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National Convening of the Good Food Network Case Research of Food Value Chains Chicago IL November 20, 2008

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Presentation on theme: "National Convening of the Good Food Network Case Research of Food Value Chains Chicago IL November 20, 2008"— Presentation transcript:

1 National Convening of the Good Food Network Case Research of Food Value Chains Chicago IL November 20, 2008 (gwsteven@wisc.edu)

2 Percentage Change in US Farms by Sales Class, 1997 - 2002 -15% -10% -5% 0% 5% 10% < $5,000$5,000- $25,000 $25,000- $50,000 $50,000- $100,000 $1000,000- $500,000 $500,000- $1,000,000 <$1,000,000

3 AOTM Working Group Structure

4 Business & Marketing Options Value- Added Commodity Very Small Very Large 1. Direct Sellers 2.Cooperative Sellers 3.Low Margin/ High Volume 4. Troubled Zone Farmers’ Markets CSA’s Internet Sales Strategic Alliances & Food Value Chains Mid-scale Commodity Producers Large-scale commodity Producers

5 Tiers of the Food System Tier 0 Personal Production of Food Tier 1 Direct Producer to Consumer Tier 2 Strategic Partners Embedded in Supply Chain Relationships (multiple scales) Tier 3 Large Volume Aggregation and Distribution Tier 4 Global Anonymous Aggregation and Distribution Tier 0 Tier 1 Tier 2 Tier 3 Tier 4

6 Definition of Mid-tier Food Value Chains: Values-based strategic business partnerships Featuring mid-scale agri-food enterprises that Create and distribute responsibilities and rewards equitably across the supply chain, and Operate effectively at regional levels with Significant volumes of high-quality, differentiated food products.

7 Case Studies Country Natural Beef [www.oregoncountrybeef.com] Shepherd’s Grain [www.shepherdsgrain.com] Organic Valley Family of Farms [www.organicvalley.coop] Red Tomato [www.redtomato.org]

8 Key Characteristics of Mid-tier Food Value Chains: Engage value/values in products and business relationships Emphasize organizational interdependence. trust and transparency: shared support & shared reward Achieve scale & volume through cooperation and aggregation of mid-scale producers Enable mid-scale enterprises to be competitive

9 Farmers, Ranchers, and Fishermen: Are treated as strategic partners, not as interchangeable input suppliers Negotiate prices based on production and transaction costs, plus a reasonable margin Experience agreements/contracts as fair and for appropriate time frames Control brand identity up the supply chain …co-branding with strategic partners Participate fully in value chain decisions

10 Challenges and Opportunities: Creating & Marketing Significant Volumes of Differentiated Food Products Creating Effective Internal Organizational Forms Selecting Value Chain Partners [Shared values, different competencies, and complementary business models]

11 Challenges and Opportunities Cont. Developing Effective Supply Chain Logistics Achieving Economic Sustainability [commitment to the economic welfare of all strategic partners; supply management, stable pricing, and cost-of-production- based pricing] Future Dynamics [engaging consumers as strategic partners and deeper differentiations]

12 Big Themes: Building Out a Middle Tier in the U.S. Food System 1) Develop, test, communicate, and proliferate a “new business logic” 2) Address key systemic issues [The “Good Food” bundle & Michael Pollan’s list]

13 Big Themes Cont. Value Chains Can Be Both “Smart” and “Right” 1) Smart Business: strategic partnerships (social capital) replace economic capital and expertise; nimbleness in the market; quality control efficiencies; food miles and food safety efficiencies; geographical identities 2) Ethical Business: equitable distributions; participatory organizations and alliances; ethical differentiations

14 Other References www.agofthemiddle.org Thomas Lyson, G.W. Stevenson, and Rick Welsh, eds. 2008. Food and the Mid-Level Farm: Renewing an Agriculture of the Middle. The MIT Press, Cambridge MA.


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