Mary Shelman discusses forces driving higher food prices and some of the changes which are impacting the global food supply chain. Shelman coordinates Harvard Business School’s premier Agribusiness Seminar attended annually by more than 200 CEOs and top managers from global firms. She also organizes and teaches similar programs in Europe, Latin America and Asia. Her research focuses on the forces shaping global agribusiness. Her experience bridges academia, as an author and teacher of dozens of case studies on strategic change and challenges in global agribusiness firms, with industry experience.global food supply chain, food prices, markets, Agribusiness, Demand and Price Analysis, Marketing, Q10, Q11, Q13,

Jose, H. Douglas

English

Research Papers in Economics

 
International Food and Agribusiness Management Review 
Volume 12, Issue 2, 2009 
 
 
 Global Supply Chain 
An Executive Interview with Mary Shelman 1 
 
H. Douglas Jose 
 
 
Professor and Extension Farm Management Specialist, Department of Agricultural Economics 
Room 304 Filley Hall, University of Nebraska, Lincoln NE 68583-0922 
 
 
Introduction 
 
Mary Shelman discusses forces driving higher food prices and some of the changes 
which are impacting the global food supply chain. Shelman coordinates Harvard 
Business School’s premier Agribusiness Seminar attended annually by more than 
200 CEOs and top managers from global firms. She also organizes and teaches 
similar programs in Europe, Latin America and Asia. Her research focuses on the 
forces shaping global agribusiness. Her experience bridges academia, as an author 
and teacher of dozens of case studies on strategic change and challenges in global 
agribusiness firms, with industry experience. 
 
This podcast can be seen with Realplayer on IAMA’s website at: 
http://www.ifama.org/dispatch.asp?page=executive_interviews_2008  
 
 
                                                           
 
 
                  
1 Mary Shelman served as Chairman of the Board of RiceTec, Inc., a fully integrated agribusiness venture owned by 
the Prince of Liechtenstein, and has served on boards of various international companies and industry associations 
including IAMA. After receiving a BS in Chemical Engineering with High Distinction from the University of 
Kentucky, she achieved an MBA with Distinction from the Harvard Business School and was awarded a Dean’s 
Doctoral Fellowship for research in economics and marketing.  Ms. Shelman can be contacted at: 
mshelman@hbs.edu      
 
 Doug Jose is the host of the Market Journal, a weekly televised program on agriculture produced by the University 
of Nebraska-Lincoln. This interview was conducted during the 18th Annual World Forum and Symposium in 
Monterey, California, June 18, 2008. Doug Jose can be contacted at: hjose1@unl.edu    
 2009 International Food and Agribusiness Management Association (IAMA). All rights reserved.     81 
 Jose / International Food and Agribusiness Management Review Volume 12, Issue 2, 2009 
 
 
 
It’s a pleasure to have as my guest Mary Shelman who is director of the Harvard 
Business School Agribusiness Program. Harvard has been involved in agribusiness 
for some time and you did start with this concept of supply chains. Tell us a little 
bit about that and how that relates to the total picture of agriculture. 
 
Shelman: A lot of people are surprised when they hear that Harvard Business 
School has an agribusiness program.  Boston is not exactly a hot bed of agricultural 
activity. But the very term “agribusiness” was created by two HBS professors back 
in the 1950s: Ray Goldberg, who is known throughout the world for his tremendous 
contribution to the field, and John Davis, a former Assistant Secretary of 
Agriculture. They coined the term agribusiness to describe the flow of goods from 
the farm all the way to the consumer. In 1958, they published a book called A 
Concept of Agribusiness which became the seminal work in the field. Professor 
Goldberg went on to write hundreds of cases on agribusiness firms and to teach 
thousands of executives, and he is still writing and teaching. Ray was also one of 
the founders of IAMA. 
 
Goldberg and Davis used a “commodity system approach” to look at the supply 
chain and that is something that we still use today. It is a very important way to 
think about where value is created within the chain, where value is captured across 
the chain and how the individual players in that chain react to each other.  In 
today’s complicated environment, the framework takes into account government 
policies, resource constraints, consumer demand factors and a lot of different issues.  
It is still very powerful. 
 
Let’s jump ahead to today and talk about what is happening related to that. One of 
the things is the increasing demand for food around the world which is in part 
responsible for the prices that we have today. On the other side is the productivity 
of agriculture. In the work that you have done, in the case studies you put together, 
how does that worked out? 
 
Shelman: It’s a very interesting time. My father was a farmer equipment dealer and 
also a farmer, so I have been involved in agriculture all my life. What we are seeing 
reminds me of the 1970s when there was a big run up in agricultural prices built on 
demand coming out of the Soviet Union. Producers, spurred on by aggressive 
lenders, bought more land and equipment—all high priced. Then the embargo was 
put in place and commodity prices collapsed. Many farmers went out of business 
and many rural communities were destroyed. So one of the questions that we ask 
today is whether the current run up in prices will mirror what happened in the 
1970s. Is this a bubble that will come apart, or is there a fundamental change?  
Looking around the world, I see a number of factors that are driving up prices in the 
short term: biofuels, weather shocks, high oil prices, speculation. However, in the 
long term  demand itself is permanently moving up, spurred by rising populations 
and incomes in the Asian countries, as well as in Brazil and other emerging 
 2009 International Food and Agribusiness Management Association (IAMA). All rights reserved. 
 
 
82Jose / International Food and Agribusiness Management Review Volume 12, Issue 2, 2009 
 
 
 
economies.  More people will be eating protein-based diets that are less efficient in 
terms of the resources required to produce a calorie for human consumption. And if 
you look at the other side of that equation—supply—we are beginning to see a gap. 
Historically, the majority of investments in ag research were directed towards 
improvements in productivity. Today, there is a greater emphasis on “luxury” 
aspects: resource efficiency, environmental factors, efficient water use, functional 
foods and other value-added attributes. Increases in basic yields are not keeping up 
with increases in demand. In the long term, the way I see it, prices will never go 
back to the level of two-dollar [per bushel] corn. 
 
What about the impact of the technology? So what you are saying is that the 
technology is there but it is not keeping up.  Where are we headed in terms of the 
impact of the technology? 
 
Shelman: Technology is such an important part of the equation.  Historically, 
advances in agricultural technology came from the public sector: active plant 
breeding programs at land grant universities, international research programs such 
as those under the CGIAR. Today, most investment in research is in the private 
sector. And for the private sector to invest, mechanisms must exist that allow 
companies to capture a portion of the value of their technology. For some 
technologies, this is an easy thing to do. For example, if you look at the hybrid corn 
system, it’s easy to measure the extra value from higher yields and farmers have to 
buy new seed every year in order to get that advantage. But for other technologies, 
such as those associated with using less water or less nitrogen fertilizer, or animals 
with lower emissions or other attributes that are better for the environment, it’s 
harder for the companies to understand how they might capture that value. 
Normally you would say that would be a public good, and that public research 
programs should be working on this.  But yet, the funds going into that sector are 
being pulled back, not only here in the U.S. but all over the world.  
 
Another thing that we’ve talked a lot about in recent years is international markets.  
We’re in a global market.  I think we can accept that there’s an increase in demand 
at the local level, the farmer’s market products.  Where is that going to wash out? 
 
Shelman: Global or local is a very interesting issue. For 20 years or more we’ve 
talked about free trade, we’ve talked about opening markets; we’ve talked about 
how tariffs should come down. Yet given the recent run-up in prices and concerns 
about basic food availability, I see the world moving into a period where 
governments are going to become more focused on food security. We are seeing a 
growing number of consumers saying we like our food grown close to home. And 
now, on a broader basis, nations might be saying we like our food grown a little 
closer to home. So we have new tariff barriers that won’t go away when prices 
moderate. Just as the United States has found that relying on foreign oil is risky, 
countries don’t want to be in the same situation in terms of food security.  Many 
 2009 International Food and Agribusiness Management Association (IAMA). All rights reserved. 
 
 
83Jose / International Food and Agribusiness Management Review Volume 12, Issue 2, 2009 
 
 
 
 2009 International Food and Agribusiness Management Association (IAMA). All rights reserved. 
 
 
84
countries are questioning their policies, especially if they rely heavily on imports. I 
see more barriers come back into being, even though many have fought long and 
hard to get them to come down.   
 
   

Global Supply Chain: An Executive Interview with Mary Shelman

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