July 7, 2003: Last week's National Value Chain conference
in Toronto changed my thinking about the merits of family
farmers participating in value chains. I arrived a skeptic.
I left persuaded that many family farms could become stronger
businesses by developing value chains with others in the food
I needed to appreciate that a value chain is not a supply
chain. Not all the conference speakers had the distinction
clear, but the event as a whole clarified my understanding.
On the surface a value chain may look like a supply chain,
but its structural framework -- and who benefits -- differs
In recent weeks, there have been two interesting supply chain
developments. McDonald's corporation announced restrictions
on its suppliers' use of antibiotics in livestock. MacDonald's
new policy requires the phasing out of some antibiotics that
promote growth in animals. The media reported the initiative
as the result of yearlong consultations with environmental,
science and consumer groups. No mention of farmers!
Closer to home, pork producers under contract to deliver
to Maple Leaf Pork, Ontario's largest processor of pork, have
received a letter requiring them to remove all meat and bone
meal from all approved Signature Hog rations immediately.
Although Maple Leaf Pork likes to address those under contract
to deliver to them as "producer partners," there
is no indication that farmers had any input on this latest
My purpose in mentioning these supply chain developments
is not to criticize their content. I expect that both can
be accommodated in our food system without long-term disruption.
Both are bold examples of supply chain management, in this
case designed, not to drive out costs, but to protect market
share. In each case, there is only one winner, the firm with
enough market clout to manage the supply chain.
Value chains work differently.
First, a value chain is a real partnership between all players
in the chain, from farmers and their input providers to wholesalers
and the firm dealing directly with consumers. The ideal value
chain will even have consumers as partners. Real partnership
means all participants benefit and all have a say in developments.
Second, a value chain is built on trust. Value chains are
as strong as the confidence that the contributors have in
each other. They too need to be bold, but their emphasis is
on collaboration, building relationships and creating social
Third, value chains -- add value. They are not caught in
the cheap food syndrome, the race to the bottom, the chase
for the lowest cost of production globally. They apply market
knowledge to develop storied food that brings consumers back,
again and again.
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