NC_old1198: Renewing an Agriculture of the Middle: Value Chain Design, Policy Approaches, Environmental and Social Impacts
(Multistate Research Project)
Status: Inactive/Terminating
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Statement of Issue(s) and Justification
Long-term USDA data clearly show that the industrialization of the U. S. food system has resulted in dramatic changes in how food products are produced and distributed. While the numbers of both small and large farms have increased, many mid-sized farms and ranches have disappeared. In the decade from 1997 to 2007, the number of farms grossing between $50,000 and $500,000 decreased by nearly 25 percent. Operations in this sales range are often too large or poorly located to direct market their products and are increasingly unable to compete successfully on price in global commodity markets. Beyond the farm level, the food processing, distribution, and retailing sectors have witnessed similar consolidations. The implications of these structural changes in the food system for stakeholders remain poorly understood.
Three previous projects, NCDC 207 (Research and Education Support for the Renewal of an Agriculture of the Middle, 2004-2006), NC 1036 (Research and Education Support for the Renewal of an Agriculture of the Middle, 2006-2010) and NCDC 223 (Advancing Research, Education, and Policy to Support Renewing an Agriculture of the Middle 2010-2012), have investigated the implications of this changing structure of U. S. agriculture and considered potential responses. More specifically, midscale values-based supply chains were examined as an alternative to local direct marketing and global commodity marketing. It is hypothesized that these midscale chains represent strategic business alliances among farms of the middle and other agrifood enterprises that: (a) handle significant volumes of high-quality, differentiated food products, (b) operate effectively at multistate, regional levels, and (c) distribute risk and profits transparently and equitably among the strategic partners. Values-based supply chain business models place emphasis on both the values associated with the food and on the values associated with the business relationships within the food supply chain.
In many conventional supply chains, business relationships are framed in win-lose terms. Relationships are constructed as competitive, even adversarial, whereby each company seeks to buy as cheaply and sell as expensively as possible. While this model may be appropriate for undifferentiated commodity supply chains, where each partys goal is profit maximization, it may not perform well for supply chains where differentiation is based primarily on product (including production methods) and relationship qualities. Framed in win-win terms, values-based supply chains are viewed as having the potential to provide commitments to the welfare of all partners in the supply chain, including fair profits, fair wages, and business agreements of appropriate, extended duration. Given the interdependence inherent in values-based food supply chains, participants should have a strategic self-interest in the performance and well-being of the other partners. In these supply chains, farmers and ranchers would be treated as strategic partners, not as interchangeable (and exploitable) input suppliers. These are all statements that can be (and to only a limited extent have been) empirically examined.
Over the last five years, project participants have increased the visibility and understanding of values-based supply chain development options through successful advocacy of changes in the language used in USDA RFPs, a series of successful research, outreach, and educational grant proposals, and a range of scientific and popular press publications. See Lyson, Stevenson, and Welsh, 2008, the publications available at http://www.agofthemiddle.org/, and the recent special issue of the Journal of Agricultural, Food Systems, and Community Development available at http://www.agdevjournal.com/volume-1-issue-4.html.
The new coordinated research effort proposed here will serve to further analyze and understand the results and potential of agriculture of the middle type values-based supply chains. The new effort will both re-examine the existing research studies from new perspectives and add additional baseline projects. Examples of the new issues to be explored are the implications of these values-based supply chains on the distribution of decision-making within the food system, the management of rural landscapes and natural resources, the well-being of rural communities, and the impact of public and private sector policies.
While specific project objectives are presented in greater detail in a separate section below, here is a summary of what will be studied within the project:
Organization/Ownership Objective: Determine key factors that influence patterns of ownership, control, and business relationships within values-based supply chains and investigate how all three influence economic performance and viability of participating farms and ranches and other chain partners.
Social Objective: Identify the community-related goals and needs of values-based supply chains and assess the impact these chains have on the communities in which they operate. Examine labor arrangements throughout these chains.
Landscape/Environmental Objective: Identify the environmental and natural resource-related goals of values-based supply chains and assess the impact these chains have on the landscapes in which they operate.
Policy Objective: Determine how existing policies in a number of areas such as commodity subsidies, conservation payments, rural development and others influence the performance of values-based supply chains, and how policies and programs could be redesigned to enhance the future performance of these chains.
We will also be identifying policy research topics that can be pursued by participants in this multistate project and others.
Technical feasibility of the research/outreach; justification of a multistate effort; impacts from successful completion of this effort
The registered members of this new research project have demonstrated their capacity to both conduct appropriate studies and provide technical assistance to agricultural sector participants. The work conducted under previous projects clearly demonstrates that excellent opportunities exist to match producers of the middle with a growing demand for high quality differentiated products but that further research is required to overcome numerous barriers. Many members have funded or potentially funded projects on topics that fit under this umbrella and recognize the benefits of a national network of academics focused through this multistate research effort.
The experience of the last five years has been that the most successful efforts have crossed geographic, disciplinary and commodity boundaries (see for example the various research projects cited above). Many of the researchers and outreach specialists who have expressed an interest in working on these topics have limited collaboration opportunities with colleagues in their own state and therefore they will benefit greatly from the opportunity to network with participants from other states and regions. The current NCDC 223 members will participate in an effort to recruit new participants to work on this topic and collectively are committed to address all project objectives.
Successful completion of this research effort will: 1) Document in much greater detail what these values-based food supply chains actually deliver; 2) Help existing values-based supply chains evaluate and improve their performance; 3) Provide models for potential values-based supply chain participants: 4) Provide guidance on the design of appropriate policies.
Long-term USDA data clearly show that the industrialization of the U. S. food system has resulted in dramatic changes in how food products are produced and distributed. While the numbers of both small and large farms have increased, many mid-sized farms and ranches have disappeared. In the decade from 1997 to 2007, the number of farms grossing between $50,000 and $500,000 decreased by nearly 25 percent. Operations in this sales range are often too large or poorly located to direct market their products and are increasingly unable to compete successfully on price in global commodity markets. Beyond the farm level, the food processing, distribution, and retailing sectors have witnessed similar consolidations. The implications of these structural changes in the food system for stakeholders remain poorly understood.
Three previous projects, NCDC 207 (Research and Education Support for the Renewal of an Agriculture of the Middle, 2004-2006), NC 1036 (Research and Education Support for the Renewal of an Agriculture of the Middle, 2006-2010) and NCDC 223 (Advancing Research, Education, and Policy to Support Renewing an Agriculture of the Middle 2010-2012), have investigated the implications of this changing structure of U. S. agriculture and considered potential responses. More specifically, midscale values-based supply chains were examined as an alternative to local direct marketing and global commodity marketing. It is hypothesized that these midscale chains represent strategic business alliances among farms of the middle and other agrifood enterprises that: (a) handle significant volumes of high-quality, differentiated food products, (b) operate effectively at multistate, regional levels, and (c) distribute risk and profits transparently and equitably among the strategic partners. Values-based supply chain business models place emphasis on both the values associated with the food and on the values associated with the business relationships within the food supply chain.
In many conventional supply chains, business relationships are framed in win-lose terms. Relationships are constructed as competitive, even adversarial, whereby each company seeks to buy as cheaply and sell as expensively as possible. While this model may be appropriate for undifferentiated commodity supply chains, where each partys goal is profit maximization, it may not perform well for supply chains where differentiation is based primarily on product (including production methods) and relationship qualities. Framed in win-win terms, values-based supply chains are viewed as having the potential to provide commitments to the welfare of all partners in the supply chain, including fair profits, fair wages, and business agreements of appropriate, extended duration. Given the interdependence inherent in values-based food supply chains, participants should have a strategic self-interest in the performance and well-being of the other partners. In these supply chains, farmers and ranchers would be treated as strategic partners, not as interchangeable (and exploitable) input suppliers. These are all statements that can be (and to only a limited extent have been) empirically examined.
Over the last five years, project participants have increased the visibility and understanding of values-based supply chain development options through successful advocacy of changes in the language used in USDA RFPs, a series of successful research, outreach, and educational grant proposals, and a range of scientific and popular press publications. See Lyson, Stevenson, and Welsh, 2008, the publications available at http://www.agofthemiddle.org/, and the recent special issue of the Journal of Agricultural, Food Systems, and Community Development available at http://www.agdevjournal.com/volume-1-issue-4.html.
The new coordinated research effort proposed here will serve to further analyze and understand the results and potential of agriculture of the middle type values-based supply chains. The new effort will both re-examine the existing research studies from new perspectives and add additional baseline projects. Examples of the new issues to be explored are the implications of these values-based supply chains on the distribution of decision-making within the food system, the management of rural landscapes and natural resources, the well-being of rural communities, and the impact of public and private sector policies.
While specific project objectives are presented in greater detail in a separate section below, here is a summary of what will be studied within the project:
Organization/Ownership Objective: Determine key factors that influence patterns of ownership, control, and business relationships within values-based supply chains and investigate how all three influence economic performance and viability of participating farms and ranches and other chain partners.
Social Objective: Identify the community-related goals and needs of values-based supply chains and assess the impact these chains have on the communities in which they operate. Examine labor arrangements throughout these chains.
Landscape/Environmental Objective: Identify the environmental and natural resource-related goals of values-based supply chains and assess the impact these chains have on the landscapes in which they operate.
Policy Objective: Determine how existing policies in a number of areas such as commodity subsidies, conservation payments, rural development and others influence the performance of values-based supply chains, and how policies and programs could be redesigned to enhance the future performance of these chains.
We will also be identifying policy research topics that can be pursued by participants in this multistate project and others.
Technical feasibility of the research/outreach; justification of a multistate effort; impacts from successful completion of this effort
The registered members of this new research project have demonstrated their capacity to both conduct appropriate studies and provide technical assistance to agricultural sector participants. The work conducted under previous projects clearly demonstrates that excellent opportunities exist to match producers of the middle with a growing demand for high quality differentiated products but that further research is required to overcome numerous barriers. Many members have funded or potentially funded projects on topics that fit under this umbrella and recognize the benefits of a national network of academics focused through this multistate research effort.
The experience of the last five years has been that the most successful efforts have crossed geographic, disciplinary and commodity boundaries (see for example the various research projects cited above). Many of the researchers and outreach specialists who have expressed an interest in working on these topics have limited collaboration opportunities with colleagues in their own state and therefore they will benefit greatly from the opportunity to network with participants from other states and regions. The current NCDC 223 members will participate in an effort to recruit new participants to work on this topic and collectively are committed to address all project objectives.
Successful completion of this research effort will: 1) Document in much greater detail what these values-based food supply chains actually deliver; 2) Help existing values-based supply chains evaluate and improve their performance; 3) Provide models for potential values-based supply chain participants: 4) Provide guidance on the design of appropriate policies.