Availableonlineatwww.sciencedirect.com
Revista
de
Administração
http://rausp.usp.br/ RevistadeAdministração52(2017)114–117
ThinkBox
Agribusiness
systems
analysis:
origin,
evolution
and
research
perspectives
Decio
Zylbersztajn
∗UniversidadedeSãoPaulo,SãoPaulo/SP,Brazil
Abstract
Thepresentessayrevisitstheconceptofagribusinesssystems,discussesitsevolutionbasedintheinstitutionalperspectivehighlightingtheproperty rightsandcontractualapproaches.Itconcludeswithsuggestedresearchtopicsinthefieldofeconomicsoforganizationsappliedtoagriculture.
©2016DepartamentodeAdministrac¸˜ao,FaculdadedeEconomia,Administrac¸˜aoeContabilidadedaUniversidadedeS˜aoPaulo–FEA/USP. PublishedbyElsevierEditoraLtda.ThisisanopenaccessarticleundertheCCBYlicense(http://creativecommons.org/licenses/by/4.0/).
Introduction
Theproductionoffood,fiber,andbio-energyconnectswith contemporaneous problems of food safety, global warming, consumer’spreferences, consolidationof global corporations, environmentalimpacts,mega-tradeagreements,andpersistent
∗Correspondingauthor:AvenidaProfessorLucianoGualberto,908, SãoPaulo,SP,Brazil.
E-mail:[email protected]
PeerReviewundertheresponsibilityofDepartamentodeAdministrac¸ão, FaculdadedeEconomia,Administrac¸ãoeContabilidadedaUniversidadede SãoPaulo–FEA/USP.
problemsoffoodaccess.Inordertofindanswerstothe prob-lems that affect governments, agrocorporations, farmers and consumersaroundtheworld,theissueof“coordinationof spe-cialized agentsengagedinagricultureproduction”isacentral one.Thepresentessayaimstopresentapartialviewofthe evo-lution of thoughtonbusiness management andeconomics of organizationsappliedtoagricultureandidentifiesperspectives forempiricalstudies.Thepapercontainsfourtopics.Following thisintroduction,thesecondpartrevisitstheconceptof agribusi-nesssystems, thethird partpresentsthe institutional/property rightsperspectiveandcontractualapproach,andpartfour sug-gestsresearchissuesinthefieldofeconomicsoforganizations andconcludes.
http://dx.doi.org/10.1016/j.rausp.2016.10.004
D.Zylbersztajn/RevistadeAdministração52(2017)114–117 115
Agribusiness–aconceptyettobeunfolded
Uptothe beginningof the sixties,economistsapproached agricultureproduction, mostly through the lenses of markets andpricestakingtheagriculturalsectorasanindependentunit. Marketpricesweresufficienttopromotecostlesscoordination ofproductionanddistribution.Traditionalinterventionremedies fixed market imperfections and consequent price distortions. Theresearchdidnotfocusonprivatestrategiesinagriculture andrelatedsectors.Publicpoliciesofmarketinterventionwere the dominant topic. The contribution of Davis andGoldberg (1957)atthe Graduate Schoolof BusinessAdministration at HarvardUniversityopenednewperspectivestotheanalysisof foodsystemsthatprovedtobeusefulforpublicpolicydesign andarchitectureofprivatestrategies.Theauthorsproposedthe definitionoftheconceptofagribusinessas:
“The sum of all operations involved in manufacture and distribution offarmsupplies,productionoperationsonthe farm,andthestorage,processing,anddistribution offarm commodities”.
Thisconceptevolvedgivingoriginto“AgribusinessSystems Analysis”rootedintwoelements: First,agriculturetreatedas an isolated sector, becamepart of specialized interdependent systemofagentsthatoperateininterconnectedindustries.The secondrelevantaspectproposedbyGoldbergisthatthevalue addedatthefarmleveltendstodeclinethroughtimeasashare ofthe totalvalueof production, withserious strategic conse-quences.Hewasthefirsttostressthefactthatmarginsarelarger as the productapproaches the finalmarket destiny.Goldberg built the AgribusinessSystems Modelbased in sector analy-sisandhighlighted theinter-sectorialconnections.Implicit in hisstudiesistheassumption ofcostless operation ofmarkets andfrictionless interactionsamongsectors, institutions being absent.
TheworkbyDavisandGoldberg(1957)servedasthebasis fortheevolutionoftheAgribusinessSystemperspectiveasseen inGoldberg(1968).DevelopedinHarvardofferedanewbreath tothestudyofagro-basedfoodsystemsbreakingwiththe tradi-tionalwaytolooktoagricultureasanindependentsectormoving towardstrategicissues.Theconceptofagribusinesssupported theHarvardAgribusinessProgramsupportedtheproductionof casestudiesofagribusinessfirmsandthedebateofprivate strate-giesaswellaspublicpolicies.Theconceptof“agribusiness”at theorigindidnothavethemeaningdistortedtowardtheeventual conflictbetweenlargecorporationsandsmallfamilyfarmersas isseeninBrazil. Theconcept considers onlythat agriculture ispart of the business sphereof phenomena.A small farmer ispartoftheagribusinesssystemas wellas alargecorporate farm.
Thedomainofagricultureeconomistsinmostoftheresearch centersprevailedanddidnotplaceeffortstostudyreal world businesspractices,focusingpublicpoliciesinstead.Meanwhile realworldproblemsfacedbyagriculture-basedproductionwere waitingforanswers.Inthe80sand90stotheconvergenceof interestsbetweeneconomicsandmanagementhasintensified. Asthetheoryofeconomicsoforganizationsevolved,theissue
ofgovernanceandcoordinationofagribusinesssystemsbecame a vigorous applied field of empirical research. Questions of mechanismsofgovernancebasedinverticalintegration, com-plexcontractsandtheroleofinstitutionsaddedtoGoldberg’s approach.Studiesofagribusinesseconomicsandmanagement basedinthepropertyrightsperspective,transactioncosts anal-ysis, knowledge,resources basedviews andnewinstitutional economicsgainedstrength.
Propertyrights,institutionsandcontracts
The perspective adopted by Goldberg moved the debate towardthedirectionofrealworldbusinessproblems.The adop-tionofchainsandsystemsasaconceptualconstructdidshow its usefulnesstostudy thecoordinationof aflow ofproducts toward thefinalmarkets.Chainandsystems convergeinone point:actorsneedtocooperateinordertoproducevalueand governcomplexmechanismsofproductionandtrade.However, the conceptof chainandsystemsas approachedbyGoldberg hasshowntobelessthansufficienttoofferaframetoexplain thecomplexityoftransactionsactuallycarriedoutbybusiness players.
In the 1990s the science of economics of organizations introducednewelements,namely:thepropertyrights founda-tionstostudyorganizations(Barzel,1997),theNewInstitutional Economics with the macro-institutionalperspective as devel-opedbyNorth(1990)andatthemicroperspectiveastreatedby Coase(1937)andWilliamson(1985).
Basedontheassumptionofzerotransactioncosts,the origi-nalAgribusinessSystemsperspectivetookthepricemechanism assufficienttopromotecoordination.However,therealworld isoneofpositivetransactioncosts(Coase,1937).Insuchcases, it is mandatory to considerthe role of institutions and coor-dination mechanismsotherthanprices, mostlyof contractual nature.ThedominantviewofeconomicanalysiswhenGoldberg introducedtheAgribusinessSystemconceptignoredtheroleof institutions.Theglobalproductionandtradeoffood,fiberand bio-energyproductsdependsontechnologychoice,presenceof globalplayers,existenceofvestedinterests,lobbymechanisms andexistenceofculturaltiesamongdifferentcountries. Transac-tionscarriedonthroughagribusinesssystemscarryasymmetric informationaboutproductandprocesscharacteristics,opening roomforopportunismandstrategiestocapturepropertyrights. Insuchcases,pricesarenotsufficienttopromoteefficient coor-dination;instead,consideringpositivecostsoftransaction,need institutional rules to provide incentives for economic players engageincomplexcontractsinadditiontothepricemechanism. Theevolutionofagribusinessanalysisbasedintheinstitutional perspective consideredthat institutions matterinagribusiness studies.
116 D.Zylbersztajn/RevistadeAdministração52(2017)114–117
propertyrights,knowledgeandresourcesconsiderationsandthe relevanceof theinstitutionalframe.TheworkofZylbersztajn and Farina (1999) approachedthe agribusinesssystem as an expanded Coasian firm, with complex contractual structure. Transactionscostapproachopenedthepossibilitytostudythe institutional frame that affect the mechanisms of governance enrichingthedebateanddialogbetweenlegalanalysis,business managementandeconomicsanditsapplicationtoagriculture. Thefocus onmarkets andpricesenlargedwiththeeconomic analysisofcontractsperformedthroughthesystem,resultedin amorerealisticapproachtothe existingliteratureof agricul-turalmarkets.Pricesarerelevantaswellasothermechanisms ofgovernance.Empiricaltestsoftransactioneconomicsbased hypothesiswereabundantintheliteratureinadditionto narra-tivesanddescriptivecasestudies.
Researchperspectives
Theresearchapproachesofagribusinesssystemshaveshown apatternof evolutionfromindividualmarkets towardchains, networks1 and systems perspectives and the introduction of institutions. Different theories explain parts of the complex coordinationmechanisms, ranging from price theory,to new institutional and property rights, evolutionist and resources views.Thenewinstitutionalapproachconsidersthatinstitutions matterandaresusceptibleofanalysis.Itisnothostileto ortho-doxy,andopensroomfor aninterdisciplinarycombinationof law,economics,andorganization.Theadoptionofthis perspec-tiveinagribusinessstudiesprogramsinbusinessschoolsisjust oneofthepositiveoutcomes.
However many unsolved issues are yet present and need to be addressed. The level of analytical aggregation adopted differsamong studies. Coordination mechanismsin agribusi-nesssystemseventuallyconvergeshowingapattern,however notalwaysaclearpatternisidentifiable.Thetransactioncosts economicsalignmenthypothesisreceivedconsiderablesupport fromresearchbutatthesametimediversityofgovernanceand coordinationmechanismsobservedintherealworld,revealsthe needtoexplainthatthecomplexityrelatedtothestrategicchoice ofmechanisms.Onecanobservedifferentgovernancestandards governingthesameagribusinesssystem.Coexistenceofmany standards is more common than an eventual unique efficient solution.Differentconceptsemergedtoexplorethistensionas; strangeforms,complexcontractualforms,hybridforms,plural forms(Saes,Silva,SouzaandSchnaider,2011),withdifferent meanings.
Agricultural contracts gained support from international organizations as FAO to promote the contractual connection betweenfarmersandprocessingindustries(UNIDROIT,FAO,& IFAD,2013).Theinitiativehasgoodintentions,namelytoinsert smallfarmersinorganizedsystems,howeveritrunstheriskto
1 Thelimitsbetweenagro-systemsandnetworksisyettobefurther
devel-oped.Theyrelyonthesameissueofdispersedmechanismsofgovernanceand authority.Networkanalysisperspectivehaveshowntobeanecessaryingredient tomovethestudiesofagribusinesssystems.
proposeuniquesolutionstodifferentplayers.Thediversityof formsisvisibleincontractssinceasinglefarmerorprocessing industrycanholddifferentcontractssimultaneously.
Why do different contract formscoexist? Why the gover-nance of similar agro-based systems differs under the same institutionalandtechnologicalframe?Thisobservationsuggests thateffortsarenecessarytodigdeeperintheinstitutional com-plexity considering; business-historical patterns,development of trust, knowledge based explanations, reputational mecha-nismstosafeguardforpropertyrightsappropriations.Incentives forconvergentsolutionsfaceincentivesofdivergentsolutions, bothbasedinefficiencycriteria.Theobservedresultrepresents theneteffectofdistinctforces.
Meanwhiletheoreticalevolutiontakesplaceempirical prob-lemsareabundantandwaitingforanswers.Mostofthesolutions resideintheinterface betweeneconomics,business andlegal perspectives. Examples of relevant researchtopicsare: Mega trade agreementsandinstitutional harmonization,pricingand contractsoftechnologyatthefarmlevel,marketpowerissues relatedtomega-consolidationofcompanies,newfarming tech-nologies,emergenceofagro-corporations,institutionalrulesof access toland, propertyrights regimesand itsconsequences, privateenforcementofpropertyrights,studiesoffarmers’ col-lective actions,and territorial reconversion. The relevance of problemsandthepotentialresearchagendasuggeststhatyoung scholars have a lot of work to do in coming years, both in the theoretical and applied aspects of agribusiness systems analysis.
Conflictsofinterest
Theauthordeclaresnoconflictofinterest.
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