Primary Industry Chains and Networks: Analysis for Public and Private Interests

Abstract

Modern primary industry makes obsolete the conventional analysis of private and social performance. This is due to the dominance of chain failure as opposed to the more familiar market failure. This paper makes the case that value addition dominates aspirations for primary industries, and vertical coordination and shifts in commercial power balances feature in the sharing of bene fi ts within value chains. Moreover, complexity in chain relationships and some particular features of primary industry bring challenges to forward planning and concerted effort. Value addition in New Zealand's forestry and wood products' industry presents several such challenges, and these are examined with a qualitative system dynamics model. Potential policy responses that eliminate chain failure are discussed in association with the Australian beef industry research model. The paper advocates joint industry-university-government action in terms of research and skills development.