Exporting High-Value Food Commodities: Success Stories from Developing Countries (WB, 1993, 119 p.): II. Economic and institutional issues in the marketing of high-value foods: Generic barriers to entry and coordination in food commodity systems: Production support by marketing enterprises

Exporting High-Value Food Commodities: Success Stories from Developing Countries (WB, 1993, 119 p.)

(introduction...)

Foreword

Acknowledgments

Executive summary

I. Introduction

II. Economic and institutional issues in the marketing of high-value foods

Marketing high-value food products

Food commodity systems: Organization. coordination, and performance

Commodity system competitiveness

(introduction...)

Determinants of competitiveness

Generic barriers to entry and coordination in food commodity systems

(introduction...)

Food product technical characteristics

Food commodity production characteristics

Production support by marketing enterprises

Processing and distribution functions

Technologies, institutions. and other solutions to generic food marketing problems

(introduction...)

Technological measures

Laws, rules, and standards

Spot marketing trading

Reputations, brand names and advertising

Personalized trading networks

Brokerage

Contract coordination

Cooperatives/associations/voluntary chains

Vertical integration

Government intervention

III. Synthesis high-value food commodity system ''Success stories''

(introduction...)

Selected dimensions of commodity systems performance

(introduction...)

Cost advantages and product/service differentiation

Additional performance indicators

International market environment

Macroeconomic conditions. human capital. and infrastructure

Government support and interventions

Commodity system organization coordination

(introduction...)

Competitive structure

Institutional arrangements linking producers with processors/exporters

Institutional arrangements linking exporters with foreign markets

Foreign capital and technology in the case study subsectors

IV. Summary and lessons

Bibliography

Appendix The development and performance of case study commodity systems

(introduction...)

Mexico fresh tomatoes

Kenya 'off-season' and specialty fresh vegetables

Israel fresh citrus fruit

Brazil frozen concentrated orange juice

Chile temperate fruits and processed tomato products

Processed tomato products

Argentina beef

Thailand poultry

Thailand tuna

Chile fisheries

Cultured shrimp production and trade in China and Thailand

Soybean development in Brazil and Argentina

Demand-driven agricultural diversification in Taiwan (China)

Distributors of World Bank Publications

(introduction...)

Recent world bank discussion papers

Production support by marketing enterprises

2.28 Food marketing enterprises often have an important role in stimulating and directly supporting raw material production. They can do this by various means, including the supply of market and technical information, the supply of production financing, and the supply of certain material inputs (e.g. seeds, chicks, fertilizers). The incentives for marketing enterprises to provide such services will depend upon their ability to appropriate the benefits deriving from them; benefits such as increased output, enhanced product quality, and output better timed for marketing or processing requirements. The scope for appropriability of benefits will depend upon the nature of the goods/services themselves as well as the prevailing market structure.

2.29 For example, the dissemination of technical and market information has public good properties: such information is non-rival in its consumption and it is very difficult or costly to exclude individuals benefiting from the information without contributing to its cost. The marketing enterprise is unlikely to capture the full benefits from its supply of information since in a competitive environment, producers can utilize the information and then sell to a competing buyer. Where such 'free-riding' is widespread, there will be little incentive for private firms to provide more than minimal market or technical information. The provision of technical and market information may also be associated with so-called 'moral hazard' problems. The directed message may be biased toward the particular needs of the buyer rather than properly informing the producer about the wider range of technical and market options. The provision of technical information and the direct supply of production inputs can also give rise to negative externalities as when the recommended practices (e.g. heavy chemical use) adversely affect neighboring farmers or residents.

2.30 With respect to production financing, barriers arise due to limited collateral and asymmetric information. The producer is generally better informed than the marketing enterprise about his creditworthiness. The firm's ability to recover the loan may be better in a non-competitive than in a competitive market, since in the former case producers will have little or no alternative market outlet, enabling the lender to deduct the loan amount from the payments due for the commodity.