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close this bookExporting High-Value Food Commodities: Success Stories from Developing Countries (WB, 1993, 119 p.)
View the document(introduction...)
View the documentForeword
View the documentAcknowledgments
View the documentExecutive summary
View the documentI. Introduction
close this folderII. Economic and institutional issues in the marketing of high-value foods
View the documentMarketing high-value food products
View the documentFood commodity systems: Organization. coordination, and performance
close this folderCommodity system competitiveness
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View the documentDeterminants of competitiveness
close this folderGeneric barriers to entry and coordination in food commodity systems
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View the documentFood product technical characteristics
View the documentFood commodity production characteristics
View the documentProduction support by marketing enterprises
View the documentProcessing and distribution functions
close this folderTechnologies, institutions. and other solutions to generic food marketing problems
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View the documentTechnological measures
View the documentLaws, rules, and standards
View the documentSpot marketing trading
View the documentReputations, brand names and advertising
View the documentPersonalized trading networks
View the documentBrokerage
View the documentContract coordination
View the documentCooperatives/associations/voluntary chains
View the documentVertical integration
View the documentGovernment intervention
close this folderIII. Synthesis high-value food commodity system ''Success stories''
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close this folderSelected dimensions of commodity systems performance
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View the documentCost advantages and product/service differentiation
View the documentAdditional performance indicators
View the documentInternational market environment
View the documentMacroeconomic conditions. human capital. and infrastructure
View the documentGovernment support and interventions
close this folderCommodity system organization coordination
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View the documentCompetitive structure
View the documentInstitutional arrangements linking producers with processors/exporters
View the documentInstitutional arrangements linking exporters with foreign markets
View the documentForeign capital and technology in the case study subsectors
View the documentIV. Summary and lessons
View the documentBibliography
close this folderAppendix The development and performance of case study commodity systems
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View the documentMexico fresh tomatoes
View the documentKenya 'off-season' and specialty fresh vegetables
View the documentIsrael fresh citrus fruit
View the documentBrazil frozen concentrated orange juice
View the documentChile temperate fruits and processed tomato products
View the documentProcessed tomato products
View the documentArgentina beef
View the documentThailand poultry
View the documentThailand tuna
View the documentChile fisheries
View the documentCultured shrimp production and trade in China and Thailand
View the documentSoybean development in Brazil and Argentina
View the documentDemand-driven agricultural diversification in Taiwan (China)
close this folderDistributors of World Bank Publications
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View the documentRecent world bank discussion papers

Food commodity production characteristics

2.25 The farm-level production of many food commodities and raw materials has features which render such production inherently risky, heighten transaction costs in a market setting, and inhibit effective coordination of production with downstream operations and consumption. First, compared with manufactured products, food products tend to be produced over a geographically more dispersed area and by individual producers who are smaller in scale and less specialized. This production pattern may result in high costs for crop intelligence and transmitting information to producers regarding consumer preferences. This production pattern also contributes to potentially high transportation costs in the collection of raw materials or animals, thus interrupting physical commodity flows. The output of a small producer may also be insufficient to warrant investment in proper storage facilities or standardized containers, perhaps leading to additional handling activities or requiring additional quality inspection. All of these imply added transaction costs.

2.26 At the same time, small, dispersed producers may possibly face a situation of monopsonistic competition with only one or very few active buyers in their area. There is frequently a considerable mismatch between the efficient scales at the level and in subsequent processing operations. A market structure featuring a relatively large processor and multiple small suppliers may emerge with asymmetric information and considerable inequality of bargaining power. The mismatch in efficient operating scales serves as a barrier to forward integration by unorganized producers and requires the processor to develop multiple supply sources to enable it to utilize its full capacity. A coordination problem arises since the production schedules for different suppliers must be scattered over time rather than overlap one another.

2.27 A second common set of food production characteristics concerns the yield lag, yield uncertainty, and seasonality of production. The production of most food crops and animal products is dependent upon the life cycle of plants and animals. In some cases (e.g. tree crops; beef cattle), this life cycle involves an extended gestation period before commercial yields are attained. This creates a need for medium-term financing and presents a potentially considerable commercial risk for the producer. Agricultural production is inherently highly risky due to the important influence of weather and the possible incidence of plant diseases or pests. Adverse natural or manmade events can undermine total supply or the supply from one geographical area, resulting in farmer losses, un(der)-utilized marketing and processing facilities, and unmet consumer demand. The seasonality of crop and animal production creates problems for cost-efficient utilization of transport and processing facilities. For perishable commodities, processing requirements may make it necessary to extend planting and harvest activities into more risky production periods.