The concept of "agricultural value chain" (Ag VC) covers the full range of activities and participants involved in moving agricultural products from the farmer's field to the consumer's table. In order for a product to reach the consumer, there often are many processes or steps involved. Each step must have a direct link to the next in order to form a viable chain. At each node of this chain, some additional transformation and enhancement is made to the product. Hence, a VC is often defined as sequence of value adding activities, from production to consumption, through processing and commercialization.
The flow of seeds to farmers and grains or tubers to the market occurs along chains. These can be referred to as VCs as the product moves from one actor of the chain to another actor of the same chain e.g. from producer to intermediary to consumer, it gains value. So in general, a VC can be defined as "the full range of activities which are required to bring a product or service from conception, through the different phases of production (involving a combination of physical transformation and the input of various producer services), . delivery to final customers, and final disposal after use. A range of technical. business and financial service providers supports these processes.
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Growers are generally isolated from a majority of end-consumer and have little control over input costs or process received for their produce. The primary exception is where local farmers sell produce in local markets and where there is a direct link from farmer to consumer. In most traditional agriculture marketing systems growers tend to receive minimal profit. From the perspective of the chain actors, any integration up or down the VC can help them to receive a greater share of the
The Michoacan state in Mexico has become the world’s largest producer of avocadoes. Although this vegetable is grown on farms throughout this state, it is also tied to an integral network of trade and export to countries across the globe. In this essay, I will argue that like any commodity chain study, the production of the organic Hass avocado has an intricate production process, which for my commodity chain study begins in Uruapan, Mexico a town in the state of Michoacan. This analysis has indicated the crucial underlying links to trade, labour, and demand that the export of this vegetable has created throughout North America and the rest of the world. I hope to establish these links in an attempt to ‘defetishize’ this commodity and bring about the broader and conflicting issues that have resulted between Mexico and nearby countries such as the United States and Canada. I will begin this research by briefly reviewing the actual process and networks that the organic Hass avocado forms from the farms in Uruapan and the path it takes to the grocery stores in Vancouver, Canada. Then look to the implications of NAFTA and other related issues that have affected the trading process of avocadoes and has created severe divisions between the USA and Mexico. I will establish the importance of the organic produce industry and its exports to further developed countries with increasing demand for these organic products. And conclude that the future of the organic produce industry may be struck with ongoing divisions, as it becomes more globalized, between larger organic agricultural firms and smaller organic farmers who rely heavil...
These three companies have all but either acquired or eliminated their smaller competitors. The giants compete for the leading fast food chain’s contracts, in turn only benefitting the restaurants and increasing their profits (Schlosser 116). The potato industry has become an, “oligopsony- a market in which a small number of buyers exerts power over a large number of sellers,” (Schlosser 117). The potato farmers of Idaho face as Schlosser recounts, “pressure to either get bigger- or get out if the business,” (Schlosser 117). “Over the past twenty-five years, Idaho has lost about half of its potato farmers.
The tool essentially shows the chain of activities required to develop and deliver the products. The effectiveness of the organization vastly improves when all the key activities such as customer, vendor, suppliers and partner within the value chain working smoothly. The value chain used to reduce operational and production cost using low-cost producer strategy. If two service or products are delivery by two separate divisions for two different markets, there are functionality and process that can be integrated to save cost.
...struggling to earn any income at all and sometimes do not even get the opportunity to eat. Another issue that Raj Patel did not touch on is the lack of care consumers have for the farmers. It seems that consumers care about farmers about as much as the corporations do, which, in my opinion, is not a lot. When consumers only care about low prices and large corporations only care about making a profit, the farmers are left out to dry. Many consumers believe “food should be available at a bargain price, a belief that relies on labor exploitation and environmental exhaustion at multiple points along the commodity chain.” (Wright, 95) Corporations as well as consumers generally tend to be selfish and I think Raj Patel is afraid to mention this. If only these people cared a little bit more about each other I believe the hourglass of the food system will begin to even out.
The series of activities that are enacted by a firm that add value to a product beyond the cost of the production are referred to as the value chain. Harley Davidson offers a combination of superior performance and unique attributes within its value chain that promotes their core competencies and provides them with a competitive advantage.
1985, Michael Porter indentified that – a value chain is a chain of value-creating activities in order to offer the customer the level of value that exceeds the cost of the activities, than competition, thereby resulting in a profit margin. Competitive advantage comes from carrying out these activities in a more cost-effective way than competitors.
... sell their product at a lower rate due to the transportation, storage, and marketing costs. Having the food sold through private markets, cuts out the middle man, and allows more money to end up back into the farms, which helps the farmer put money back into their business and other businesses. Money that goes back into local businesses then increases the local economy through a process called the multiplier effect. The multiplier effect is an economics term that is used to describe where a small investment of money is circulated back into the economy, it sets off a chain reaction that increases exponentially. For example, if a consumer gave the farmer $20 for his goods and the farmer spends three fifths of his income ($20 + (.06x$20)), $32 would be the amount of money available in the market from the initial $20 investment (Krugman, Paul R., and Robin Wells).
After the purchasing on materials is made, then it turns to operation part which is transforming the raw material into finished food and services.
Farmers are essentially the back-bone of the entire food system. Large-scale family farms account for 10% of all farms, but 75% of overall food production, (CSS statistics). Without farmers, there would be no food for us to consume. Big business picked up on this right away and began to control the farmers profits and products. When farmers buy their land, they take out a loan in order to pay for their land and farm house and for the livestock, crops, and machinery that are involved in the farming process. Today, the loans are paid off through contracts with big business corporations. Since big business has such a hold over the farmers, they take advantage of this and capitalize on their crops, commodities, and profits. Farmers are life-long slaves to these b...
The aim of the value chain structure is to maximize the value creation while minimizing costs. Value Chain Analysis is a useful tool for working out how you can create the greatest possible value for your customers. Value chain analysis relies on the rudimentary economic principle of competitive advantage -companies are best served by operating in divisions where they have a relative prolific benefit compared to their competitors. Concomitantly, companies should ask themselves where they can deliver the paramount value to their customer. To conduct a value chain analysis, the company begins by identifying each part of its production process and recognizing where steps can be purged or enhancements can be made. These improvements can result
Value Chain Analysis is used to describe the activities that take place within the organization and relates them to an analysis of the competitive strength of the organization. Michael E. Porter (1991) stated that the activities of an organization could be divided into two groups: Primary Activities- Those that are directly concerned with creating and delivering a product and Support Activities- this group consist of those not directly involved in production, this group also add values to the organization because they help to increase effectiveness or efficiency (e.g. human resource management). Porter also stated that is not common for an organization to undertake all primary and support activities (Porter, 1991).
Value chains are essential elements of successful businesses, and how to gain a competitive advantage by analyzing them is the most important aspect. In Porter’s value-chain model, he points out that there are two types of business activities: primary activities, which include inbound logistics, operations, outbound logistics, marketing, sales and service; and support activities, which include procurement, technology development, human resources management, and firm infrastructure. In order to gain an edge, companies should focus on these activities to improve or create products that will satisfy their customers.
Value chain analyses a firm 's internal activities such as planning, production, and development, packaging and distribution so as to create value for clients. The function of the value chain is to identify the sources for cost reduction along with quality improvement. It means value chain is used to identify the strong and weak points, positive and negative points, the scope of improvement; in a nutshell, the advantages and disadvantages of the activities taking place in the system. The value chain is also called as a strategic analysis tool and it is a well-known concept in business management industry.
In the movie “Food Inc” we saw how the food industry keeps their farmers under their control. Food incorporation sets new protocols that require the farmers to keep purchasing more on dept. As a result of loans and only $18,000 annually (Kenner) they are stuck in a hole that they can’t get out of. I find many things disturbing about this. First off, I find it disturbing that he picked a poorly educated farming area. It seems obvious that the farmers don’t know what they got into and don’t have any knownldge of how to get out. I find it an example of poor unionization within the small farmers that are to be blamed not the ones that find out how to exploit it (Kenner).
Explain how the company’s value-chain activities can be better linked to create value for the company.