Consciously Pursued Joint Action: Agricultural and Food Value Chains as Clubs

Abstract

Certain members of a population consciously and deliberately decide to take joint action to provide particular types of goods or services that are at least partly excludable and at least partly congestible because it is too costly to provide such goods individually. These goods are called club goods or collective goods. We first define some key concepts in club theory and public choice. This includes the prospects for determining the optimal level of membership of a club, how to determine the optimal level and range of provision of services by a club, and consideration of the dynamics of club membership. Then we examine the ways in which club theory can help provide an alternative approach to recognising and overcoming market failure in agricultural and food value chains. We note that useful insights can be gained by considering value chains as 'latent clubs'. That is, they are systems that exist which are either inactive or have not been fully developed, but which have the potential for improvement through collective action. If value chain members do exploit an opportunity to reap the rewards of collective action, then forming a club that comprises the whole chain or a subset of chain members offers an efficient organisation design to do so. We find that all of the calculus that has been identified for clubs can be applied to agricultural and food value chains. However, there are two particular issues that require further consideration. One is the nature of risk in agricultural value chains, and how it is related to member preferences, and the other is the form of collective action to be taken by agricultural value chains in the future.