Food value chain businesses form alliances with horizontal and/or vertical partners to take collective action to either overcome or ameliorate chain failure, or to take advantage of new opportunities available due to innovations in products or processes. The desired outcomes from the collective action would no t be possible to achieve if these businesses acted independently. While such alliances and collaborations may take many forms, depending on the degree of commitment, the kind of governance and infrastructure linkages, they can often be thought of as “clubs ” for the purpose of economic analysis. Several different types of clubs can be identified, thus the path to collective action chosen by clubs may vary according to existing capabilities and the scope for collaboration, particularly in relation to the potential for value-creating innovation. The result of the collective action is the provision of a chain good or service, which usually leads to greater and more valuable chain coordination. By collectively identifying, funding and acting to capture positive externalities associated with innovation, businesses in many parts of a food value chain can widen opportunities to increase whole-of-chain surplus as well as private profits. In this paper five mini-case studies are presented to demonstrate the breadth of past collective actions undertaken by businesses in food value chains, two in Europe and three in Australia. These are the Euro Pool System, and Global Standards certification in Europe and globally, as well as Meat Standards Australia, an Australian beef organic producer alliance (OBE Organic®), and the supply of food to households during Covid-19 lockdown in Australia. Each case study yields insights into the rationale of how businesses in different food value chains in different countries have acted as a club to use their joint resources to internalise positive innovation and coordination externalities.

Concerns over livestock production practices have resulted in increased consumer preferences for certified products. Australian beef buyers’ survey data revealed the preferences of consumers who would buy differentiated beef based on animal welfare, safety, health, or environmental-friendly considerations. Female respondents are more likely to buy certified animal welfare products. Buyers with children, and those who value branded beef, are more likely to buy products differentiated by a bundle of credence attributes. Given that Australian beef consumers eat similar amounts, there are opportunities for differentiating beef products according to credence attributes and offering them in a range of retailers.

Apples are an important and popular fruit among the Australian population and, in the case of fresh apples, the domestic market is relatively self-sufficient. Retail specifications and consumer preferences are the driving force for quality standards for apples along the chain, with actors working to provide the best quality selection of produce. However, the industry is facing many interrelated challenges. These include the growing influence of climate change, the changing nature of consumer preferences, an increasing shortage of labour to undertake orchard operations, and a significant volume of loss and waste. These challenges are discussed in this paper. While all of these challenges are important, it is noteworthy that the total amount of fresh apples that is potentially diverted from the Australian fresh apple supply chain each year is conservatively estimated at 163,000 tonnes, about 40 per cent of total production at the farm level. If this waste is valued at the average farm price, it equates to an industry loss of $245 million annually.

In recent decades both domestic and global agricultural and food value chains have become more private, powerful, self-regulated, closely-coordinated or fully vertically-integrated, and experience-based. Consumers are now wealthier and have expectations that go beyond the traditional provision of goods. They now seek a food "experience" and meeting this demand requires a well-coordinated value chain. However, the provision of a wider range of attributes increases the probability of unpriced spillovers into these chains or into the broader community. How then should all the chain participants be aligned to deliver these food experiences efficiently, to maximise consumers' willingness to pay, and to account for any externalities that may be present? A diagrammatic procedure is used to develop, outline and explain a framework based on value chain failure due to value chain externalities, and how the provision of value chain goods can internalise these externalities.

Cassava (Manihot esculanta Crantz) is an important tropical root crop for food security and national economies in Africa. In Ghana, it is the most important staple food also used in breweries, bakery and confectionery industries. Several high-yielding and disease resistant improved cassava varieties (ICVs) have been released and are being promoted through diverse dissemination channels. Past studies investigate the role of information in the adoption of agricultural technologies without accounting for the diversity in the dissemination strategies. The paper explores the diversity of dissemination strategies in examining the adoption of improved cassava varieties using a sequential mixed-method approach which combines exploratory interviews and focus group discussions with a questionnaire-based quantitative survey and the Cragg's two-part model. The paper uses data collected from 608 farmers randomly selected from major cassava producing communities in the Ashanti and Brong-Ahafo regions in Ghana, West Africa. The results show statistically significant and identical impact of information through demonstrations, distribution of planting materials, farmer-to-farmer and media on the probability of ICV adoption. Other drivers of adoption are the membership of farmers based organizations (FBO), planting of two or more varieties and having large livestock size. However, ICV adoption and intensity was hampered by household size, distances to the nearest tarred road and market, and grey-skin color. These attributes need to be integral of dissemination campaigns for cassava variety adoption.

Agricultural RD&E managers have responded to the increased focus on value chains in food and agricultural product markets and most Australian agricultural RD&E corporations now have value chain programs embedded in their portfolios of funded projects. As community concerns have intensified within the social, environmental and public health spheres, the agricultural RD&E corporations also have started to invest some resources in areas of research which have externality implications. However, the assessment processes they use typically have not kept up with these changes, and some are questioning the basis of the current approaches when whole-of-chain and externality issues are important considerations. In this paper, the idea that agricultural value chain RD&E results in 'chain goods' is linked with Swann's idea of a 'club goods solution' to research funding, to argue that a 'chain goods solution' can be a viable means of funding research activity that relates to agricultural value chains. Thus, members of a value chain need not rely solely on government to fund value chain RD&E. A set of criteria is suggested to determine who should fund RD&E activities in Australian agricultural value chains depending on the relative balance between expected private, chain and social benefits.

Geographical concentrations of wineries often occur within a region for obvious reasons of terroir. However, localised spatial concentrations of wineries may exist because of other factors. This paper explores whether co-location exists among wineries that have higher wine ratings in the Hunter Valley wine region in New South Wales, Australia. Key conclusions are that clustering of Hunter Valley wineries producing high-quality wines does not exist, the quality rating of a winery is influenced by its terroir, and wine quality among wineries in the region is higher for those producing the territorial brand wine of Semillon. Blending was found to have no impact on the quality of wine produced by a winery.

There is strong evidence that innovation is a primary driver of a nation's economic growth. As Australia continues to compete in the global economy, it is imperative that businesses should be innovative to improve their performance. In this paper, we evaluate the status and main drivers of innovation in small businesses in the food sector in Australia. Discrete choice modelling and bootstrapping procedures are applied to a panel of firm‐level data collected through the ABS Business Characteristics Survey (2006–2007 to 2010–2011 for the Australian Bureau of Statistics’ Business Longitudinal Database Confidential Unit Record File) to investigate the factors affecting the likelihood of small food businesses to innovate. Results show that businesses are more likely to innovate if they collaborate, have higher information and communication technology intensity, and use science, technology, engineering and mathematics skills. We also found that small food businesses, even at the subsector level, do combine different types of innovation when innovating. The propensity to innovate also increases for small businesses that have flexible working arrangements, face moderate‐to‐strong market competition, operate overseas and seek finance through debt and equity. The relative importance of these factors was found to vary between agricultural and nonagricultural food subsectors.

The present study investigated the influence of a quality-grading system, demographic information and consumption preferences on consumer willingness to pay (WTP) for sheep meat. Eating quality was defined by four grades developed by the Meat Standards Australia (MSA) sheep meat-grading scheme. These grades were based on consumer palatability scores for cooked sheep-meat samples and described as 2-star ('unsatisfactory' quality), 3-star ('good every day' quality), 4-star ('better than every day' quality) and 5-star ('premium' quality). Currently, sheep-meat available in Australian retail outlets that meets MSA quality specifications is trademarked as 'MSA graded' and consists of lamb that falls into at least the 3-star quality band. There is no distinction made between 3-, 4- and 5-star-graded product. A challenge for marketers would be pricing the product by these three grades should finer-quality differentiation be adopted. The present study evaluated consumer WTP for the MSA quality grades and interactions with consumer demographic factors and consumption preferences. Results clearly showed that consumers were willing to pay less for the 2-star grade and more for 4- and 5-star grades, than for 3-star grade. Robust results for the impact of demographic and consumption preferences on WTP were limited to consumer age, occupation, income level and the interaction between MSA grade and consumer age.

Certain members of a population consciously and deliberately decide to take joint action to provide particular types of goods or services that are at least partly excludable and at least partly congestible because it is too costly to provide such goods individually. These goods are called club goods or collective goods. We first define some key concepts in club theory and public choice. This includes the prospects for determining the optimal level of membership of a club, how to determine the optimal level and range of provision of services by a club, and consideration of the dynamics of club membership. Then we examine the ways in which club theory can help provide an alternative approach to recognising and overcoming market failure in agricultural and food value chains. We note that useful insights can be gained by considering value chains as ‘latent clubs’. That is, they are systems that exist which are either inactive or have not been fully developed, but which have the potential for improvement through collective action. If value chain members do exploit an opportunity to reap the rewards of collective action, then forming a club that comprises the whole chain or a subset of chain members offers an efficient organisation design to do so. We find that all of the calculus that has been identified for clubs can be applied to agricultural and food value chains. However, there are two particular issues that require further consideration. One is the nature of risk in agricultural value chains, and how it is related to member preferences, and the other is the form of collective action to be taken by agricultural value chains in the future.

Strategic fit is the nature of the link between the customer priorities that a value chain hopes to satisfy, and the capabilities that are available in the value chain to implement that objective. Usually, there is a trade-off between value chains that focus on being responsive to customer needs and those that focus on supplying at the lowest possible cost. If demand uncertainty is low, a low-cost value chain is the best strategic fit; conversely if demand uncertainty is high, a responsive value chain is the best fit. A poor fit means lower chain surplus to be shared among the chain participants. We provide an outline of an analytical framework for determining the optimal level of responsiveness for a food value chain. We then present and discuss two case studies. Both feature initiatives aimed at internalising positive chain externalities and capturing chain goods within the Australian beef value chain. We use our framework to show how these initiatives are predicted to promote responsiveness and thus achieve a better strategic fit and higher surplus for the whole chain. Verifying that such a move would indeed contribute to higher chain surplus would require some new measurements of whole-of-chain outcomes so that the economic relationships making up the framework could be estimated and analysed.

Retail beef markets not offering objective grade indicators in-store leave consumers uncertain about the quality of beef they purchase. The introduction of fresh brands can better meet consumers' expectations. Willingness-to-pay for 'ideal' quality cuts represents the maximum premiums brands could achieve. Using Australian consumers' survey data, the maximum premiums are modelled using zero-inflated negative binomial models. Results indicate that buyer's characteristics and perceptions about product attributes influence the premiums for high-quality beef that consumers are willing to pay for a cut considered 'ideal', indicating the maximum premium that brands could achieve in relevant segments. The premiums indicate there is substantial potential for beef cuts that reduce purchase risk by more assuredly meeting buyer's preferences in Australia.

The concept of value chain upgrading and promotion has been proposed as a vehicle for small-holder farmers in developing countries to gain access to higher value markets and thus generate greater income for their families and communities. However, there are many instances where investments in upgrading have not generated the expected outcomes. One of the contributing factors has been that existing approaches focus more on who does what rather than the real problem to be addressed. A chain failure framework on the other hand focuses attention on the core problem and the appropriate response, rather than on who does what. It takes a system view rather than a function or component view, and it starts from the supposition that the only reason for intervening in a value chain is to increase chain surplus, where chain surplus is properly measured to include any chain or social externalities. In this paper we review some of the existing literature on value chain upgrading and promotion as proposed for developing country situations, outline the essential elements of the chain failure/chain good theory and its relationship to the club goods literature, and then assess whether the chain upgrading and promotion literature can be reconfigured as a chain failure/chain good problem, using a number of published case studies. Finally, we discuss various types of governance models used in agricultural value chains in developing countries and suggest how well they might align with the chain failure/chain good approach.

In this paper the literature on industry clusters as a response to local collective failure is reviewed as a way of enhancing knowledge about how failure of food value chains to perform efficiently can be analysed and overcome. The conclusion is that there is much in the local collective failure literature that assists in an understanding of, and is consistent with, the concepts of value chain failure, value chain externalities and value chain goods. Four potential areas for enhancing the analysis of value chains by accessing this literature are noted: defining the boundary between chain failure and local collective failure; improving joint action among parties interested in overcoming chain failure; augmenting the processes of knowledge creation and application in value chains; and improving the governance of value chains. The key point is that the ability of local collective or value chain partners to produce chain goods and internalise positive chain externalities depends directly on the nature and intent of the joint action by the partners: will they cooperate or not, and, if they do cooperate, how and to what extent will they do so? These issues of coordination of economic activity and the nature of the relationships between partners go to the heart of governance within both local communities and value chains.

No Australian wool price hedonic studies have separated auction data into different end product-processing groups (PPR) on the basis of all fibre attributes that affect the suitability of wool sale lots for PPR. This study was conducted to assess: (1) whether including information about PPR groupings is more useful in understanding price than clustering by broad fibre diameter (FD) categories, and (2) if the ‘noise’ of macroeconomic effects on price can be reduced by using a clean price relative to the market indicator (RelPrice) formula or a log RelPrice formula compared with log price or clean price. Hedonic models using data derived from 369 918 Australian auction sale lots in 2010–2011 were estimated for these four dependent price variables. Linear FD models predicted less of price’s variance than quadratic or exponential models. Segmenting wool sale lots into 10 PPR before wool price analyses was found to increase the proportion of price variance explained and thus be worthwhile. The change in price with a change in FD, staple length and staple strength differs significantly between PPR. Calculating RelPrice or log RelPrice appears a better price parameter than clean price or log price. Comparing the RelPrice and clean price models, the mean absolute percentage errors were 6.3% and 16.2%, respectively. The differences in price sensitivity to FD, staple length and staple strength across PPR implies a complex set of price-setting mechanisms for wool as different users place different values on these wool properties. These price-setting mechanisms need to be incorporated in hedonic models for agricultural products that possess this characteristic. The wool price premiums can be used to estimate relative economic values when constructing sheep breeding selection indexes and can help determine the most profitable wool clip preparation strategies.

The stars appear to be aligned for a sustained effort to improve information to rural development policy makers about the impact space has on the opportunities for development of the ubiquitous smallholder households in rural areas of Southeast Asian countries. The influences of spatially heterogeneous resource constraints on farming activities, distance to markets and institutions, and spatial interaction among smallholders can now be better accounted for in modelling work as a result of improvements in analytical methodologies, the growing availability of so-called ‘big data’ and access to spatially defined information in panel data sets. The scope for taking advantage of these advances is demonstrated with two examples from a Southeast Asian country, the Philippines: spillovers and neighbourhood effects in impact studies and the development of sophisticated spatial stochastic frontier models to measure and decompose productivity growth on smallholdings.

The marketing strategies of agricultural producers have become increasingly focussed on the sale of differentiated products to intermediary buyers rather than the sale of homogeneous commodities directly to retailers. The wool value chain in Australia fits the description of differentiated products being sold by wool producers to agribusiness firms that are intermediaries in the chain. The attributes of wool that are the source of this differentiation are used by firms to add value to their operations, reflected in higher retail prices paid for wool products.We measure the overall efficiency with which wool is converted into value across different processing routes and end products in the Australian wool value chain and decompose it into its technical, scale and mix efficiency components. We find that wool price changes significantly with a change in fibre diameter, staple length and staple strength and employ a flexible functional form to capture the relations between these wool attributes and lot value. Results show that considerable scope exists to increase the value of most sale lots, and indicate that the overall efficiency in extracting value is lower for wool supplied to processes that produce high-value wool garments. We then ascertain that various factors related to wool production and product characteristics significantly influence the level of technical efficiency.The mix of the three key attributes in wool lots was found not to be a major factor influencing overall efficiency whereas scale efficiency scores (which we measure as returns to wool attributes) were clearly much lower than those for technical and mix efficiency scores, a function of strongly increasing returns to wool lots as the levels of attributes increase. We test propositions about the skewness of distributions of efficiency scores in translating wool attributes into value. Most distributions of overall efficiency scores are positively skewed for production processes paying high prices for wool, and differences in overall efficiency were observed across selling centres. Prima facie, the results provide a strong case for wool producers to move to higher value levels of wool attributes by producing finer, stronger and longer wool fibres -especially the former. But such a strategy may not be an optimal one for producers to follow because the investments they make to implement such a strategy may entail high costs and take a long period to fruition that would lead to a heavy discounting of future benefits. A full benefit-cost analysis would be needed of any investments to raise the levels of wool attributes and otherwise improve wool quality at the farm level.

Using cross-sectional farm-level data from 3,164 rice-farming households in the Philippines, we measure the impact of modern rice technologies on farm productivity while disentangling technology gaps (the distance between production frontiers) from managerial gaps (differences in technical efficiency). To do so, we combine a recently developed stochastic production frontier framework with impact evaluation techniques to control for biases stemming from observables and unobservables. First, we find an adequate control group using propensity score matching to mitigate the effect of biases from observable variables. Then, we test for biases that might arise from unobserved variables using a stochastic frontier framework corrected for self-selection. Finally, we estimate meta-frontiers to assess productivity differences between adopters and non-adopters. The analysis shows that the adoption of certified seeds has a significant and positive impact on productivity, efficiency and net income in rice farming.

The purpose of this paper is to examine the policy options with the best prospects to improve the performance and competitiveness of housewives' groups in the cottage food industry in Thailand. The analytical framework is based on an analysis of private and value chain-level net benefits from alternative policy actions and research and training initiatives. Seven candidates for policy implementation with the best prospects for success are examined: industrial policy; improving food quality; branding and labelling; encouraging strategic alliances; increasing the managerial role of members in housewives' groups; educating members of housewives' groups and group leaders; and improving the organisational structure of housewives' groups. A suitable institutional setting is essential for policy success. We describe a chain governor and cooperative research centre for cottage foods that would fit neatly into the existing policy milieu in Thailand. This paper highlights the potential to improve the performance of housewives' groups and stimulate its growth as a key income-generating activity for rural households in developing countries.