1. AGRICULTURAL ECONOMICS 790 SEMINAR
Key Issues in Developing Global Value Chains for Food: Management and Policy Implications for South African Agribusiness
Bassey O. Nicholas

2. SIGNIFICANT ISSUES IN GLOBAL VALUE CHAINS FOR FOOD.
Dimensions of Global value Chains Analysis
Agricultural Global Value Chains
Characteristics of Agribusiness Value Chains
Potential Impact of the key issues of Global Value Chains for Food on Agribusiness

3. THE IMPLICATIONS FOR SOUTH AFRICAN AGRIBUSINESS
Management and policy Implications for South Africa’s Agribusiness
Global value chains for food requires a new look at trade policy
Ensuring efficient custom and port procedures for agro-food products
Service Markets access and Promoting Improved Competitiveness
Conducive agribusiness environment is required for participation in the GVCs
Ensuring increasing returns and value adding
Improving the poverty - reduction impact of export agribusiness
Investment promotion policies need to take cognizance of GVCs for food
Ensuring a Strong Environment and Governance Framework
Achieving Upgrading through partnership must be ensured

4. INTRODUCTION
…full range of activities that firms and workers perform to bring a product from its conception to end use and beyond
(Gereffi & Ferandez-Stark, 2011).
such as design, production, marketing, distribution and support to final consumer.
GVCs cover a full range of interrelated production activities performed by firms in different geographical locations to bring out a product or service from conception to complete production and delivery to consumers. (UNCTAD, 2006).
Relevant questions
What are the key issues in developing GVCs for food?
What are the main activities in GVCs for food?
organizations are involved in this process and how important are they?
how can we identify management and policy instruments?
GVCs analysis provides important insights into these issues.

5. General objective
identify the key issues in developing global value chains for food
Specific Objective
to identify the main activities/segments in the global value chains for food,
identify the dynamic and structure of companies under each segment of the value chain,
identify the policy and management implication for South African Agribusiness.
The methodology of GVCs explores these basic dimensions
an input-output structure – process of transforming Raw material into final products.
The main activities in the chain vary according to industry, basically these include: research and design, inputs, production, distribution and marketing, and sales.

6. Distribution & Marketing
FIGURE 1: Global Value Chain Segment for Fruit and Vegetables
Inputs
Production
Packing & Storage
Processing
Distribution & Marketing

7. Table 1: Fruit and Vegetables Global Value Chain
Input
Production for export
Packing & storage
Processing
Distribution & marketing
Seeds
Farms: fruit and vegetables for processed food
Exporter companies
Processing companies
Supermarkets
Fertilizer
Farms: fruit and vegetables for fresh consumption.
packing plants (Selection, packing, cutting, labeling etc)
Dried
Food services
Agrochemicals(herbicides, fungicides and pesticides)
Small farms
Cool storage units
Frozen
Importers and wholesales
Farm equipment
Medium and large farms
Large producer exporter companies
Preserved
Small scale retailers
Irrigation equipment
Large producer exporter companies (farms)
Juices and pulps
Research and developments

8. Geographical consideration - Globally, supply chains are dispersed leading to most of the activities being carried out in different parts of the world. The level of position South Africa occupies in the GVCs depends on the number of leading firms within the country.
Governance - ….how a chain is controlled and coordinated when certain actors in the chain have more power than others.
….Gereffi (1994a)
Five governance structures –
Markets: Involves transactions that are relatively simple.
Modular: occurs when complex transactions are relatively easy to codify.
Relational: Occurs when buyers and sellers rely on complex information that is not easily transmitted or learned.
Captive: small suppliers are dependent on one or a few buyers that often wield a great deal of power.
Hierarchy: Occurs when product specifications cannot be codified, products are complex, or highly competent suppliers cannot be found.

9. Institutional Context: identifies how local, national and international conditions and policies shape the globalization in each stage of the value chain.
Upgrading: “... a process of improving the ability of a firm or an economy to move to more profitable and/or technologically sophisticated capital and skill intensive economic niches.”
..(Gereffi 1999)
the shift from lower-to higher value economic activities by using local innovative capacities to make continuous improvements in processes, products and function. McDermott (2007: 104)
The two definitions emphasize different aspects, but do not mention the importance of making these value chains more sustainable. Upgrading is also an opportunity to make GVCs for food more sustainable.
Despite the importance of agriculture in the African economy, it is characterized by low productivity, poor quality products, poor service quality, and high production and transaction costs (Eifert, Gelb & Ramachandran 2008; Kydd et al. 2004; Wiebe et al. 2003). It is also plagued by major environmental constraints such as competition, legal requirements and technology (Bationo, A & Waswa, B 2011; Nutsukpo et al. 2012; Ortmann 2000, 2005).