The Food Value Chain

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En provenance du cours de Technische Universität München (TUM)

The Economics of Agro-Food Value Chains

42 notes

Technische Universität München (TUM)

The Economics of Agro-Food Value Chains

42 notes

Have a look at our trailer for a brief introduction to this course: https://youtu.be/GADAgxTHjgE In this course, you learn how the agro-food value chain approaches the challenge of constantly improving its competitiveness by producing high quality food and products and also aiming to attain greater sustainability. Some of the topics of this course are: • The notion of quality for food and agricultural products and consumer value. • How to conduct market research in this field. • Labelling, branding and pricing strategies, as-well as innovation in the agro-food sector. • How sustainability can be used as a competitive advantage through corporate social responsibility. • The role and different types of industrial standards. • The different forms of coordination in the chain, in particular with regard to the retailing and distribution sector. This course is taught by a group of international experts from Universities in Italy, Germany, Ireland, Scotland and the Netherlands. Each of them will give you insights into a specific topic related to food quality and the organization of the agro-food value chains.

À partir de la leçon

Module 1: Introduction

This module will give you an introduction and overview of the course. In the second lesson of this module, we will talk about the current challenges and trends in the agro-food value chain. In the third lesson of this module, the concept of quality in the agro-food value chain will be introduced. The module finishes with the fourth lesson, which gives you an overview of the food value chain.

The Food Value Chain6:28

Rencontrer les enseignants

Hannes Lang
Research Associate
Technical University of Munich
Luisa Menapace
Professor
Technical University of Munich
Faical Akaichi
Research Economist
Scotland’s Rural College
Francesco Bimbo
Research Economist
Wageningen University
Montserrat Costa-Font
Research Economist
Scotland’s Rural College
Carlo Russo
Associate Professor
University of Cassino and Lazio Meridionale
Chenguang Li
Research Economist
University College Dublin

Welcome to the 4th and last lesson of Module 1: "The Food Value Chain."

In this lesson I will give you an introduction to the food value chain.

At the end of this lesson you will be able to explain the concept of a value chain, explain where we can apply it,

and argue why understanding the value chain is

relevant for businesses, governments, and NGOs. Value chains are an abstract concept -

we generally find two perspectives - the value chain within a firm

and the value chain across firms. Dissecting the value created

within a firm into its components yields the generic value chain Michael Porter already described in 1985.

Porter describes this value chain in the following way:

"The idea of the value chain is based on the process view of organizations,

the idea of seeing a manufacturing or service organization as

a system made up of subsystems each with inputs, transformation processes and outputs.

Inputs, transformation processes, and outputs involves the acquisition and

consumption of resources - money, labour, materials, equipment, buildings, land,

administration and management. How value chain activities are carried out

determines costs and effects profits." The value chain across firms, on the other hand,

is usually viewed as a sequence of the processes ranging from the creation

of goods or services to their delivery to the end consumer.

Not too long ago it seemed businesses were more concerned with the value chains within the firm,

and economists and policy makers with the value chain across firms and sectors.

Today, however, businesses are much more concerned about the whole value chain of which they are part,

because advancing globalization and technology allow for

much more fine tuning of the processes along a value chain.

Such optimization of value chains is desirable for firms, because it can

increase the efficiency of their production and decrease cost and risks.

To do so, however, requires a holistic view of the value chain, making it

imperative for managers to know how to analyze them.

Knowing and understanding the value chain is also necessary to analyze the attractiveness of markets.

We should consider where value can be generated and absorbed and where it is

extracted by competition or rent-seeking.

A framework like Porter's five forces allows us to disentangle the many factors shaping the distribution of the

value across stakeholders - factors such as entry barriers, bargaining power,

price elasticity, institutional constraints, and so on, can be identified and investigated

in isolation to get a clearer picture of this situation. This is not only useful

for businesses to identify ways to maximize profits, but also for

governments, researchers, and NGOs to investigate whether markets are functioning.

Governments and NGOs are interested in value chains because the

interdependencies across firms created by a value chain can have both desirable

and adverse effects on the functioning of the whole market. As each actor in the

value chain strives for maximizing the value they create and the retention of

that value, the preferences of the different actors along the value chain

are not always aligned. This can lead to various forms of market failure.

Economic theory can help us understand the reasons of the various forms of market failures along a value chain.

Understanding these reasons then helps

us come up with solutions, which could be new business models, new institutions, or regulations.

As there are different parties interested in different aspects

of value chains, there are several different definitions of a value chain

such as the following: For instance, the World Bank defines the

value chain as "the full range of value adding activities required to bring a

product or service through the different phases of production."

The United Nations Industrial Development Organization views value chains as "Actors connected along a

chain producing, transforming and bringing goods and services to

end-consumers for a sequenced set of activities." The more business-oriented

definition based on Porter's observation sees the value chain as

"interlinked value-adding activities that convert inputs into outputs which, in turn, add to

the bottom line and help create competitive advantage."

For the time being, the key conceptual and methodological elements of value chain analysis and

development are still evolving. For now, it suffices to remember that the

food value chain links the value generating process of a good or service from

inventors to producers to intermediaries through consumers.

To summarize what we have learned in this lesson: We can look at value chains within and across firms.

Firms take a holistic view of the value chain to

optimize their process and to maximize profits. Governments and NGOs take

holistic view of value chains to identify reasons for market failure and

to learn how to resolve them. Misaligned interests of the actors in a value chain

can lead to market failure. Economic theory can help understand reasons for

market failure and provide guidance for solution. This is the end of lesson 4 and

with it we conclude Module 1: the Introduction to this online course.

Thank you for your attention.

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