professor hugh bigsby, dean faculty of agribusiness and ......faculty of agribusiness and commerce...

Strategic collaboration for increasing food value

Professor Hugh Bigsby, Dean

Faculty of Agribusiness and Commerce

Lincoln University, New Zealand

Strategic collaboration for increasing food value

• Why collaborate?

• How to collaborate?

• How to make collaboration work?

Agricultural Value Chains

• Urbanisation• Proximity and connection to production

• Lifestyle


• Urbanisation

• Globalisation• Key driver for agribusiness value chain development

• Changes in trade and policy regimes (WTO, FTA’s)


• Urbanisation

• Globalisation

• Increased market demands• Quality assurance

• Food safety

• Consumer acceptance

• Regulations

• Just-in-time delivery

• Regional credence characteristics


• Urbanisation

• Globalisation

• Increased market demands

• Changes in distribution channels and technology• New channels of distribution: short chains vs. long chains

What do these have in common?

• Uber

• Air BnB

• Go Jek

• Grab

• WeChat


• Urbanisation

• Globalisation

• Increased market demands

• Changes in distribution channels and technology

• Changes in industrial organisation• Consolidation / concentration in part as a reaction to drivers

What is collaboration?

• Typology of collaboration

• Different focus, objectives and payoffs

Transaction Operational level decisions, transactional data exchange

Event Tactical decisions, joint planning for solving specific issues

Process More strategic involvement, fully integrated processes

Collaboration versus cooperation

• Collaboration• Strategic and constructive way

for parties to engage

• Parties work with each other

• Ownership of outcomes shared

• Jointly develop capabilities for both the customer and supplier• Reduced cost

• Process improvements

• Innovation in products or services

• Collaboration is not only with external organisations• Observed increasingly in internal

organizations

• Cooperation• Parties bound by regular

commercial agreements

• One party delivers a service or goods to the next

Why create strategic relationships?

• Access to competencies or capabilities• Technical capability

• Organisational capability

• Innovative capability

• Flexibility

• Reliability

• Knowledge

• Network position

• International presence

• Low risk of discontinuity


• Access to competencies or capabilities

• Relationship-specific assets• Tangible

• Specialised machinery

• Improved quality and efficiency

• New products and technologies

• Intangible• Relational assets like trust

• Exchange of knowledge and joint learning

• Lower transaction costs


• Access to competencies or capabilities

• Relationship-specific assets

• Long-term supply chain partnerships can create a competitive advantage

• Relational rents• Profits achieved through

collaboration not able to be produced by each individual firm in isolation

Relationships in the value chain

• Key considerations• Who decides what is produced• How are the rules of trade determined• What is the relationship between participants• Role of associations/institutions• Coordination mechanisms (contracts, market sales)• Extent of chain “power”

• Relative size of a particular actor• Share of chain profits• Control over a key technology

• Value chain hierarchy

PRICE

Sellers

Buyers


Market-based• Spot transactions• (Generally) anonymous and

ad-hoc• Based on the prevailing price

Source: Gereffi et al (2005). Review of International Political Economy 12:1, pp. 78–104

Buyer

Supplier

Modular• Some level of input by the buyer

• Made-to-order • Custom design

• Based on existing technologies or capabilities of the supplier

• Coordination purely through buyer specifications

• Buyer does not have any specific stake in the supplier



Buyer

Supplier

Relational• More complex transactions

between buyer and supplier• Mutual dependence

• Can include social, ethnic, or other informal ties



Buyer

Supplier

Captive• Characterised by dependence of

the supplier on the buyer• Inputs• Materials• Markets

• Significant supervision and monitoring by buyer



Buyer

Supplier

Hierarchy• Supplier directly owned by

the buyer• Transactions between buyer

and supplier conducted within the firm



PRICE

Buyer

Supplier

Buyer

Supplier

Buyer

Supplier

Buyer

Supplier

End Use

Materials

Market Modular Relational Captive Hierarchy

Low HighDegree of Explicit Coordination

Degree of Power Asymmetry

Types of relationships

Spot-Markets

Verticalintegration

Relational contracts / repeated transactions

Captivecontracts

Production contracts

Marketing contracts

Hybrids

Increased intensity of vertical coordination

Hierarchy / RelationalMarket

Key steps to successful collaborations

Zespri

• Need for year round supply

• Develop partnerships with growers in other regions• South Korea, China, Italy

• License plant variety rights to local growers

• Supply chain management• Fruit quality management

• Pre-harvest certification activities

• Supply chain relations

• Fruit packaging management

• Shipping logistics and coordination

• Supply chain planning

• Farmer/Marketer partnering


Spot-Markets

Verticalintegration


Captivecontracts


Marketing contracts

Hybrids


MarketHierarchy / Relational

Pāmu deer milk

• State-owned enterprise

• Development of the deer milk industry• Special characteristics of

deer milk as a moisturiser

• Partnership with Yuhan in South Korea• Cosmetics business• Moisturiser product

• Farmer partnering up the value chain


Spot-Markets

Verticalintegration


Captivecontracts


Marketing contracts

Hybrids



BRAINZ

• Small coffee growers in Aroponga, Brazil• Normally sell bulk beans to large buyers

• Desire for control and to be closer to consumers

• New Zealand market channel – BRAINZ• Online marketing

• Marketing the grower and attributes

• Farmer/marketer partnering


Spot-Markets

Verticalintegration


Captivecontracts


Marketing contracts

Hybrids



professor hugh bigsby, dean faculty of agribusiness and ......faculty of agribusiness and commerce...

Documents