embrace these developments in a practical and mutually inclusive manner to the benefit of the whole South African mohair industry â a challenge that would compel the industry to shake off its reputation as a sluggish adapter to the dynamic changes in world markets.Dissertation (MSc (Agric))--University of Pretoria, 2007.Agricultural Economics, Extension and Rural DevelopmentMScUnrestricte
Supply chain risks and smallholder fresh produce farmers in the Gauteng province of South Africa
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
farmersâ 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 âsmallholder dilemmaâ.http://www.unisa.ac.za/default.asp?Cmd=ViewContent&ContentID=22335am2016Agricultural Economics, Extension and Rural Developmen
The trade-off between chain performance and fragility considering coordination strategies of agri-food chains : a South African egg chainâs case study
The mainstream strategy in the coordination of agri-food chains has traditionally focused more on the
enhancement of chain performance by adopting lean and highly integrated strategies. These strategies are
premised on the principle that governance structures are the result of tactics that economize on transaction
costs in exchanges in chains. Due to existing interdependencies between chain players such strategies expose
these chains to detrimentally disruptive uncertainty. This paper adopted a heuristic stress-testing approach
to measure the fragility of South African egg value chain and performed a comparative fragility analysis
of two coordination approaches in the egg chain. Additionally, the analysis of results indicated that the
egg chain strategy with high levels of interdependencies between its chain players as significantly fragile.
Precisely, the difference between the chain strategies was associated with a variety of differences at the
factor and chain player levels that led up to a higher overall chain fragility of the chain with higher levels of
interdependency. Inevitably, the paper propositions that there is a trade-off between chain performance and
fragility. The results of the study affirmed that there is a trade-off between chain performance and fragility
which needs to be balanced.The African Economic Research Consortium (AERC), through its Collaborative Masters in Agricultural and Applied Economics (CMAAE) programme.http://www.wageningenacademic.com/loi/ifamram2022Agricultural Economics, Extension and Rural Developmen
Private Standards, Handling and Hygiene in Fruit Export Supply Chains: A Preliminary Evaluation of the Economic Impact of Parallel Standards
With the emergence of private food safety and quality standards in developed countries fruit exporting countries in the developing world face increasing constraints to access markets in the rich industrialised countries in the North. Producers in the South have no alternative as to make the necessary investments on farms and in pack houses to comply with the requirements of these food quality and safety standards. The export of fresh fruit is an important component of South African agricultural exports, with citrus fruit exported to markets such as Europe being of particular importance. This paper reports selected results from a large research project into the impact of private standard compliance on the quality of the fruit and the returns to farmers. The research process involved a multi-disciplinary analysis of Agricultural Economics and Microbiology / Plant pathology as we analysed the dynamics of the citrus export supply chain from the farms in South Africa to the end consumer in Europe. Sampled fruit containers were followed through the whole supply chain which allowed us to provide an exposé of the behaviour of the different actors in the citrus supply chain and obtain some evidence of poor handling and hygiene standards by means of a comparison of the experimental observations with various relevant components of the EurepGAP control points and compliance criteria for fruit and vegetables. Observations suggest that these standards are adequately applied to the production and handling of fruit at the farm and pack house levels while on the other hand the subsequent stages (mainly after the importing harbour in Europe) of the fruit supply chain are seemingly not subjected to the same strict requirements laid out for producers, leading to fruit quality deterioration and financial losses for producers. This constitutes clear parallel standards in terms of fruit safety and quality standards between upstream and downstream sections of the supply chain and questions thus the purpose of the standards and the financial return for producers making large investments to comply with these privately introduced standards.International Relations/Trade,
Alternative marketing options for small-scale farmers in the wake of changing agri-food supply chains in South Africa
With South Africaâs urban population approaching 60%, supermarkets and fast food chains have become important players in the South African food system. These large players in the food sector have systematically modified their procurement practices especially with regard to fresh fruit and vegetables and are now circumventing spot markets in favour of sourcing via in-house sourcing companies who mainly procure from preferred supplier producers. This paper draws extensively from a global research programme which seeks to highlight the market changes that potentially contribute to continued exclusion of the small producers from mass consumer markets. This paper illustrates, through a series of case studies, how integration of small-scale farmers into the urban retail market can be facilitated and how the challenges posed by the changing food system could possibly be overcome. The case studies illustrate various initiatives through which small-scale farmers and agribusinesses can be integrated into mainstream agri-food systems and may be used as models for an innovative approach to include small-scale farmers while still maintaining profitable business operations. They highlight the need for a multi actor approach for the successful participation of smallholder farmers in order to allow them to join the supply chain at any point within the channel.Marketing, Agribusiness,
Markets for marama beans in southern Africa : linking sustainable products with sustainable livelihoods
Indigenous natural food plants are critical to rural livelihoods, especially in arid and semi-arid regions where they contribute significantly to food security and social and economic welfare. The sustainability of these plants is therefore of paramount importance. This paper analyses the market conditions for marama bean (Tylosema esculentum) products, taking into account economic, social and cultural conditions. Information on local livelihoods was gathered through focus groups and in-depth interviews with key informants in Botswana, South Africa and Namibia. The market analysis for marama products was conducted using an STP (segment, target, position) framework, and willingness to pay for prototype products was evaluated using the contingent valuation method to analyse structured questionnaires directed at retail outlets. The study found that assuring the sustainability of local peopleâs livelihoods while creating a larger market is only achievable through community organisations supported by a broad marketing strategy and using cultivated marama.http://www.tandfonline.com/loi/cdsa2
Hotspots of vulnerability and disruption in food value chains during COVID-19 in South Africa: industry- and firm-level âpivotingâ in response
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 âessentialâ the product (vertical) value chains but left as âinessentialâ the important âlateralâ 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 âhotspotâ linchpin segments (such as livestock auctions) or infrastructure (such as at ports). (3) Collective, industry-level âpivotingâ 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 âpivotingâ was also crucial for resilience, such as cattle auctions going on-line with the help of e-commerce firms.http://www.tandfonline.com/loi/ragr202023-06-24hj2023Agricultural Economics, Extension and Rural Developmen
The true cost of food : a preliminary sssessment
Ensuring sustainable food systems requires vastly reducing their environmental and health costs while making healthy and sustainable food affordable to all. One of the central problems of current food systems is that many of the costs of harmful foods are externalized, i.e., are not reflected in market prices. At the same time, the benefits of healthful foods are not appreciated. Due to externalities, sustainable and healthy food is often less affordable to consumers and less profitable for businesses than unsustainable and unhealthy food. Externalities and other market failures lead to unintended consequences for present and future generations, destroying nature and perpetuating social injustices such as underpay for workers, food insecurity, illness, premature death and other harms. We urgently need to address the fundamental causes of these problems. This chapter sets out the results of an analysis to determine the current cost of externalities in food systems and the potential impact of a shift in diets to more healthy and sustainable production and consumption patterns. The current externalities were estimated to be almost double (19.8 trillion USD) the current total global food consumption (9 trillion USD). These externalities accrue from 7 trillion USD (range 4â11) in environmental costs, 11 trillion USD (range 3â39) in costs to human life and 1 trillion USD (range 0.2â1.7) in economic costs. This means that food is roughly a third cheaper than it would be if these externalities were included. More studies are needed to quantify the costs and benefits of food systems that would support a global shift to more sustainable and healthy diets. However, the evidence presented in this chapter points to the urgent need for a system reset to account for these âhidden costsâ in food systems and calls for bold actions to redefine the incentives for producing and consuming healthier and more sustainable diets. The first step to correct for these âhidden costsâ is to redefine the value of food through true-cost accounting (TCA) so as to address externalities and other market failures. TCA reveals the true value of food by making the benefits of affordable and healthy food visible and revealing the costs of damage to the environment and human health 3.https://link.springer.com/book/10.1007/978-3-031-15703-5hj2024Agricultural Economics, Extension and Rural DevelopmentSDG-02:Zero Hunge
Agribusiness value-chain risk, fragility and coordination strategies : case studies of South African value chains
Accelerating volatility, complexity and scrutiny will be the norm in the landscape for
agribusiness value chains as the future unfolds. Evidence of this new landscape is clear
from the extent and intricacy of global food and fibre value chains, the rise of
consumerism, and the prominence of the sustainability and responsibility narrative. As
a result, agribusinesses and their value chains are compelled to evolve to meet the
challenges and opportunities that this new landscape presents. However, agribusinesses
and their value chains generally seem lethargic to adapt to this new environment and
are consequently every so often ensnared by a cascade of effects that highlight the
volatile, complex and scrutinising challenges for these value chains. Confirmation of
these cascading effects is evident from the range of food scandals, product recalls,
instantaneous bankruptcies, and reputation and brand devastation, where unexpected
events lead to these, and other, non-linear payoffs that ripple through these chains. The
conspicuous occurrence of these events with non-linear impacts is indicative of fragility
in these chains and specifically highlights the rationale for detailed exploration of
fragility, as a phenomenon, in agribusiness value chains. This thesis addresses this
overlooked phenomenon by threshing out the factors that cause fragility, by developing
a framework to quantify fragility, and finally by exploring the interaction between
fragility and the coordination of agribusiness value chains. Through a normative Delphi approach with key stakeholders and a principal component
analysis, this thesis explored the factors that contribute to agribusiness value chain
fragility in selected meat, fibre and fruit chains and found that those factors that
contribute to the efficiency of value chains are also the factors that drive the fragility of
these chains. This finding exposed a juxtaposition between value chain efficiency and
fragility and the need to find a measured balance between these approaches to achieve
and sustain chain goals. The thesis develops a framework to measure agribusiness value
chain fragility and applies this framework to the South African lamb value chain
through a modified value chain analysis methodology. This framework exhibits the
detection and quantification of fragility at the factor, stakeholder and chain level in the
particular chain. The thesis finds a golden thread of specific factors that are critical to
the fragility of the particular chain. The whole chain of actors is fragile to the actual
quality and safety performance and the cash flow position of actors in the chain.
Likewise, the thesis also finds nuances in specific factors that are critical to the fragility
of the particular actors in the chain due to the activitiesâ unique techno-economic
characteristics. Producers are uniquely fragile to buyer and operational reliability,
abattoirs to the quality and training of human resources, and the quality and adequacy
of infrastructure, packers to regulations and supplier reliability, and retailers to the
management information and supplier relationship and alignment. The idiosyncrasy is
that activity-specific fragilities could, unpredictably, cascade into the rest of the chain
due to sequential interdependencies in a typical chain. Quantification of the fragility of
the South African lamb chain also establishes that increasing coordination intensity and
interdependency in the chain increase the fragility of the chain. Hence the thesis argues
that traditional transaction costs economising model that guides the coordination
strategies of successive exchanges in value chains may, in fact, contribute to chain
fragility in the effort to economise on the costs of exchange.
Conscious of the findings of the analyses the thesis argues that complex systems like
value chains are unavoidably exposed to human limitations in their design and
management. Humanity appears challenged in coping with complexity, and as a result,
the coordination of value chains oscillates between hubris and nemesis in pursuit of
coordination precision â sailing too close to the wind and then crying foul when the
inevitable happens. Therefore, the thesis makes a case for a more mindful and less âfragilisingâ approach to the coordination of value chains by arguing that both fragility
and the cost of exchange be considered in the governance of chains. The shortcoming
of the traditional approach is laid bare by the growing frequency and impact of events
with cascading consequences that ripple through chains. Hence the thesisâ argument is
contrary to the traditional transaction costs economising model that only considers
economising on the costs of exchange, at all cost, in the coordination of value chains.Thesis (PhD)--University of Pretoria, 2017.Meat Industry Trust of South AfricaBill and Melinda Gates FoundationEU-Saturn programUniversity of Pretoriaâs post-graduate research grantsAgricultural Economics, Extension and Rural DevelopmentPhDRestricte