Refocussing on the Value Chain Perspective to Analyse Food, Beverage and Fibre Markets

Abstract

Global food, beverage and fibre markets can be characterised as networks of global value chains. Increasingly such chains are private and powerful, closely coordinated or fully vertically integrated, self-regulated, global and experience-based. The more that global agricultural and food product trade is conducted in these global value chains, the greater the concern that market efficiency may be compromised and the stronger the argument for having effective regulatory policy on hand for these markets. It is difficult to define appropriate roles for government intervention in these new environments. A priori, standard market failure justifications for public interventions are no longer as strong. In this paper the standard public good/market failure argument is summarised, developments in these markets and implications for analyses of agricultural and food sector markets are reviewed, and appropriate roles for government in an environment dominated by global value chains are considered. The conclusion is that there are potential roles for government or the governing agency in the value chain. These roles relate to creating or improving chain goods to ameliorate chain failure, rather than customary intervention to provide public goods in the face of market failure.