From Farm to Fork:
2. Scope and Approach
This report aims to understand how supply chain barriers affect agricultural value chains. Geographic focus is on sub-Saharan Africa and South Asia. These regions were chosen based on agriculture’s significance to their economies, the potential impact of supply-chain-barrier reduction as identified in the 2013 Enabling Trade: Valuing Growth Opportunities report, and the magnitude of food losses as quantified by the Food and Agriculture Organization of the United Nations (FAO). Within these regions, crop/country combinations (i.e. “value chains”) were selected for case studies. In order to facilitate access to contacts and data, priority was given to value chains where Forum partner companies had operations. Additional criteria for crop selection were the percentage of waste as reported by the FAO, and the potential to alleviate hunger or contribute to economic development through import substitution or exports. Additional criteria for country selection were government willingness to promote change, and the ability to leverage multistakeholder partnerships supported by the New Vision for Agriculture initiative and Grow Africa partnership, in collaboration with the African Union and NEPAD.
Three case studies are included in this report:
- Nigerian Cassava Flour: Broadening Value Chains for Traditional Crops
- Indian Tomatoes: Adding Value and Reducing Losses through Processing
- Kenyan Avocados: Connecting to High-value Export Markets
This report focuses on the steps of the value chain, from post-harvest storage to transport and distribution. Aside from post-harvest supply chain barriers, there are additional important levers that contribute to achieving a competitive cost position for any agricultural value chain, but they are not a main focus of this report. For example, breeding, access to inputs, and production and harvesting technologies and practices have important impacts on post-harvest supply chain management and food loss, and should be considered as part of the broader equation. Retailing and consumption patterns are also outside the scope of this report, as are the impacts of tariffs on the movement of agricultural goods (Box 2).
Box 2: Impacts of Tariffs on Global Agricultural Trade Flows
Tariffs continue to be a major factor restricting world agricultural trade. Average global tariffs for agricultural goods are more than three times higher than for non-agricultural goods. Some agricultural tariffs are as high as 800%, and in no other area does domestic support distort international markets to the extent it does in agriculture. In 2011, member states of the Organisation for Economic Co-operation and Development (OECD) provided US$ 252 billion in agricultural support and protection. World Trade Organization (WTO) trade rules tolerate export subsidies in the agricultural sector, even though they have long since been prohibited for other goods.16
The case against tariffs has two elements: distortions created within a protected country by higher domestic prices, and costs imposed on other countries by decreased exports and lower world prices. Export subsidies drive similar but inverse distortions.
In some cases, tariffs or export subsidies may provide the short-term boost needed to foster sector development and trigger a virtuous cycle of private-sector investment. However, these distortionary mechanisms are too often used as long-term forms of protectionism or subsidization. Continued international trade negotiations are thus critical to enabling greater overall efficiency in global agricultural markets.17
The conclusions of this report draw from the findings of the three case studies, which are based on a combination of primary and secondary research. For each case study, lead firms provided access to contacts and data along the value chain. In collaboration with these firms, the authors conducted interviews (and, where possible, field visits) to identify the most significant supply chain barriers restricting the movement of goods along the value chain and their contribution to excess costs, including food loss. A total of 80 interviews were conducted. The authors are very grateful for the contributions of the lead firms to the respective case studies: A.P. Moller-Maersk (Kenyan avocados), Flour Mills of Nigeria (Nigerian cassava flour), and Unilever and CHEP, a Brambles Ltd company (Indian tomatoes).