Shaping of Agri-Food Supply Chain - Essay Example

Running Head: Food Marketing Food Marketing of the of the Factors Shaping of Agri-Food Supply Chain from PrimaryProducer to Consumer Food Safety In the precedent 15 years, the United Kingdom has practiced an enlargement in the figure and brutality of food safety incidents. In 1980, 12,700 incidents of food borne sickness were accounted. In 1998, there were almost 100,000 such incidents. In December 1988 most egg production in the United Kingdom was contaminated with Salmonella. The government ordered the slaughter of two million birds between 1989 and 1993. In a December 1996 outburst of Escherichia coli in Lanarkshire, Scotland, 500 people became ill, and 21 people died. Those events constituted the worst Escherichia coli outbreak to date in the world. There also has been an increased worry in the United Kingdom about the hygienic practices of consumers at home. “Current investigation by the Health Education Authority (HEA) shows that almost three million children as young as seven years of age regularly prepare their own breakfasts, that 64 percent of children seven to 11 years of age do so, and that 65 percent also cook evening meals for their parents. Many of the children are not aware of good food safety practices or of food borne-illness risks. Fifty-seven percent of the children questioned prepared food while pets were in the kitchen, and 46 percent shared food with their pets during preparation.” The incidents of most concern to citizens of the United Kingdom involve many unknown factors. Supermarket chains have been receptive to the consumer quarrel and have in many instances removed all GM food ingredients from their shelves. The British press has a strong influence in determining which types of food safety issues are of concern to consumers. Large trade food chains are another resource of food safety information for consumers. Food Safety Week has provided a centre for messages designed to help people undertake fundamental precautions that decrease the risk of food borne illness. Consumer activist groups have played a major role in informing the public about food safety issues. “These groups include the Food Commission, Greenpeace, and the Consumers Association, a 700,000-member organization whose goal is to provide unbiased information to consumers. The Consumers Association publishes a series of books and monthly magazines on a variety of topics.” (Smith, 2001). Food Sector An alternative geography begins to emerge because the restricted ecologies of quality food production are frequently to be found in areas that have escaped the industrialization processes that support globalization. This is most apparent in agriculture, where the maintained use of “output-enhancing” technologies in the post-war period has frequently resulted in uncovered agricultural ecosystems. Thus those areas that have largely remained insignificant to industrialized agriculture are generally the very areas where quality production might bloom. The turn toward quality in consumption may then reveal a very different mixture of productivity, one that contrasts in important respects with the dominant geographic distribution of food production activities. Consumers increasingly are linking ideas of food quality to ideas of nature in the agro-food system, as though they feel that the higher the natural content of food the less susceptible it will be to hurt human interference. Yet, some leading commentators on the food sector have begun to argue that the theoretical analysis of food has tended to underplay the “salience of nature”. It is now widely believed that the agro-food system is globalize, and much of the recent research into the agro-food system has taken as its main focus how processes of globalization come to be driven by the reshaping of food production processes according to patterns of capital growth. Like processes of modernization, analysts see globalization in the food sector as derived from agencies which aim to promote new interlink ages between the “principal actors (e.g., farmers, processors, and retailers), spread new uses and forms of knowledge (linked especially to science and technology), and establish new commodity forms within mass markets.” In many respects, the globalization of the food system follows the same course as in other economic sectors, so that production chains increasingly are orchestrated across long distances by a few large-scale economic actors, usually international corporations. But in other important respects, the growth of the food system follows its own course, with a mixture of reasons usually suggested for its uniqueness. Food is necessarily a mix of the "organic" and the "inorganic" or the "natural" and the "social". So we can say that biology plays a vital role in mediating processes of industrialization and places checks upon the extraction of profit or value from the food sector. Constant efforts are made by producers and manufacturers to reduce the importance of nature in the food production process, and this has been a primary concern of many food sector analysts. While recent work on the globalization of food has concerned itself with a restructuring of the food sector in line with the increasingly globalize demands of internationalized agro-food industries, it is also recognized that global processes are mediated and sometimes refracted by regional and local specificities. This local refraction of global processes seems to be fundamental to the industrialization of the food sector, in part because the various mixtures between the organic and inorganic are hard to detach from space and place. A particular effective method of attaching district to product is through the fabrication of brand names or trademarks. A great deal of attention has been paid in agro-food studies to the process of globalization in the food sector. Analysts have shown how linkages are established between different parts of the food chain and different places. Political economy has enabled descriptions of the transformation of food production under the unfolding logics of globalization and has been used to examine the growing specialization of agricultural enterprises and regions, the integration of agriculture into longer and longer food chains, the growing dominance of industrial and Tran’s national capitals. The political economy of globalization in the food sector has rendered the new connections and relationships that surround and shape food commodities, and it has revealed many of the key motive forces that drive changes in the processes of production. It has paid particular attention to the processes of appropriation and substitution. It is not surprising, then, that some food sector analysts have begun to use alternative theoretical resources in order to get a better grasp on the complex combinations of nature and society found in the food sector. In the food sector embedded ness matters and, given current trends, will probably matter even more in the future. (Marsden and Murdich, 2000) According to quality criteria derived from conventions theory, the production of the product displays strong domestic qualifications. “The small scale of production (the milk comes from one farm, usually where the cheese is made) means that the product is unquestionably local and closely associated with a specific geographic area.” Personal knowledge and trust relationships are therefore significant in defining the quality of the product. Public qualification thus also plays a role in building quality. Lastly, by differentiating their produce as organic, the cheese makers are also able to point to the environmentally suitable methods of production and management which support and create the product, while declaring civic and environmental qualities. The procedure of embedding “involved the careful assembling of domestic, public, civic, and ecological qualities.” Selling to a range of customers through a wholesaler means that industrial qualifications are not strongly “prioritized” in the production system. Commentators on globalization, especially those adopting a political economy perspective, have been cautious of attributing too much significance to the local production processes which give rise to "niche" products. The success of a company is based on a number of factors. First comes a quality product which carries a certificate of ecological quality and a strong sense of the setting of production. Second, the company made a commitment to continually upgrade and expand the production process. Third, a strong brand image surrounded the product. Quality has to be in line with consumer demand as expressed in super markets. In the food networks orchestrated by the retailers, commercial and industrial conventions tend to dominate. As consumers are becoming more attentive to quality issues retailers are under increasing pressure to monitor the methods of production and processing that deliver food along the chain. In the preceding, it can be seen that the food sector is being shaped by a number of differing processes. On the one hand, the processes of globalization continue swiftly, leading to greater and greater standardization and industrialization in both production and consumption of food. On the other hand, more incomplete trends are emerging, with health and quality considerations mobilizing demands for natural and locally embedded foods. “This latter development is wide-ranging: it encompasses everything from the small-scale niche production of farmhouse cheese to the large-scale production of free-range eggs.” It is also clear that the two main trends--globalization and fragmentation--are linked. The increased industrialization of food production processes has given rise to modem consumer fears. Many consumers have thus turned to more natural products in the expectation that these offer some protection from food-borne diseases. Obviously, the “standardized-generic and specialized-dedicated” worlds match to the two standardized and specialized geographies of food outlined earlier. Thus it can be declared that, “in pursuing globalization and the industrialization of the agro-food sector, analysts have, using the political economy approach, tended to focus on the standardized-generic world, and they have been keen to show how an increasing industrialization, leading to the manufacture of mass-market generic food products, has come about.” They have identified how industrial and commercial conventions come to dominate the food production process. And in geographic terms they have paid a great deal of attention to the hotspots of industrialized agro-food production and the various ways in which these have come to be integrated into a global system of food provision. (Marsden, Murdich, 2000) Historically land use changes have brought about significant increases in atmospheric concentrations of greenhouse gases, surpassing fossil fuel contributions as the leading source of heat-trapping carbon dioxide worldwide until the middle of this century. In many temperate countries such as the UK, human intervention has influenced land use for many centuries thereby affecting the carbon sinks in soils and vegetation. The UK National Communication under the Framework Convention on Climate Change reports the “fluxes associated with agriculture to be -500 to 500 ktC per year”. This flux estimate is the only productions figure to be presented with a range estimate in the UK National Communication. Consequently, this paper strives to provide a point estimate for the agricultural land-use emissions category, and to discuss the major limitations in existing data. As data on land use change are not collected with carbon fluxes in mind, the relevant information must be derived from available UK land use data sources. Changes in collective land-use are allocated according to estimated trends derived from an earlier study based on the “Monitoring Landuse Changes Study”. Change in carbon storage on “arable land is estimated based on MAFF data on crop type and yield.” The other major land use affecting carbon fluxes is forestry. In addition to the MAFF agricultural census data, a number of other land use surveys have been published for the UK. The major sources of land use data for the UK are the Land Utilization Surveys undertaken in the 1930s and in the 1960s, the monitoring landscape change (MLC) project published by the UK Department of Environment in 1986 for England and Wales based on aerial photographs cantered around 1947 and 1980; “and data collected on land utilization by particular agencies, such as the annual agricultural census by MAFF, forestry data collected by the Forestry Commission (FC),” and data on protected areas published by individual National Parks or nature conservation statutory agencies. The UK agricultural census is the aggregation of census forms filled in by individual farmers in June each year, adjusted upwards for land on minor agricultural holdings. The published census gives a relatively accurate time series of land use on the 70 to 80 per cent of the total UK land area that is under agricultural use, or at least on-farm. Rural land uses excluded from the agricultural census include golf courses and other recreational land uses such as horse stables. The data are used here in the UK aggregate form, but are reported by MAFF at the country, county and community group level. Data on individual farms are not released, for the sake of confidentiality. Thus it is difficult to map the agricultural census data to soil classifications and other land classifications although some methods have been developed to this end. The structure of arable land use has also changed over the two decades considered here, with increases in total arable area, loss of orchards, and increases in oilseed rape and in wheat at the expense of other cereals. In terms of the use of agricultural census data for accounting for carbon fluxes, several additions or caveats must be made. Urban land is treated as a remaining of other categories of land use change, rather than using alternative urban growth data series. Farm woodland area is taken from the MAFF census, though there may be some overlap with “Forestry Commission data.” The Other category “includes set-aside land post-1988, so a series is constructed to separate these two land uses.” Urban land area in the UK is not represented in the agricultural census. Published data on urban expansion, particularly in England and Wales, are contested, particularly by those concerned about landscape and planning impacts of increased suburbanization. Farm woodland has increased over twofold in area on agricultural land in the last two decades, according to the agricultural census data. This is primarily the result of subsidies under the Farm Woodland Scheme and the Farm Woodland Premium. Subsidized woodland planting is recorded by the Forestry Commission (FC) and appears as a separate category of the Woodland Grant Scheme in the Forestry Commission annual reports. Classification of farm woodland changed at the start of the 1970s, making the series in the early part of the analysis presented here less reliable than after the mid 1970s. In the countries of the European Union in the post-war period, the demand for agricultural land has in effect been declining as price support mechanisms encourage greater productivity through increased capitalization of agriculture and rapid technological advance. Indeed the European Union has become more than self-sufficient in all temperate foodstuffs. In the European Union a voluntary set-aside scheme operated from 1988 to 1991, primarily in order to reduce surplus agricultural production without further distorting the world markets for agricultural products. Within the category of arable crops in the above framework there is a huge amount of crops and management commands. The crop mix on arable land in the UK has changed dramatically over the time period examined with oilseed rape now grown on over 0.4 million hectares from an insignificant area in 1970. The average standing biomass of individual crops per year has also risen with increasing yields. (Adger and Subak, 1996) It is frequently observed that technological advantages are heterogeneously distributed among countries and that this pattern tends to persist over time. This heterogeneity in technological resources is strikingly evident in the biotechnology industry. The important research breakthroughs have been made in only a few countries, primarily the U.S., France, the United Kingdom, Japan, Germany, and Switzerland. This pattern of “agglomeration is even more conspicuous in the commercialization of major discoveries.” The U.S. has dominated the market for commercial applications of biotechnology research, and it has the largest number of start-up projects in the biotechnology industry. Traditionally, theories of Foreign Direct Investment (FDI) have emphasized “firm-specific advantages or ownership advantages derived from the ownership of intangible assets such as technologies, management skills, and organizational capabilities.” For FDI to take place, these advantages must be sufficiently large to offset the fact that they are possessed by a foreign company. Several experimental works find evidence of the positive effects of R&D intensity on the propensity to make foreign investments. In these studies, only nonessential and passing attention has been given to the possibility that firm-specific advantages may be sourced through FDI. Recently, multinational corporations (MNCs) have accelerated their efforts to acquire and develop new technologies overseas. In the analysis of U.S. patent data, European researchers found that more than 70% of patents registered by Belgian and Dutch MNCs originated from locations outside their home countries. “In 1987, the twenty largest Swedish MNCs in the engineering and chemical industries made 22.8% of their R&D expenditures outside Sweden.” A recent survey revealed that executives in U.S. and Japanese MNCs, whose R&D activities have traditionally been much more centralized in their home countries, ranked the "internationalization of R&D" as one of their top priorities. The increase in foreign R&D activities of MNCs has led to the growing academic interest in a dynamic interaction between home-based and foreign-acquired technological advantages as sources of MNCs competitive advantages. The emerging view of FDI emphasizes that FDI is not only "pushed" by the firm-specific advantages of the investor, but may also be "pulled" towards centres of innovations located in recipient countries as a means for the investor to acquire and develop new resources and capabilities. The emerging view of FDI is based on the following observations. First, at the firm level, the technological capabilities necessary for competing in the high-technology industry might reside outside the firms, or even the nations boundaries. Second, at the country level, technological advantages are heterogeneously distributed and tend to persist over time. As an intrinsic part of a firms activities, developing new resources and capabilities is viewed as necessary for profitable growth of a firm. However, it might be a risky proposition for a firm competing in an industry of rapid technological change to premise its resource accumulation process solely upon internally existing capabilities. Gaining access to technologies that reside in a foreign country often requires the presence of multinational firms in the country, due to the localized nature of knowledge spill overs and complex, hard-to-replicate networks of institutional relationships. A frequently used measure of technological advantage is patenting activities. Although patents do not capture all the innovative activities of a firm, as many types of intangible assets are either non-patentable or are better protected without patents, patenting activity has been found to be a good measure of the innovative capabilities of a firm. Previous research has found a strong positive relationship between R&D investments and patents. Patents are viewed as "the intellectual capital of the biotechnology industry and a cornerstone of a firms ability to attract investment capital". Although the quality of patents is not easily captured, the number of patents taken out by a firm seems to best communicate the firms technological strength and to explain the market valuation of biotechnology concerns. The empirical test is conducted using a discrete-time event history analysis. Two types of variables are used to measure the impact of a firms area of concentration on the dependent variable. The first is Diversity, which is a count variable measuring the number of areas in which the firm commercializes new technologies. As the value of Diversity increases, the probability that the firm will attract investment from foreign firms searching for capabilities in different areas will also increase. Therefore, this variable is expected to bear a positive sign. Six biotechnology areas are identified and each of them is coded as a dummy variable. These include Agriculture, Food, Diagnostics, Therapeutics, Veterinary products, and other, which include the remaining products. The effects of these non-mutually exclusive dummy variables are estimated in a separate model because inclusion of them with Diversity in the same model would create multi co linearity problems. (Shan and Song, 1997) Reconciling internationalization with democracy is a matter of considerable interest and importance. As a mode of governance, democracy presumes the relevance of the territorial state; the geographic scope of those who exercise political authority coincides with the population that they represent and are accountable to and that have a voice in their decisions. This assumption is increasingly at odds with internationalization and the emergence of sites of power that lie outside the community over which authority is exercised. Although scholars disagree about the degree to which it has occurred, few would dispute that policymaking authority has "leeched away from nation-states to supranational authorities and/or mobile transactional economic actors.” Both developments endanger democracy, but the transmission of policymaking authority to supranational bodies is often regarded as the lesser threat, since supranational institutions are created by states and operate with their consent. With the adoption of the Agreement on Sanitary in 1995, under the World Trade Organization (WTO), states have delegated to supranational bodies’ significant authority to set and enforce Food safety rules and standards and have agreed to be bound by the decisions of bodies that adjudicate disputes that arise over these rules. Within these supranational bodies, and by virtue of the rules adopted in the SPS Agreement, the authority of experts-scientists--is elevated and the preferences of consumers undermined. The reliance on technical experts is consistent with domestic food safety regulatory practices, where governments have delegated the regulatory task to arms-length agencies, whose scientists exercise “standard-setting and standard-enforcement powers.” However, in keeping with liberal democratic norms, domestic regulatory agencies exercise their authority within an accountability framework that leaves political authorities ultimately responsible for the safety of their citizens food supply. In addition, and regardless of the necessity of technical expertise for effective food safety regulation, recognition of the social and economic dimensions that attend food safety regulation has often led governments to establish mechanisms for a two-way flow of information between food safety regulatory bodies and the public. In this way, popular sovereignty is provided for. (Skogstad, 2001) In contrast to the domestic arena, internationalization of food safety regulation does not provide a similar degree of either democratic accountability or popular sovereignty. There are few opportunities for popular participation in supranational bodies, where resources of technical expertise of a scientific, legal, or economic nature are the influential tools of the trade. Efforts to make their decision making more transparent and open to nongovernmental observers moderate in some measure the lack of popular sovereignty but are not without limitations. The argument that an unprecedented measure of internationalization of food safety regulation has occurred and that this development undermines liberal democratic norms is advanced here by examining the genesis and principles of the SPS Agreement and its interpretation in the beef hormones dispute between North America and the European Union (EU). Demonstrating that the SPS Agreement has reduced, but not entirely eliminated, the degrees of freedom of all countries to take into account consumer preferences with respect to food safety, the analyses document the degree of internationalization of food safety regulation. Countries do retain some scope for domestic policy autonomy, but the threat to democratic governance is nonetheless real. This threat varies from country to country and depends on the extent to which the domestic food safety regulatory framework mirrors the framework that is in place in the WTO-SPS principles. It also depends on the coincidence of national publics food safety preferences with the outcomes yielded by enforcement of the international food safety regime. Countries that have been able to negotiate supranational rules and norms that reflect their own domestic societys preferences are less likely to perceive a diminished accountability to their citizens when regulatory authority is shifted beyond their territory. “Supranational rule making and rule enforcement will be more visibly experienced as a loss of democratic accountability in countries whose domestic (food safety) regulatory template and the values it embodies are at variance with the supranational regulatory regime.” The EU, in particular, finds compromised its policy autonomy and its capacity to render governments accountable. The EU has found itself paying an economic cost to reflect its citizens concerns in its food safety regulatory policies, with its food safety regime at odds in some important respects with that embodied in the SPS Agreement. WTO members, including the EU, consented to the shift of food safety regulatory authority upward in order to promote their trade interests. Internationalization of a regulatory activity refers to the increased salience of developments and forums beyond the nation-state on domestic policymaking and policies. A range of institutional internationalization can be constructed that distinguishes the degree to which institutions beyond the territorial state suppose powers with respect to policy formulation and policy enforcement. If policy formulation and policy enforcement powers are merged, a high degree of institutional internationalization of food safety measures will exist when nation-states delegate significant authority to supranational authorities to set and enforce food safety rules and standards, and when they agree to be bound by the decisions of bodies that adjudicate disputes that arise over these supranational rules. The internationalization of food safety policy represents a desire to promote the liberalization of agri-food markets while simultaneously enabling governments to meet their responsibility to ensure their citizens of a safe food supply. “Despite their similar objective of balancing legitimate food safety goals with market liberalization and integration objectives, the European Community (EC) and GATT templates differed in one important respect: the EC Council of Ministers and EC Commission have strong authority to promote harmonization of food safety measures across member states and can substitute their own food regulations for those of member states.” The Codex Alimentarius Commission was created by the World Health Organization (WHO) and the Food and Agriculture Organization (FAO) in 1962 to facilitate fair trade in food by creating international food standards. Its permission extended into food safety regulatory policy and included determining the safety of “pesticides, food additives and contaminants, and veterinary drugs.” Two features of the SPS Agreement contribute to this enhanced institutional internationalization. First, the SPS Agreement is legally binding, backed up by the WTOs Dispute Settlement Understanding. The strengthened dispute settlement mechanisms of the WTO differ importantly from those under the predecessor GATT, in that countries can no longer block the formation of a WTO panel to investigate a trade complaint, nor can a party to the dispute block the adoption of the report of a panel or appellate body. “In short, the dispute settlement body established under the WTO is the final arbiter of whether a WTO members food safety regulatory measures are inconsistent with the SPS Agreement: its decisions enjoy automat city.” (Skogstad, 2001) The SPS Agreement, in explicitly incorporating production and process methods within its scope, brought the hormone ban under the WTOs authority. In terms of furthering the internationalization of food safety measures and endorsing the science-based template in the SPS Agreement, the strong push in this direction by the panel was reversed somewhat by the appellate body. First, the panel promoted harmonization on the basis of international standards by ruling that the EU measures were contrary to the SPS Agreement in not being based on existing international standards. In the view of the panel, the requirement that sanitary measures be based on international standards meant that they should "conform to" Codex standards, guidelines, and recommendations. Evidence for the panel that SPS measures were based on international standards is that they "reflect the same level of sanitary protection as the standard." Second, the adjudication of the beef hormone dispute reinforced the imperative for food safety measures to be based on risk assessment and scientific evidence. This requirement meant that countries did not have "an absolute or unqualified right" to determine their own appropriate level of sanitary protection. Finding the EUs regulatory framework at odds with the SPS Agreement, the WTO panels recommended that the EU be requested to bring its SPS measures into agreement with the SPS Agreement. The EUs response was to signal its willingness to fulfil by undertaking the necessary risk assessment. The arbitrator awarded the EU fifteen months from the adoption of the appellate body report to comply with the ruling. The EU was unable to complete all its risk analyses within that time period and found itself with few options. “A number of serious food scares (of which the most prominent was the 1996-1997 BSE or "mad cow" crisis) had heightened the anxiety of European consumers and undermined their faith in scientists and regulators as reliable guarantors of the safety of their food supply.” That jeopardy is sourced in the SPS Agreements recourse to science to distinguish between food safety policies that were intended to serve public policy goals of protecting public health, and protectionist objectives. The procedures of science are invoked for risk assessment, which is assumed to be a technical, non-political exercise. The assumption is that the scientific exercise is value-free, untrammelled by the values and judgments of individual scientists. In taking a step back from the internationalization of food safety regulation and providing more flexibility on the scientific evidence needed to justify trade-impacting food safety measures, the WTO appellate body in the beef hormones case gave countries more scope to balance potential conflicts between consumer preferences and scientific judgments. It thereby also diminished, but did not eliminate, the jeopardy posed to democratic governance by institutional internationalization. Societies that are more risk averse, and/or whose historical experiences imbue them with a sharp distrust of science "to get it right," are still likely to perceive their autonomy constrained by the supranational food safety regulatory regime. To the extent that the supranational food safety regulatory regime severs the links between those who make food safety decisions and those who must abide by these decisions, it undermines democratic accountability. “Democratic accountability is lost as non-elected trade lawyers and technical experts (in food safety and veterinary medicine) undermine and displace elected politicians in international rule-making and rule-enforcement bodies.” Below the supranational level of WTO bodies and the Codex Alimentarius Commission, national polities and even the EU are more likely to afford access and influence to diffuse interests. “If efforts to democratize international institutions appear to have their limits, another option is greater elasticity in the SPS Agreement--that is, a broader substantive basis for the legitimacy of national differences regarding food safety regulatory policy. Such a substantive basis would take into account evidence those countries dissimilar cultures and experiences enter into their publics calculations of the hazards posed by various food productions and processing methods.” (Skogstad, 2001) References Martha Smith Patnoad. Food Safety Education in England: A Report from the NEHA/CIEH Sabbatical Exchange Program. Journal of Environmental Health. 2001 Jo Banks, Terry Marsden and Jonathan Murdoch. Quality, Nature, and Embeddedness: Some Theoretical Considerations in the Context of the Food Sector. Economic Geography, 2000 W. Neil Adger and Susan Subak. Estimating Above-Ground Carbon Fluxes from UK Agricultural Land. The Geographical Journal, 1996 Weijian Shan and Jaeyong Song. Foreign Direct Investment and the Sourcing of Technological Advantage: Evidence from the Biotechnology Industry. Journal of International Business Studies, 1997 Grace Skogstad. Internationalization, Democracy, and Food Safety Measures: The (Il) Legitimacy of Consumer Preferences? Global Governance, 2001 Read More