2015, Volume 18, Paper 104
ISSN: 1442-6951

Refocussing on the Value Chain Perspective to Analyse Food, Beverage and Fibre Markets

Garry Griffith – UNE Business School, University of New England, Armidale, New South Wales, Global Food Studies, University of Adelaide, Adelaide, South Australia and Agriculture and Food Systems, University of Melbourne, Parkville, Victoria

Hamish Gow – College of Business, Massey University, Palmerston North, New Zealand

Wendy Umberger – Global Food Studies, University of Adelaide, Adelaide, South Australia

Euan Fleming – UNE Business School, University of New England, Armidale, New South Wales

Stuart Mounter – UNE Business School, University of New England, Armidale, New South Wales

Bill Malcolm – Agriculture and Food Systems, University of Melbourne, Parkville, Victoria

Derek Baker – UNE Business School, University of New England, Armidale, New South Wales

This paper has had a long gestation. Gow, Griffith and Umberger met in 2010 to scope out a research agenda in the economic analysis of value chains for food and agricultural products and to design a workshop for those interested in collaborating in teaching and applying value chain analysis. The background material presented here was the rationale for undertaking the scoping study. The workshop did not eventuate but several conference papers were presented (Griffith et al. 2012, Fleming et al. 2013b) and some of the material was mentioned in Umberger and Griffith (2011). Fleming and Mounter joined the group in 2011 and by 2012 a new course in value chain analysis was developed and offered at UNE. This has subsequently been extended into undergraduate and postgraduate versions and transitioned in different formats to the universities of Adelaide and Melbourne. The material presented here forms the opening lectures in both courses. Further, some of the earlier concepts of chain failure and chain goods that were developed were applied by a group of UNE staff interested in the grape and wine industries (Fleming et al. 2013a,c, Grant et al. 2013, Griffith et al. 2014). Then in 2014 a major project was completed for Meat and Livestock Australia where the concepts were further developed with case studies from the Australian red meat industries (Griffith et al. 2014). Malcolm was part of that team. Finally, Baker joined UNE in 2013 and began to develop a research agenda in value chains and networks (Baker et al. 2014). During these various iterations and conversations the original background material has been revised and updated, but essentially not much has changed. The authors thought it would be valuable to make available the material to a broader audience.

Abstract

Global food, beverage and fibre markets can be characterised as networks of global value chains. Increasingly such chains are private and powerful, closely coordinated or fully vertically integrated, self-regulated, global and experience-based. The more that global agricultural and food product trade is conducted in these global value chains, the greater the concern that market efficiency may be compromised and the stronger the argument for having effective regulatory policy on hand for these markets. It is difficult to define appropriate roles for government intervention in these new environments. A priori, standard market failure justifications for public interventions are no longer as strong. In this paper the standard public good/market failure argument is summarised, developments in these markets and implications for analyses of agricultural and food sector markets are reviewed, and appropriate roles for government in an environment dominated by global value chains are considered. The conclusion is that there are potential roles for government or the governing agency in the value chain. These roles relate to creating or improving chain goods to ameliorate chain failure, rather than customary intervention to provide public goods in the face of market failure.

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