Impacts of Farmer Coordination Decisions on Food Supply Chain Structure

To increase profitability, farmers often decide to form strategic partnerships with other farmers, pooling their resources and outputs for greater efficiency and scale. These coordination decisions can have far-reaching and complex implications for overall food supply chain structural emergence, which in turn impacts system outcomes and long-term sustainability. In this paper, we describe an agent-based model that explores the impacts of farmer coordination decisions on the development of food supply chain structure over time. This model focuses on one type of coordination mechanism implementation method, in which coordinated farmer groups produce a single crop type and combine their yields to achieve economies of scale. The farmer agents’ decisions to coordinate with one another depend on their evaluation of the tradeoff between their autonomy and the expected economic benefits of coordination. Each coordination decision is a bilateral process in which the terms of group reward sharing are negotiated. We capture the effects of farmers’ size, income, and autonomy premia, as well as volume-price relationships and group profit-sharing rules, on the rate of farmer coordination and the number and size of groups that form. Results indicate that under many conditions, coordination groups tend to consolidate over time, which suggests implications for overall supply chain structural resilience.