Search

Concerns over livestock production practices have resulted in increased consumer preferences for certified products. Australian beef buyers’ survey data revealed the preferences of consumers who would buy differentiated beef based on animal welfare, safety, health, or environmental-friendly considerations. Female respondents are more likely to buy certified animal welfare products. Buyers with children, and those who value branded beef, are more likely to buy products differentiated by a bundle of credence attributes. Given that Australian beef consumers eat similar amounts, there are opportunities for differentiating beef products according to credence attributes and offering them in a range of retailers., International Journal on Food System Dynamics, Vol 11, No 3 (2020)

In recent decades both domestic and global agricultural and food value chains have become more private, powerful, self-regulated, closely-coordinated or fully vertically-integrated, and experience-based. Consumers are now wealthier and have expectations that go beyond the traditional provision of goods. They now seek a food “experience” and meeting this demand requires a well-coordinated value chain. However, the provision of a wider range of attributes increases the probability of unpriced spillovers into these chains or into the broader community. How then should all the chain participants be aligned to deliver these food experiences efficiently, to maximise consumers’ willingness to pay, and to account for any externalities that may be present? A diagrammatic procedure is used to develop, outline and explain a framework based on value chain failure due to value chain externalities, and how the provision of value chain goods can internalise these externalities.

Agricultural RD&E managers have responded to the increased focus on value chains in food and agricultural product markets and most Australian agricultural RD&E corporations now have value chain programs embedded in their portfolios of funded projects. As community concerns have intensified within the social, environmental and public health spheres, the agricultural RD&E corporations also have started to invest some resources in areas of research which have externality implications. However, the assessment processes they use typically have not kept up with these changes, and some are questioning the basis of the current approaches when whole-of-chain and externality issues are important considerations. In this paper, the idea that agricultural value chain RD&E results in ‘chain goods’ is linked with Swann’s idea of a ‘club goods solution’ to research funding, to argue that a ‘chain goods solution’ can be a viable means of funding research activity that relates to agricultural value chains. Thus, members of a value chain need not rely solely on government to fund value chain RD&E. A set of criteria is suggested to determine who should fund RD&E activities in Australian agricultural value chains depending on the relative balance between expected private, chain and social benefits.

Food value chain businesses form alliances with horizontal and/or vertical partners to take collective action to either overcome or ameliorate chain failure, or to take advantage of new opportunities available due to innovations in products or processes. The desired outcomes from the collective action would not be possible to achieve if these businesses acted independently. While such alliances may take many forms, depending on degree of commitment and infrastructure linkages, they can often be considered to be clubs. Four such types of clubs can be identified (1) horizontal clubs comprising businesses that take collective action across a single cross-section or an aggregate of multiple cross-sections in the value chain; (2) vertical clubs, which consist of businesses that form a strategic alliance for collective action along a single value chain within a network of chains; (3) clubs that specialise in a single product or multiple products in the value chain; or (4) clubs focusing on a single input/activity or multiple inputs/activities. Thus the path to collective action chosen by clubs may vary according to existing capabilities and the scope for collaboration, particularly in relation to the potential for value-creating innovation. The result of the collective action is the provision of a chain good or service which usually leads to greater and more valuable chain coordination. By collectively identifying, funding and acting to capture positive externalities associated with innovation, businesses in many parts of a food value chain can widen opportunities to increase whole-of-chain surplus as well as increase private profits. In this paper four mini-case studies are presented which demonstrate the breadth of past collective actions that have been undertaken by a substantial proportion of businesses in food value chains, two in Europe and two in Australia. These are (1) the Euro Pool System, (2) Global Standards certification in Europe and globally, (3) Meat Standards Australia, and (4) the OBE Beef organic producer alliance in Australia. Each case study yields insights into the rationale of how businesses in different food value chains in different countries have acted as a club to use their joint resources to internalise positive innovation and coordination externalities that would not have been possible to achieve were these businesses to act independently., Proceedings in Food System Dynamics, Proceedings in System Dynamics and Innovation in Food Networks 2018

There is strong evidence that innovation is a primary driver of a nation’s economic growth. As Australia continues to compete in the global economy, it is imperative that businesses should be innovative to improve their performance. In this paper, we evaluate the status and main drivers of innovation in small businesses in the food sector in Australia. Discrete choice modelling and bootstrapping procedures are applied to a panel of firm-level data collected through the ABS Business Characteristics Survey (2006–2007 to 2010–2011 for the Australian Bureau of Statistics’ Business Longitudinal Database Confidential Unit Record File) to investigate the factors affecting the likelihood of small food businesses to innovate. Results show that businesses are more likely to innovate if they collaborate, have higher information and communication technology intensity, and use science, technology, engineering and mathematics skills. We also found that small food businesses, even at the subsector level, do combine different types of innovation when innovating. The propensity to innovate also increases for small businesses that have flexible working arrangements, face moderate-to-strong market competition, operate overseas and seek finance through debt and equity. The relative importance of these factors was found to vary between agricultural and nonagricultural food subsectors.

Certain members of a population consciously and deliberately decide to take joint action to provide particular types of goods or services that are at least partly excludable and at least partly congestible because it is too costly to provide such goods individually. These goods are called club goods or collective goods. We first define some key concepts in club theory and public choice. This includes the prospects for determining the optimal level of membership of a club, how to determine the optimal level and range of provision of services by a club, and consideration of the dynamics of club membership. Then we examine the ways in which club theory can help provide an alternative approach to recognising and overcoming market failure in agricultural and food value chains. We note that useful insights can be gained by considering value chains as ‘latent clubs’. That is, they are systems that exist but which are either inactive or have not been fully developed, but which have the potential for improvement through collective action. If value chain members do exploit an opportunity to reap the rewards of collective action, then forming a club that comprises the whole chain or a subset of chain members offers an efficient organisation design to do so. We find that all of the calculus that has been identified for clubs can be applied to agricultural and food value chains. However, there are two particular issues that require further consideration. One is the nature of risk in agricultural value chains, and how it is related to member preferences, and the other is the form of collective action to be taken by agricultural value chains in the future.

The purpose of this paper is to examine the policy options with the best prospects to improve the performance and competitiveness of housewives’ groups in the cottage food industry in Thailand. The analytical framework is based on an analysis of private and value chain-level net benefits from alternative policy actions and research and training initiatives. Seven candidates for policy implementation with the best prospects for success are examined: industrial policy; improving food quality; branding and labelling; encouraging strategic alliances; increasing the managerial role of members in housewives’ groups; educating members of housewives’ groups and group leaders; and improving the organisational structure of housewives’ groups. A suitable institutional setting is essential for policy success. We describe a chain governor and cooperative research centre for cottage foods that would fit neatly into the existing policy milieu in Thailand. This paper highlights the potential to improve the performance of housewives’ groups and stimulate its growth as a key income-generating activity for rural households in developing countries.

The marketing strategies of agricultural producers have become increasingly focussed on the sale of differentiated products to intermediary buyers rather than the sale of homogeneous commodities directly to retailers. The wool value chain in Australia fits the description of differentiated products being sold by wool producers to agribusiness firms that are intermediaries in the chain. The attributes of wool that are the source of this differentiation are used by firms to add value to their operations, reflected in higher retail prices paid for wool products. We measure the overall efficiency with which wool is converted into value across different processing routes and end products in the Australian wool value chain and decompose it into its technical, scale and mix efficiency components. We find that wool price changes significantly with a change in fibre diameter, staple length and staple strength and employ a flexible functional form to capture the relations between these wool attributes and lot value. Results show that considerable scope exists to increase the value of most sale lots, and indicate that the overall efficiency in extracting value is lower for wool supplied to processes that produce high-value wool garments. We then ascertain that various factors related to wool production and product characteristics significantly influence the level of technical efficiency. The mix of the three key attributes in wool lots was found not to be a major factor influencing overall efficiency whereas scale efficiency scores (which we measure as returns to wool attributes) were clearly much lower than those for technical and mix efficiency scores, a function of strongly increasing returns to wool lots as the levels of attributes increase. We test propositions about the skewness of distributions of efficiency scores in translating wool attributes into value. Most distributions of overall efficiency scores are positively skewed for production processes paying high prices for wool, and differences in overall efficiency were observed across selling centres. Prima facie, the results provide a strong case for wool producers to move to higher value levels of wool attributes by producing finer, stronger and longer wool fibres – especially the former. But such a strategy may not be an optimal one for producers to follow because the investments they make to implement such a strategy may entail high costs and take a long period to fruition that would lead to a heavy discounting of future benefits. A full benefit-cost analysis would be needed of any investments to raise the levels of wool attributes and otherwise improve wool quality at the farm level.

The scoring of wines and the ratings of wineries is the source of much debate. In this paper we attempt to explain variations in winery ratings in Victoria by examining two winery rating systems, the winery 5-star ratings system of Halliday and the WineBoss version that modifies the Halliday system, to obtain a consensus industry rating from a variety of sources; in conjunction with a limited number of other data about the wineries that are rated. We use ordered logit models and odds ratios on a sample of rated Victorian wineries (291 in the Halliday sample and 331 in the WineBoss sample) to see which predictor variables increase the odds of a winery being in a higher-rated category. Wineries that are older, use a consultant winemaker and/or produce predominantly red wines are more likely to be in a higher-rated category than those wineries that do not; conversely, wineries that use a contract winemaker and/or are located in a number of particular regions of Victoria are more likely to be in a lower-rated category than those wineries that do not. All of these results are as expected and confirm previous research. However, neither the size of the winery in terms of output nor whether the winery has other revenue sources, such as a restaurant, has any significant correlation with winery rating. The paper concludes with some suggestions for further research.

We use structural equation modelling to conduct a path analysis for cacao production in West Sumatra, Indonesia, quantifying the main constraints identified by farmers attempting to increase their incomes. Stakeholders in a workshop identified low yield of cacao trees and low quality of cacao beans as the two main production constraints, which are the focus of this study. Farm-level data from 100 smallholders were analysed to describe and estimate the dependencies between various factors and their relationship to farmers’ income. Five variables – source of cacao seedlings, expenditure on pest and disease management, expenditure on fertilizer, frequency of pruning, and pest and disease attack – were hypothesized to influence the yield of cacao trees. Yet farmers considered only fertilizer expenditure to have the expected positive influence. They considered lack of capital to be a critical factor indirectly impeding fertilizing practices. Expectations that farmers would perceive that the quality of their cacao beans and their ability to bargain would affect the price they received proved incorrect.

The potential economic benefits that options contracts bring to the Murray Valley water market in Australia are assessed. Exotic call option prices are estimated using Black-Scholes and skewness-and-kurtosis-amended Black-Scholes option closed-form pricing methods that are based on mean weekly water prices between 2004 and 2008. While options would result in significant economic benefits through more efficient trade of water on the open market for lower-value crops, there were mixed results from attempts to price them. Results show that use of the standard Black-Scholes formula is likely to undervalue option prices considerably at all but improbably low levels of volatility in water prices. Water option prices are high relative to the net present value of option benefits for recent levels of volatility, which is likely to discourage the development of a water options market. Alternatives to reduce the option prices are discussed. Other potential constraints to the implementation of a water options trading system are outlined.

We estimate total factor productivity in wool production spatially across benchmarked farms in four climatic areas in Eastern Australia. Estimates are decomposed into an environment-technology gap and technical efficiency relative to the production possibilities in each area. The environment-technology gap reflects the regional differences in the environment and variations in production technologies used in the wool enterprise. Significant gaps are found to exist between areas but they are relatively small in magnitude, emphasising the adaptability of the wool enterprise to environmental variability. Technical inefficiencies are also present in all areas but are larger among farmers who do not regularly receive consultancy advice in the benchmarking group. There is little variation in mean total factor productivity between the climatic areas.

Globalization results when markets become more integrated because of reduced transaction and transport costs. These costs have fallen because of sustained advances in transport technology and, more dramatically, in digital information and communication technology (ICT). Although communication costs tend to be a minor component of total trading costs, reductions in these costs may strongly stimulate international trade. The empirical evidence in support of this effect is, however, scant and its strength may depend on the composition of ICT and the nature of the product being traded. We test the hypothesis of an ICT effect on trade in bananas, oranges, tomatoes, and vegetables and fruit in general. We employ a gravity model of international trade between major exporting and importing countries for the period 1995 to 2009. The model explains the value of trade in terms of export and import countries’ levels of internet and mobile phone penetration, and of a broad range of factors that might also affect bilateral trade. We test whether a fixed effects model or random effects model best suits the data; results suggest a fixed effects model is appropriate. Model results suggest that mobile phone penetration significantly stimulates trade in vegetables and fruit and oranges by exporting countries. , but its impact is less than that of fixed telephone usage which has an unexpected negative influence on banana imports. Internet usage has only a positive effect on trade in imports of tomatoes. Internet usage in exporting countries for fruit and vegetables are negatively associated.

The cacao industry has played an important role in terms of export earnings and employment opportunities in Indonesia since 1980s. It is the main source of income for more than one million smallholder farmers in Indonesia, who are considered poor. Most planted areas of cacao are in Eastern Indonesia; however, cacao production has developed in Western Indonesia recently, with West Sumatra designated as the area of central production. Due to the importance of cacao industry in the Indonesian economy, there is a big opportunity to explore the potential of the industry in poverty alleviation. The study uses the participatory impact pathway analysis (PIPA) method. It is a new approach to formulate a development strategy and policies proposed by the Institutional Learning and Change. This approach is used because it: (1) covers impact analysis in order to investigate the potential contribution of cacao agribusiness development to poverty alleviation, which is not covered by other participatory approaches; and (2) can be used to identify stakeholders‟ relationships for cacao agribusiness development. The use of PIPA in this study involves various tools: a participatory workshop, surveys and semi-structured interviews. Problems facing the cacao industry were identified through the workshop, including low yields and price and price instability. Lack of knowledge by farmers of agronomic practices and low quality of seedlings were considered to be the main causes of low yields by the participants. Low price of cacao beans was thought to be mainly caused by low quality of cacao beans while lack of cooperation between farmers and the village cooperative and lack of a farmers‟ association were considered to be the main factors affecting price instability. Farmer survey data results show slightly different priorities from the workshop. Most cacao farmers disagreed on the problem of low yields and low price of cacao beans but a high proportion agreed on the problem of price instability and confirmed that cacao farmers face a problem of low quality of cacao beans. Most farmers do not know the cause of price instability, while improper fermentation was agreed as the main factor causing the low quality of cacao beans.

In this paper we draw on impact assessment work of the Australian Centre for International Agricultural Research (ACIAR) to present an example of meta-evaluation – an evaluation of evaluations – in an agricultural research, development and extension setting. We explore quality issues relating to evaluation studies in the context of government institutions. Program evaluation standards (PES) are divided into categories of utility, feasibility, propriety and accuracy to provide a framework for the meta-evaluation. The PES are presented as a universal measure of evaluation study quality. The intent of using them here is to judge the adequacy of PES as a universal quality measure or meta-evaluation base and to extract useful insights from ACIAR program evaluation activities when developing a meta-evaluation model for the Limpopo Department of Agriculture (LDA). Our meta-evaluation is undertaken of 63 impact assessment reports. First, the literature guiding the conduct of a meta-evaluation is reviewed. Second, an assessment (the meta-evaluation) of the evaluation studies is carried out for 19 sampled reports from a population of relevant reports fitting the dimension of the analysis, and results are presented and discussed. Also, lessons learned are presented, using the framework provided by the meta-evaluation criteria. Third, taking into account the lessons learned, implications are drawn for a proposed systematic meta-evaluation of the LDA. Finally, we conclude that all the PES cannot be equally emphasized in a meta-evaluation model. At ACIAR, 70% of the standards were at least partially addressed. Therefore, we succeeded in using the PES in judging the ACIAR evaluation quality. As such, they can be an important base when developing an evaluation model but should be applied in a contextualized manner.

Rice producers in the Philippines operate in different physical environments that are largely beyond their control, especially in terms of the agroclimatic conditions they face. Each rice area requires a unique set of location-specific technologies to match its location-specific needs. The rice production frontier is expected to vary, depending on the degree of yield-enhancing interventions implemented by the government and adopted by farmers. Understanding differences in specific production frontiers in different production systems should provide better assessments of yield performance across different locations and enable rice scientists to develop location-specific technologies as well as disseminate appropriate technologies to farmers in different climatic zones. A precise analysis of productive efficiencies, technology gaps and technical change among these zones may contribute to a more accurate targeting and effective design of the government’s rice program. We measure technical efficiencies and technological gaps in rice production for farmers in four agroclimatic zones in the Philippines who may employ different production technologies according to environmental conditions. Climatic zone 3 is considered most favourable for rice production based on the intensity and distribution patterns of rainfall. A stochastic metafrontier function is used to compare mean technical efficiency and the environmental and technological gap ratio (ETGR) across climatic zones. We estimated four regional stochastic frontiers using the standard stochastic frontier model based on a translog functional form. A deterministic metafrontier production function was then fitted to the regional frontiers. Farm-level panel data were used from a three-round survey covering six cropping periods – the wet seasons of 1996, 2001 and 2006 and the dry seasons of 1997, 2002 and 2007. Results show surprisingly little interzonal variation in productivity. First, the production frontiers are quite stable across the different agroclimatic zones. The mean ETGR is quite high in all zones and varies in a narrow range from 0.83 to 0.87. Farmers operating in agroclimatic zone 3 are the most productive group followed by those operating in agroclimatic zone 2. Mean technical efficiencies of farmers in respect of their group frontiers are also closely grouped, ranging from 0.74 to 0.76. It appears that Philippine rice producers have been able to adapt their crop management strategies well to suit their particular agroclimatic conditions.

"Clean and safe" agricultural products are an important issue among consumers, farmers and governments. Many developing countries develop their produce at various points along the ‘clean’ continuum based on production practices related to use of synthetic chemicals. Organic farming is applied to technologies with no chemicals or synthetic fertilisers used during production or processing. It was initially developed by farmers and non-government organisations in Thailand, and subsequently implemented by the Thai government through a series of policies on clean produce to meet international standards. Safe-use and pesticide-free practices lie between organic and conventional practices, and are possible steps when converting conventional farms to organic farms. We compare the technical efficiencies and technology gaps of the four farming systems in northern Thailand of which three - organic, pesticide-free and safe-use - are designated ‘clean and safe’. Farm-level data on vegetable production were collected from random samples of farms using these technologies. A metafrontier model was estimated, enabling the estimation of technical efficiencies and technology gap ratios (TGRs) for vegetable farms operating under the different production systems. Conventional farms were expected to have the highest mean TGR (smallest distance from the metafrontier) as they are least constrained in the way they farm, and results bear out this expectation. The mean TGR for conventional farms is 0.80, significantly higher than that for organic farms at 0.45. But all production systems have farms lying on the metafrontier. In contrast to the TGR results, conventional farms have the lowest mean technical efficiency relative to their group frontier (0.33) and pesticide-free vegetable farms the highest (0.47), most likely reflecting the different degrees of technical assistance provided to farmers in these groups. Organic farming is that farmers in this group did not perform markedly worse than farmers in other groups in terms of productivity. There are numerous organisations and projects providing assistance for ‘clean and safe’ vegetable farming in northern Thailand. Scope exists to improve the performance of farmers in all groups as technical efficiencies and TGRs of farms vary widely in all groups. Improvements are needed for agronomic technology, supply chains, farmer capacity in production and marketing, and effectiveness of technology transfer strategies.

The global food marketing network is being constantly reshaped, providing opportunities and challenges to the use of information and communication technology (ICT) to develop international trade in food products. ICT is likely to be especially important for food products such as fresh fruit and vegetables that are differentiated and sensitive to timeliness in supply, possess varied quality dimensions, and involve considerable supply accumulation and assortment. Digital ICT (Internet and mobile phones), in particular, is expected to facilitate international trade and encourage efficiency in the fruit and vegetables marketing system in two main ways. First, it reduces communication and search costs through cheaper and more effective media. Second, it improves market information and corrects information externalities along the supply chain, by promoting greater price transparency and enabling consumer preferences and tastes to be more precisely met. We employed a gravity model of international trade to test the hypothesis that ICT positively affects bilateral international trade in fruit and vegetables between member Asia-Pacific Economic Cooperation (APEC) economies in the period from 1997 to 2006. Explanatory variables include the usage of the Internet, mobile telephones and fixed telephone lines, and a broad range of factors that might determine the value of bilateral trade such as income per capita, population, distance between trading partners and common language. A Poisson pseudo-maximum likelihood model was estimated in order to handle zero trade observations and reduce biases caused by heteroskedasticity. Empirical results were not quite as expected, with relatively minor impact of digital ICT. They suggest that using digital ICT has significant positive effects on trade in fruit and vegetables between APEC countries only for the Internet in exporting countries. A stronger positive impact was discerned for the traditional form of ICT, fixed telephone lines in exporting importing countries. Nevertheless, fostering the development of digital ICT infrastructure and its diffusion should make exporters in APEC countries more competitive in the fruit and vegetables supply chain through the Internet effect, and boost their trade values in these products.

Productivity change and real returns to resources are measured for a sample of farms in south-west Victoria that produce beef. A stochastic frontier production model is estimated from which annual production frontiers and individual farm technical inefficiencies are calculated during the survey period from 1995-96 to 2004-05. Results suggest that best-practice beef producers in this region (those operating on the production frontier) modestly improved their productivity during the period. Technically inefficient farms seem to be achieving productivity increases lower than their top-performing counterparts and are on average falling behind the productivity levels of the latter. A single factoral terms of trade index is also estimated for each farm as a measure of the real returns to resources used in the beef enterprise. The mean annual index increased substantially after declining during the first year of the survey period. This measure showed much greater volatility than the productivity measure, principally because of fluctuations in beef prices.

Productivity change and real returns to resources are measured for a sample of farms in south-west Victoria that produce beef. A stochastic frontier production model is estimated from which annual production frontiers and individual farm technical inefficiencies are calculated during the survey period from 1995-96 to 2004-05. Results suggest that best-practice beef producers in this region (those operating on the production frontier) modestly improved their productivity during the period. Technically inefficient farms seem to be achieving productivity increases lower than their top-performing counterparts and are on average falling behind the productivity levels of the latter. A single factoral terms of trade index is also estimated for each farm as a measure of the real returns to resources used in the beef enterprise. The mean annual index increased substantially after declining during the first year of the survey period. This measure showed much greater volatility than the productivity measure, principally because of fluctuations in beef prices.

Beef consumers in Australia have shown differences in their preferences for products and sensitivity to price. This can be explained by the influence on expected quality of cues related to health, production process and eating experience. Eating experience is difficult to predict as consumers generally do not have enough information to form reliable expectations. In this context, branded beef can help to signal quality and reduce the degree of uncertainty that consumers experience when shopping. Focus group research identified different segments, premiums for preferred products and potential for large-scale differentiation and branding in the Australian market.

Scope economies can be used in studies of farming systems to provide a measure of synergies between different farm enterprises and between activities within farm enterprises. In this paper, they are reported for farms in a benchmarking group in the Wheat-Sheep Zone in New South Wales, Australia, by estimating a stochastic input distance function and calculating an ‘economies of scope parameter’. Evidence is presented of scope economies between sheep and beef enterprises, sheep and crop enterprises, and beef and crop enterprises.

Governments are under increasing pressure to deliver results. Therefore, it is important to evaluate the effectiveness, efficiency and relevance of the public service in implementing policies and programmes for social betterment. Without such evaluations, it is difficult to ensure that evidence is integrated into policy and used in practice due to lack of generalizability and learning. This paper focuses on (1) the knowledge that is relevant to understand evaluation influence, (2) the possible conceptual frameworks that enable understanding of the evaluation implementation process, (3) possible models of the process of organizational evaluation, and (4) the main ways of intervening to increase influence. The context for analysis is the South African Department of Agriculture.