Commodity chain and strengthening of the agro-food sector competitiveness

Abstract

In the last decade, the character of agro-food chains functioning has changed significantly. Globalisation elements in the food processing and distribution are changing conditions in agro-food sector and influencing also agrarian markets. Due to higher food finalisation and market force of processing and distribution stages in the agribusiness commodity vertical, farm value share in the final food price has decreased. Increasing competition makes agribusiness firms look for possibilities to strengthen their competitiveness, which is increasingly determined by the ability to develop successful partnerships within commodity verticals, i.e. vertical integration, eventually co-ordination, enforces. In this study, potential benefits and risks of these forms of vertical interconnection are reviewed with respect on specific market and production characteristics of agro-food chains. The problem is presented on the example of the commodity chain of bakery and pasta production in the Czech Republic. At the end of the paper, main arguments for the interconnection of particular stages of this vertical are derived, especially between mills and bakeries.

Keywords

• competitiveness
• agro-food chain
• market force
• vertical integration and co-ordination