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Value Adding in the Agri-Food Value Chain

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  • Cucagna, Maria Emilia
  • Goldsmith, Peter D.

Abstract

Global agricultural markets reflect the increasing complexity of modern consumer demand for food safety and quality. This demand has triggered changes throughout the food industry, and led to greater opportunities for product differentiation and the potential to add value to raw commodities. Greater differentiation and value adding over time has in turn dramatically changed the price spread or marketing bill between the farm value of products and the retail value. Thus a significantly greater percentage of the final price paid by consumers is now garnered down chain rather than up chain over the last 20 years. This apparent shifting of value creation or addition, as measured by the marketing margin, has invigorated empirical questions as to where, and how much value, is created along the agri-food value chain. First we define value creation/adding, and then we estimate the economic value added for 454 firms. We validate our findings by creating and employing three additional value creation measures – the modified economic value added, the creation or destruction of value, and the persistence of value creation. Finally we estimate value creation at each node of the value chain, measure the relative differences among firms and nodes, and estimate a model measuring the drivers of value adding.

Suggested Citation

  • Cucagna, Maria Emilia & Goldsmith, Peter D., 2018. "Value Adding in the Agri-Food Value Chain," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 21(3), February.
    • Handle: RePEc:ags:ifaamr:269674
    DOI: 10.22004/ag.econ.269674
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    4. Tsai, Fu-Sheng & Tsai, Cheng-Hung & Liu, Chi-Wei & Lin, Chia-Hsun & Chang, Chih-Hsiang, 2020. "Review and prospection for food and agricultural business model innovations in emerging economies," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 23(5), December.
    5. Soleman Imbiri & Raufdeen Rameezdeen & Nicholas Chileshe & Larissa Statsenko, 2021. "A Novel Taxonomy for Risks in Agribusiness Supply Chains: A Systematic Literature Review," Sustainability, MDPI, vol. 13(16), pages 1-24, August.
    6. Dwi Ratna Hidayati & Elena Garnevska & Paul Childerhouse, 2021. "Sustainable Agrifood Value Chain—Transformation in Developing Countries," Sustainability, MDPI, vol. 13(22), pages 1-20, November.
    7. Vera Sadovska & Lena Ekelund Axelson & Cecilia Mark-Herbert, 2020. "Reviewing Value Creation in Agriculture—A Conceptual Analysis and a New Framework," Sustainability, MDPI, vol. 12(12), pages 1-22, June.
    8. Sophia Lingham & Louise Manning & Damian Maye, 2022. "Reimagining Food: Readdressing and Respecting Values," Sustainability, MDPI, vol. 14(12), pages 1-19, June.
    9. Constantin Marius & Rădulescu Iuliana Denisa & Vasić Mile & Andrei Jean Vasile & Pistalu Maria, 2021. "Modern forms of value creation in the global agri-food chain – Perspectives from the facebook ads market," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 15(1), pages 811-823, December.
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    11. Deribe, Yared & Kassa, Etaferahu, 2020. "Value Creation and Sorghum-Based Products: What Synergetic Actions are Needed?," MPRA Paper 110587, University Library of Munich, Germany, revised 09 Feb 2020.

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