Supplier-Retailer Relationships in the UK Fresh Produce Supply Chain

Abstract

Over the past decade, the UK fresh produce (fruit, vegetables, and salads) supply chain has undergone numerous changes, with retailers becoming increasingly powerful. The overall trend is towards the industry being dominated by a few large corporations operating on a national level, with some corporations even operating on a European or global scale. This process, which could significantly impact on the supplierretailer relationships, is examined in this study using indepth interviews with participants from the fresh produce supply chain. Amongst the findings are the following: Supply chain advancements, including backhauling, and factory gate pricing are causing some controversy because suppliers feel that these initiatives do not benefit their relationships with retailers. There is room for supplierretailer relationship improvement in areas such as trust, co-operation, and collaboration. Retailers, who have significant supply chain power, are starting to acknowledge the importance of suppliers in the gaining of gaining retail market share. Lastly, the intense process of supplychain rationalisation that we have seen in recent years appears to be leveling out in the UK fresh produce supply, such that there is less anticipated further rationalisation. The study outlines a series of recommendations for how suppliers (retailers) can improve their relationships with retailers (suppliers).     

Information sharing as a safeguard against the opportunistic behavior of South African Karoo Lamb farmers

Misconduct in global meat supply chains are omnipresent and even more so in differentiated chains where credence attributes such as origin and taste are used to differentiate the product. By definition, these attributes signal asymmetric information which implies that in the presence of bounded rational individuals with conflicting interests, misconduct in the form of opportunistic behavior is bound to prevail. Increased information exchange through farmer networks is, however, expected to reduce opportunistic behavior. In the case of a differentiated meat product, such as Karoo Lamb, the article studies the farmer‐abattoir transaction with the purpose of recommending strategies that can be implemented to reduce the farmer's tendency to behave opportunistically. The article employs the PLS approach to SEM and reveals a significant negative relationship between information shared and opportunistic behavior. The results indicate significant positive relationships between trust in the abattoir and information shared as well as between farmer networks and information shared. These results are indicative of the support provided to the information shared construct by higher levels of trust between farmers and abattoirs and established farmer networks. It is, therefore, recommended that differentiated meat supply chains, through their various associations, concentrate their efforts to promote information sharing by building stronger, trust centered relationships and by supporting farmer networks.     

Power and Conflict in Jordanian Food Distribution Channels

The purpose of this study is to examine power and conflict relationshios in food distribution channels in Jordan. A random sample of 178 food retailers has been selected from three major cities in Jordan. The results of the analyses indicate that food retailers attribute more power to those wholesalers who provide high quality assistances (noncoercive power sources) and who are perceived as more likely to use punishments (coercive power sources). Also, the food retailers who perceive their wholesalers as likely to use coercive sources and/or provide assistances (noncoercive sources) have more conflict with those wholesalers. The relationships between the actual use of power and both attributed power and conflict were found to be positive.     

Supermarket Expansion in Turkey: Shifting Relations of Food Provisioning

This paper examines the shifting relations of food provisioning in Turkey as small producers are increasingly integrated into commercialized agri‐food supply chains led by supermarkets. Turkey's entry into a customs union with the European Union and a World Bank–imposed policy measure adopted during the 2001 economic crisis have greatly facilitated the process of market intensification in Turkish agriculture. There are two sides to this process: one concerns the historical centrality of small‐scale production directed towards local–regional consumers; the other relates to the dominant role played by supermarkets in changing the conditions of subsistence. The restructuring of wholesale markets and the privatization of formerly state‐led agricultural co‐operatives and producers' unions have been crucial for the expansion of supermarkets into agri‐food relationships. The competitive growth of Islamically oriented small and medium‐sized capital groups alongside large retailers is further deepening the commodification process in food relationships.     

Product Differentiation with Credence Attributes and Private Labels: The Case of Whitefish in UK Supermarkets

The retail market for seafood is dynamic with substantial competition both amongst retailers and between private labels and national brands. New product attributes are added in attempts to differentiate products and to attract consumers. Credence attributes, in particular those related to eco‐labels and fishing method, have become more common. But little is known about how these and other credence attributes are valued in the retail market. In addition, little is known about price differences between private labels. To estimate the value of these attributes, weekly in‐store observations of selected frozen whitefish products were conducted in seven UK retail chains in the city of Glasgow. An estimated hedonic model shows a substantial price premium for fishing method (line‐caught), a premium for both home (Scottish) and non‐home country of origin (Icelandic) and a premium for the Marine Stewardship Council eco‐label. An uncertified eco‐label owned by a large seafood manufacturer leads to reduced price. The study also reveals substantial price differences between private labels for whitefish. The results contribute new insights regarding opportunities for differentiation by credence attributes which may lead to more sustainable and effective resource use along the value chain for frozen whitefish.     

Food Scares and Trust: A European Study

The complex interactions between the determinants of food purchase under risk are explored using the SPARTA model, based on the theory of planned behaviour, and estimated through a combination of multivariate statistical techniques. The application investigates chicken consumption choices in two scenarios: (a) a ‘standard’ purchasing situation; and (b) following a hypothetical Salmonella scare. The data are from a nationally representative survey of 2,725 respondents from five European countries: France, Germany, Italy, the Netherlands and the United Kingdom. Results show that the effects and interactions of behavioural determinants vary significantly within Europe. Only in the case of a food scare do risk perceptions and trust come into play. The policy priority should be on building and maintaining trust in food and health authorities and research institutions, while food chain actors could mitigate the consequences of a food scare through public trust. No relationship is found between socio‐demographic variables and consumer trust in food safety information.     

Activists and Animal Welfare: Quality Verifications in the Canadian Pork Sector

Animal welfare is an emotive topic. Although most governments legislate against outright animal cruelty, animal welfare organisations have actively lobbied for more stringent farm animal welfare regulations. Food retailers and restaurant chains have faced pressure from animal welfare organisations to implement more stringent animal welfare requirements for their suppliers. Is the demand for more stringent farm animal welfare protocols primarily determined by a subset of consumers with very strong preferences or does it signal a more fundamental underlying change in societal preferences? Given the credence nature of farm animal welfare, whom do consumers trust for credible quality assurances? This article analyses the role of quality verification in a market characterised by consumers with heterogeneous preferences for animal welfare. Of particular interest are the relative strength of preferences for humane animal treatment assurances and the credibility of these quality claims. Using data from a Canadian survey targeted at two distinct samples – a general population group and members of animal welfare organisations – a discrete choice experiment is used to assess consumer attitudes towards animal welfare assurances for pork products. The credibility of quality verification by public sector, private sector and third party agents is assessed. Evidence confirms that consumer preferences for farm animal welfare assurance and the source of verification are indeed heterogeneous. Although a portion of consumers remain largely indifferent to pork products with animal welfare assurances, a group of highly motivated consumers exist with an economic incentive to lobby for tougher animal welfare standards.     

Creating Value in the Supply Chain for Australian Farmed Barramundi: Whole of Chain Perspective

This article investigates 4 key areas of supply chain management to identify opportunities to create value for Australian farmed barramundi. These key areas are product attributes, material flow, information flow, and relationships. This exploratory study forms the first stage of a value chain mapping study. Based on data gathered from 13 in-depth interviews, 7 with farmers and 6 with wholesalers/retailers, a preliminary map of the value chain for Australian farmed barramundi was developed. From a producer perspective, 3 key issues emerged: lack of collaboration, inconsistency of product quality, and lack of knowledge of what consumers value. Although wholesalers/retailers identify product consistency as a key issue, they further identify product dumping and the growth of imports as areas of major concern. These findings laid the foundation for strategy development at both the individual and industry level. The insights from this case highlight the value of chain analyses as a diagnostic tool for strategy development.     

Estimating Market Power by Retailers in a Dynamic Framework: the Italian PDO Cheese Market

In this article, we evaluate the role of market power by retailers within the supply chain of Parmigiano Reggiano (PR) and Grana Padano (GP), the two most famous Italian quality cheeses. Market power is analysed in the context of a dynamic imperfect competition model of the supply chain, in which retailers are allowed to exert market power both downstream and upstream. We jointly estimate market‐power parameters together with supply and demand elasticities, by means of a structural system of demand, supply and price‐transmission equations, estimated using the generalised method of moments. We find evidence of downstream market power by retailers (toward final consumers) for PR and GP, but no evidence of upstream market power (toward processors/ripeners). These results may be explained by the structure of the supply chain and by the peculiar characteristics of the two cheeses.     

The Australian grocery industry: a competition perspective*

This article discusses whether at a theoretical level the large and growing role of the vertically integrated supermarket chains raises a buyer‐power concern because of potential harm to other retailers, suppliers, and/or consumers. Even if this is possible, whether it is a real concern depends on whether provision exists to constrain the exercise of that power through market responses, such as entry, or through regulatory provisions, such as those contained in the Trade Practices Act.     

Agricultural extension,trust, and learning: results from economic experiments in Ecuador

Using an artefactual economic experiment and a randomized training intervention in Ecuador we test if trust conditions a farmer’s decision to learn during an agricultural training. We present a simple model of farmer behavior during the agricultural training in order to link play in the laboratory to behavior in the field. We find evidence that farmers who trust agricultural technicians relatively more than community farmers in the trust game learn more during training. The results provide insight into the design of agricultural extension services in Ecuador.     

TRADITIONAL MARGINS AND THE IMPACT OF A COST-SAVING INNOVATION

Retailers tend to have a traditional level of mark-up and to charge the same mark-up even if the product is improved so that waste is reduced. Under these circumstances the result of improving a product is that producers sell less at a lower price, consumers buy more at a lower price and retailers obtain a larger percentage margin. The producers suffer as a result of their innovation. Excess capacity at retail may be caused.     

木材加工业供应链伙伴关系现状研究

用信任、关系承诺和依赖性3个维度作为衡量木材加工业供应链伙伴关系的调查指标,对福建省莆田市70家木材加工业供应链企业的性质、企业参与木材加工业供应链的情况、企业对供应链上下游企业更加偏好信任的企业类型以及木材加工业供应链的伙伴关系进行问卷调查。调查结果表明:不少原木材或木制品流通企业开始走上了工贸结合的道路,绝大多数被调查企业既有上游供应商也有下游厂商或经销商,一半的企业更加信任供应链上游企业;在木材加工业供应链中,多数企业对上下游企业之间的信任度较高、关系承诺较好,多数企业认为通过建立供应链伙伴关系能实现双方共赢但倾向于有更好的供应商或厂商时选择更换。因此,建议在木材加工供应链伙伴企业间,建立以木材行业协会为纽带的信任机制,建立以核心企业为中心的长期合作关系,建立信息共享平台,促进木材加工业供应链伙伴间的信息共享。     

Consumer trust, risk and food safety: A review

Consumers' attitudes to trust and risk are key issues in food safety research and attention needs to be focused on clearly defining a framework for analysing consumer behaviour in these terms. In order to achieve this, a detailed review of the recent literature surrounding risk, trust and the relationship between the two must be conducted. This paper aims to collate the current social sciences literature in the fields of food safety, trust and risk. It provides an insight into the economic and other modelling procedures available to measure consumers' attitudes to risk and trust in food safety and specifically notes the need for future research to concentrate on examining risk and trust as inter-related variables rather than two distinct, mutually exclusive concepts. A framework is proposed which it is hoped will assist in devising more effective research to support risk communication to consumers.     

Information Exchange and Strategic Behavior in Supply Chains: Application to the Food Sector

Information technology (IT) facilitates information exchange between retailers and suppliers. Based on evidence from food industry, information strategies under uncertainty are analyzed, using game theory. Some key results are under certain conditions, retailers withhold valuable sales data from suppliers even if this means less supply coordination; a revealed equilibrium exists where suppliers learn retailers' market data despite retailers' withholding of such data; this leads either to full information convergence or, surprisingly, incomplete information convergence with some informational asymmetry left; retailers with greater market power and numerous suppliers are more inclined to share, rather than to withhold, information.     

PRICE TRANSMISSION IN THE UNITED KINGDOM YELLOW FATS MARKET IN THE PRESENCE OF IMPERFECT COMPETITION

The yellow fats sector comprises butter, margarine and a number of newer dairy-and low-fat spreads. In analysing the transmission of policy prices (e.g. the intervention price of butter) in this sector, which is characterised by concentrated processors and retailers, it is unrealistic to assume that marketing margins are competitively determined. The empirical estimates in this paper suggest that, since the mid-1980s, processors and retailers of margarine take into account the price of butter when setting margarine prices, which they can only do if they possess market power. This implies that the benefits of CAP reform (in the form of lower butter prices) may be seriously underestimated if the resulting fall in margarine prices is ignored; the increase in butter consumption would be overestimated.     

Occupational sex segregation in agriculture: Evidence on gender norms and socio-emotional skills in Nigeria

Occupational sex segregation is a key driver of the gender gap in earnings. Using data from 11,691 aspiring agribusiness entrepreneurs in Nigeria, this article explores factors that drive sectoral choice, gender differences in the choice decision, and especially the role played by norms around gender roles. When given a choice of 11 agricultural value chains in a government program, we find the majority (54 percent) of the applicants chose to enter into the poultry value chain, and women were more likely to choose poultry than men. This article finds evidence of more restrictive gender norms in Northern Nigeria states, which lowers women's likelihood of entering into agricultural value chains where the potential for profit may be higher. The gender bias in sectoral choice is also attributed to differences in work experience especially in agricultural activities and in the chosen value chain, as well as in land ownership. Women with more experience in male-dominated agricultural value chains exhibit lower self-efficacy, which could reflect the challenges they face when deviating from social norms to operate within nontraditional value chains.     

Building Collaborative Relationships with Distributors in the Dutch Potted Flower and Plant Industry

Abstract

The objective of this paper is to discuss the impact of the information network and trust on collaborative relationships as well as the impact of the collaboration on the performance of suppliers (i.e., growers). Combining network and trust, growers can build collaborative efforts, namely joint action and the norm of flexibility. Network in this paper is analyzed in terms of its information that can support a supplier in coordinating the channel relationship. By means of trust, a grower and his distributor may have adequate mutual understanding and shared experience to creatively solve problems, set up effective planning and be flexible in the day-to-day management. The discussion is based on the network approach to channel relationships and considers elements of the transaction cost economics and marketing channels. One hundred seventy-five growers of the Dutch potted flower and plant industry answered the questionnaires about their relationships with distributors. This data was analyzed through structural equation modeling in Lisrel. The results show the safeguarding effects of the information network to encourage joint action and flexibility. Also, trust influences directly flexibility and indirectly joint action. Flexible growers achieve high profitability and growth rate. This study implies that the network and trust should be considered in making the decision about the degree of collaboration in a channel relationship. To achieve an efficient mechanism of coordination, managers need to draw special attention to the development and maintenance of trust and the network.     

农产品价格与保鲜努力决策及协调契约研究

[目的]农产品新鲜度的提升对于提升农产品供应链的整体效益具有重大作用。由单个供应商和单个零售商组成的农产品供应链中,各个节点企业在自身效益最大化前提下均没有足够动力独自保证农产品新鲜度。[方法]文章提出供应链成员可以采取合作的方式共同投资保证农产品新鲜度,在集中式决策模式下,通过设计契约合同进行利益的协调分配,使双方利益均达到最优。[结果]通过模型的计算及相应的数值仿真,结果表明:若供应链成员采取合作的方式投资农产品新鲜度的保鲜技术,不仅使自身利润增加,还可以使农产品的最优价格降低,新鲜度提高,消费者效用增加,产品销量提升,从而促进了农产品的有效推广与销售。[结论]产品新鲜度是影响农产品需求的重要因素,在农产品供应链模型中,通过设计合理的收益共享契约对农产品供应商与零售商之间的博弈进行协调,能够为农产品供应链成员进行更加合理有效的决策提供依据。     

Supply Chain Relationships and SME Firms' Competitiveness in the Spanish Pig-to-Cured Ham Chain

The objective of the article is to examine whether relationship quality in the Spanish pig-to-cured ham supply chain positively influence small and medium enterprise (SME) stakeholders' competitiveness. A structural equation modeling approach has been used with information from a survey conducted on farmers, processors, and retailers in the pig-to-cured ham chain located in the Spanish region of Aragon.

Results indicate that the quality of the relationship positively influences stakeholders' competitiveness in the supply chain. Second, improvements in communication also positively affect the quality of the relationships. Then, the quality of communication has also a positive effect on stakeholders' competitiveness through the relationship quality.