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Values-Based Food Supply Chains: Strategies for Agri-Food Enterprises.
Definitions & Distinctions
The terms -value- and -values- are used in different ways when referring to food production and food business networks.
1. Value-added- is used to characterize food products that are converted from raw product through processes that give the resulting product an -incremental value -in the market place. An – incremental value is realized from either higher price or expanded market. For example, jams, cheeses, and processed berries are considered -value-added products.
2. Value-added – is also used to characterize food products that have incremental value in the marketplace by differentiating them from similar products based on product attributes such as: geographical location; environmental stewardship; food safety; or functionality. Examples of this type of -value-added -products include locally grown produce, organic or IPM-grown fruits, antibiotic and/or functionally specified food products.
3. The words -value- and -values– are also used to characterize the nature of certain business relationships among interacting food business enterprises, rather than any attribute of the product itself. In general, this collection of relationships is known as a – supply chain- (see below). When these relationships are expressly based in an articulated set of values, they are becoming known as -values-based supply chains- or, more succinctly, -value chains.
A food supply chain is a network of food-related business enterprises through which food products move from production through consumption, including pre-production and postconsumption activities. Typical links in the supply chain are:
inputs – producer – processor – distributor – wholesaler – retailer – consumer.
Traditional food supply chains can handle both undifferentiated (commodity) and -valueadded – food products. Food value chains differ from traditional food supply chains in the following important ways:
1. Business relationships among – strategic partners – within value chains are framed in win-win terms, and constructed on collaborative principles that feature high levels of inter-organizational trust. (-Strategic partners- are those businesses that significantly add value to food products and/or to supply chain performance. It is possible that not every business – link – in the chain is a – strategic partner.)
2. As producers of differentiated food products, farmers/ranchers (and fishers) are treated as -strategic partners- with rights and responsibilities related to value chain information, risk-taking, governance, and decision-making.
3. Commitments are made to the welfare of all strategic partners in a value chain, including fair profit margins, fair wages, and business agreements of appropriate duration.
4. Operations can be effectively located and coordinated at local, regional, national, and international scales. These food value chains are distinguished from traditional food supply chains by the combination of how they operate as strategic partnerships (business relationships), and how they differentiate their products (focused on food quality & functionality and on environmental & social attributes).