Food System Dynamics (E-Journals)
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Efficiency and Capital Structure in the Italian Cereal Sector
Get PDFFarm capital structure may have contrasting effects on farm efficiency as a strand of the farm efficiency literature as pointed out ( for a review see for example Davidova and Latruffe 2007). Farmers often use external funding both to cover productions costs and to finance investments (machinery, equipment, buildings) to enhance farm economic performance. The debt is necessary to maintain or improve farm productivity and competitiveness by adopting technological innovation needed to increase farm efficiency. At the same time leverage may affects farm efficiency by influencing farm production decision constrained by lower farm expenditure capacity. In this case, farms response may rely on reducing the necessary expenditures to maintain the production assets with negative consequences on farm productivity, growth and efficiency. Finally, farm leverage may affects the farms capacity to react to market shocks adopting the needed strategic adjustments to maintain productivity, efficiency and competitiveness. A relevant case study for assessing this last effect would be the recent surge in price volatility that affected European and world cereal markets starting from 2008.The objective of this paper is to provide new empirical evidence on the relationship between farm capital structure and farm efficiency. In particular we will try to answer the following research question: does higher leverage lead to better performance? The food price volatility that has affected the cereal market from 2008 onwards is a possible stress for cereal farms that must adapt to the rapid drop in prices such as the one observed in 2010. Our research provide a first insight on the evolution of the cereal farms debt-technical efficiency relationship in times of high price volatility
Dairy Price commodity in Italy: volatility and forecast after milk quotas
Get PDFThe EU dairy industry is facing an unprecedented change since the removal of milk quotas has exposes the sector to the world competition with strongly organized multinational traders. The basic question of this paper is if the milk quota expiration will have any impact on market equilibria and decisions of agents operating at various market levels. This paper has been preceded by two other papers discussing various issues about dairy market in Italy: market asymmetries and consequences for price transmission and presence of oligopoly competition and consequences for price setting. The present analysis uses the time series analysis of weekly dairy prices to test the market behavior before and after quota regime. Volatility was tested with simple CV, SD indexes and more complexes Arch-Garch models including the breaks and changes in market regime correlated to policy adjustments. Results suggest a moderate change in volatility; our explanation is the Italian dairy sector was for long time protected from world market competition and a consistent amount of raw milk processed for cheese production was managed by the coop organization that transferred to the dairy farms the margins realized at other market levels. The future scenario is more pessimistic in absence of any protection: some structural changes needed to face the world competition could have been postponed in this protected market with the OCM. The expected growth of milk supply after quota will determine a decline in the raw milk price becoming closer to the marginal costs of the most efficient dairy farms in the world. This will cause the exit of a great number of dairy farms, the restructuring of the dairy industry and more concentration at retail level
Price Setting in Online Grocery Markets: The Case of Chocolate
Get PDFOnline markets are developing rapidly in many industrialized countries and have already reached a rather mature status for some product categories. This, however, is not the case in the food sector. In Germany, the online food market captured still less than 1 % of total food sales in 2014. Despite this small share of the online market, the segment is clearly increasing and major players on the offline grocery market engage themselves on the online market, too, or they plan to do so. It is intended in this paper to contribute to our knowledge on competitive strategies of multichannel suppliers and pure online traders which are active on this growing market segment. A major element of competitive strategies on the online market for foods is pricing. We concentrate on pricing strategies of multichannel firms and pure online traders on the German online market and present evidence for the product group chocolate
The Role of Agri-food Processor in the Food Economics
Get PDFTheoretical description of the agri-food market allows for identification of three entities whose interactions determine the market balance. In this perspective, we can distinguish consumers, agri-food processors and agricultural producers. They form a kind of circular flow of interdependent entities. The behavior of each of them conditions the behavior of others.The goal of the paper is to evaluate the role of processor in the food supply chain. We also raise the question of food processors in the context of their impact on the producers through prices of agricultural raw materials. The considerations are made basing on formal analytical models referring to the standards on the reasoning in microeconomics which are expand by the empirical evidence of analyzed problems.The processor is crucial to the sustainability of growth in the agri-food sector, because by seeking to maximize his objective function he determines the price level of agricultural products produced by the producers, under the assumption that the price of agricultural raw materials is determined by their marginal utility for the processor. It is also the basis for isolating the intermediate demand, which is reported by the agri-food processor for agricultural raw materials and direct (final) demand reported by the consumer
Commodity Market Dynamics and Price Volatility: Insights from Dynamic Storage Models
Get PDFThe recent fluctuations of agricultural commodity prices have stimulated the debate on the potential causes of price volatility. The most common explanation is that weather shocks or other external factors perturb supply, thus leading to substantial price fluctuations. In view of the development of global markets, which tend to average out supply disturbances, one would expect price volatility to decrease if primarily caused by external shocks. This however is contradicted by the experience of the recent past. An alternative explanation proposes that the persistent fluctuations are the result of nonlinear dynamics and would even occur in the absence of external shocks. The focus of this paper is on the latter type of explanation. It is investigated under which conditions price volatility is primarily caused by nonlinear dynamics. A system dynamics modelling approach is used for the analysis. The model results show that plausible behaviour of actors can lead to persistent price fluctuations, even in the absence of external shocks
Reference Price Formation for Product Innovations – the Role of Consistent Price-Value-Relationships
Get PDFWhen deciding between product alternatives, consumers have to compare the observed prices to their internal reference price to determine whether the offer is a good deal or not. For product innovations, for which no reference price has been established, it is unclear against which standard the observed price is compared. Despite extensive research on the use of reference prices, little attention has been devoted to the formation of an internal reference price for an unfamiliar product category. We suggest two mechanisms of how reference prices are constructed and find support for these in two experiments. Reference prices for an unfamiliar product category can either be formed through repeated exposure to incidental price information or through transfer of price information from a familiar, similar product category to an unfamiliar product category. Crucial is however that the product price-value relationship is consistent; a condition often not accounted for in product innovation testing
Innovation and Interactions: A Bibliometrics Study on intra-firm Coordination
Get PDFThe way the firm uses its technological resources and competences, the ability to combine/recombine components, methods, processes and techniques to offer products and services plays a central role on the innovation process (AFUAH, 2002). As Indarti (2010) points out, the interactions are a key element in the process of gaining access to, acquire, and develop knowledge for the stimulation of a firm’s activities in the field of innovation. From the intra-firm perspective, to innovate, Paruchuri (2010) argues that a firm that can improve the diffusion of knowledge internally will benefit from enhanced innovative activity. Aalbers (2015) reflecting on the governance of knowledge sharing inside organizations, suggest that knowledge may come to be difficult to transfer because of the boundaries dynamics. In light of these authors insights the aim of this paper is to present an overview of the research regarding Interactions, Innovation and Intra-firm Coordination. For that, we performed a bibliometrics study within the Web of Science (WoS) and the Elsevier’s Scopus libraries. A final sample of 111 papers were built after several refinements. The results suggest a growing tendency of the publications on the subject. The most cited papers have a gap of almost twelve years in between it, which shows that the construction of knowledge, about the topics innovation interactions and intra-firm coordination are still attached to what was published a long time ago, for the initiators of this research field, but the works of Dolfsma et al (2008) and Leendert et al (2015) shows us a new trend and that new researchers are using these brand new works as references to perform new studies
Determinants of Job Search Success of German Agricultural Sciences Graduates
Get PDFThis paper shows how job search success, measured as search duration and entry salary, is affected directly or indirectly by personal and process as well as structural characteristics. A specific focus is on the relevance of practical experience which is claimed to be a key feature of employability. While self-assessed practical and namely international experience is positively related to salary, but not to search duration, the number and duration of internships does not affect job search success. Results are relevant for higher education institutions to develop their curricula, for students to prepare for job search, and for employers to understand the genesis of employability and their potential means to impact it
A Farm Information Model for Development and Configuration of Interoperable ICT Components to support Collaborative Business Processes – a case of late blight protection
Get PDFFarm enterprises2The objective of this paper is to describe a farm information model and a proof of concept that demonstrates how a collaborative Business Process for farming can be configured using this farm information model. Knowledge to develop this model and a proof of concept is obtained by case study research focusing on the collaborative Business Processes of spraying and crop protection of potatoes against late blight disease. need to collaborate with numerous actors that are part of Agri-Food Supply Chain Networks (AFSCNs) such as governments, advisory services, contractors, processors, input providers and certification bodies. This collaboration is required to produce food in a more sustainable, safe and transparent manner. To collaborate efficiently and effectively, information needs to be shared within collaborative Business Processes. The information sharing within such collaborative Business Processes should be supported by an ICT infrastructure consisting of interoperable ICT Components. Currently, most of the available ICT Components are not interoperable, hindering data exchange between ICT Components of various vendors. Consequently, this situation is hindering optimization of farm production processes and collaboration in AFSCNs. Therefore, a platform, called FIspace, is being established for multiple domains that support the development and configuration of interoperable ICT Components into a system that is able to support collaborative farm Business Processes. To develop interoperable ICT Components and configure these in an easy and flexible manner to support farm enterprises, a farm information model is, amongst other models, required.The presented farm information reference model is able to describe the relations between a farm enterprise and its collaborators, the Business Processes related to the supporting ICT Components and the data messages for data exchange between ICT Components
Success factors of innovation networks: Lessons from agriculture in Flanders
Get PDFInnovation has been identified as a critical asset for SMEs to survive (Hitt et al., 2001; Lee et al., 2001). However, SMEs that need to improve their innovation process often lack the essential resources to innovate when relying solely on their in-house activities (Batterink et al., 2010). A large body of literature therefore highlights the role of external partnerships, or networks (Lazzarini et al., 2001; Pittaway et al., 2004; Sawhney et al., 2006).Despite the increasing number of studies focusing on the relationship between networking and innovation, there is still considerable ambiguity and debate within literature regarding appropriate network characteristics for successful innovations (Nieto and Santamaria, 2007; Pittaway et al., 2004). Furthermore, the existing studies focus mostly on high tech companies (Edquist 2006, van Galen 2008). The objective of our study is to gain insight into the network characteristics critical for successful innovations within the agricultural sector in Flanders.The study is based on interviews and focus group discussions with farmers and network coordinators active in Flanders. In total, 109 respondents were consulted. This research is based on four innovation characteristics which seem crucial for each innovation (Kanter, 1988). For each of these innovation characteristics, we investigated how networks could contribute, via their network characteristics.The results showed that networks serves as a net for knowledge about e.g. new technologies, or changing legislation in order that farmers are faster aware of developments. When farmers have multiple contacts, they have a higher chance to discover new things. Thereby, it is important that knowledge providers are part of the network and connected with the different actors, and not only provide their information to the farmers as an external actor. Also the face-to-face communication within a network is an essential issue. Furthermore, coalition can play a crucial role for some innovations, as a lot of farmers are not able to implement their idea because for example the retailer or research institute is not supportive or interested. If the farmers set up a self-initiated coalition, it can be easier to initiate the innovative idea. Fourth, it is important that individual actors from the agricultural system revisit their actual role. Successful innovation processes often originate in situations where creativity is not limited within one unit. Based on the findings, recommendations for farmers as well as network coordinators are formulated to increase the innovation capacity