module 3-4 Flashcards
what are the key economic characteristics of food agribusiness value chains
high levels of risk
less predictable quality
price variation over time (harvesting season)\
firms closer to production experience higher levels of price variability
adulteration - the risk of unsafe food and the costs of recalling and tarnished reputation
why are value chains important for developing countries
value chain gives opportunities in relation to globalisation urbanisation and the growing middle class
support for agricultural production due to decreasing tarrifs
allows for new production technologies, logistics, labour processes and organisational relations and networks to be introduced
what are the types of innovation and what do they encompass
product innovation
innovations that result in a new or essentially improved product
process innovation
changes in the field of production of the enterprise. this can lead to a reduction of financial costs, improvement of productivity or better quality of products.
constraints of developing country value chain
- Market access and market orientation
- Resources and physical infrastructures
Infrastructure – Lack of energy, water,
Knowledgebasespecialised skills, Access to technology/inputs, information (communication)
- Institutional Voids
Unfavourable taxes
Weak or lack of conducive government regulations/policies/legislation to support markets
what is value chain analysis
the technique applied to assess how public policies, investments and institutions affect existing or planned chains for agricultural commodities
what are transaction costs
are simply the costs for carrying out any exchange between firms or transfer of resources between stages in a virtually integrated firm
what are the four categories of indicators used for performance evaluation in agrifood value chains
- efficiency
- flexibility
- responsiveness
- food quality
how does food quality identify performance
appearance
and product safety
four key concepts for transaction analysis are :
bounded rationality
opportunism
asset specificity
informational asymetry
what is bounded rationality
rational decisions and capacity to evaluate rationally are physically limited within a time period
what is opportunism
cheated by seller
occurs when there is fewer number of suppliers.
the supplier will take the opportunity to act opportunistically and alter the terms of the business relationship to their own advantage such as demanding a higher price
what is asset specificity
investments made in relation to a specific transaction that would have little value in relation to any other purpose
informational asymmetry
when there is both public information available to everyone as well as private information only available to selected parties
this leads to not all parties in the transaction not possessing the same level o information.
what is verticle coordination
all the ways of harmonising the vertical successive stages of production
includes:
spot markets
vertical integration
strategic alliance
contracts
why food promotional staragies
product differentiation isn’t enough thus promotion of the features and factors of the product should be undertaken.
