Preface

Chapter 7 **Soybean Agribusiness in Argentina (1990–2015): Socio-Economic, Territorial, Environmental, and Political**

Sebastián Gómez Lende and Guillermo Velázquez

Chapter 8 **Agricultural Market Integration in the Commonwealth of**

Chapter 9 **The Struggles of Smallholder Farmers: A Cause of Modern Agricultural Value Chains in South Africa 161**

Chapter 10 **Integration of Small Farmers into Value Chains: Evidence from**

Chapter 11 **Economic Synergies from Tighter Agri-Business and Coal Seam**

**Production Capabilities for Productivity Gains 225**

Chapter 13 **A Review of Supply Chain Prices Analyses with Emphasis on**

Fabio Gaetano Santeramo and Leonardo Di Gioia

Shinan N. Kassam, Patricia Biermayr-Jenzano, Boubaker Dhehibi

**Eastern Europe and Central Asia 181**

Syeda U. Mehreen and Jim R. Underschultz

Chapter 12 **Collaboration in Agri-Value Chains: Building Supplier**

Michael Mugabira and Richard Chivaka

Jon H. Hanf and Taras Gagalyuk

**Gas Integration 199**

**Perishable Markets 241**

Chapter 14 **Gendered Dimensions of Key Value Chains in Southwestern Morocco 257**

**Section 5 AVC and Gender Equality 255**

and Aden Aw-Hassan

**Independent States: What Are the Main Driving Forces and**

Ivan Djuric, Linde Götz, Miranda Svanidze and Thomas Glauben

Wolfgang Johann von Loeper, Scott Drimie and James Blignaut

**Implications 117**

**VI** Contents

**Challenges? 139**

**Section 4 AVC and Market Integration 137**

Agricultural value chain is one of the most important pillars of sustainable agriculture and overall sustainable development of our society. In 1990, the US congress defined sustainable agriculture as follows: "the term sustainable agriculture means an integrated system of plant and animal production practices having a site-specific application that will, over the long term [1]:


As the bullets 4 and 5 indicate, farm operations need to be more efficient and effective, which also need to result in enhancements in the quality of life of farmers and the society as a whole. However, the focus of policy making needs to be expanded to the entire value chain of agricultural products. In fact, food value chain has been addressed extensively in the global reports and the literature because it has a central role in sustainable agriculture efforts in all dimensions of sustainability. The value is typically being added to an agricul‐ tural product during the entire life cycle from harvesting to the final delivery to consumer and the disposal phases. Therefore, sustainability of food value chain becomes a fundamen‐ tal issue for sustainable development initiatives worldwide. In this context, the most recent definition of *sustainable food value chain* provided by the United Nations Sustainable Food Value Chains Knowledge Platform is as follows [1]:

"the full range of farms and firms and their successive coordinated value-adding activities that produce particular raw agricultural materials and transform them into particular food products that are sold to final consumers and disposed of after use, in a manner that is prof‐ itable throughout, has broad-based benefits for society, and does not permanently deplete natural resources."

The global policy-making agency, the UN, and various local policy makers stress heavily on the social aspects of value chain as well as its economic side and the environmental impacts to realize a triple-bottom-line paradigm across the globe due to having severe economic, social inequalities in income, and profit distribution across the stakeholders of global food value chain and nondecreasing environmental consequences such as emissions, water footprint, and land depletion. Today, 70% of our food is produced by small-scale farmers [1]. In the entire value chain of food and agricultural products, value chain can be captured by five ways: salaries, net profits, tax revenues, consumer surplus, and externalities such as air pollu‐ tion (negative) and increase biodiversity (positive). All of these components of value chain need to be considered as potential improvement areas because majority of the countries in the world are in "developing" category, whose economic growth and socioeconomic status are heavily dependent on agricultural production. Indeed, the share of small-scale farmers signif‐ icantly increases in developing countries, which are indispensably in need of social and eco‐ nomic enhancements in low- and medium-income categories of their human capital. In chapter three it is discussed that other potential neuroactive steroids, dehydroepiandros‐ terone (DHEA) and its sulphated metabolite DHEA-sulphate (DHEA(S)), are potent modu‐ lators of neurogenesis, neuronal growth and differentiation, and neuroprotection. Its serum concentrations decrease with age, with lowest concentrations at the time of onset of neuro‐ degenerative processes. Pathology expressed as cognitive decline, age-related neurological disorders and dementia and others may, in part at least, be attributed to decreased secretion of DHEA that acts probably through diminished glutamate-induced excitotoxicity.

This book covers the agricultural value chain issues that occur in different parts of the world and aims to increase our understanding about the sustainable agricultural value chain para‐ digm. By reading through these chapters, the readers will witness various interesting, some‐ times sad, commonalities among different regions of the world, where smallholder farmers and producers are severely affected by various agricultural policy deficiencies or mistakes and inexistences. The book consists of 14 chapters, which comprehensively cover over 20 agricultural products from more than 15 different regions of the world. Various qualitative and quantitative research methods are presented including surveys, case studies, inter‐ views, price transmission, risk analysis, and multiagent system technology. A summary ta‐ ble is also provided to illustrate the main features of each chapter. Chapter four presents how oestrogenic pharmacotherapy can be applied in many neurode‐ generative disorders. Oestrogens delay the onset of frontotemporal dementia (FTLD) in pre‐ menopausal women compared to age-equivalent men and may provide neuroprotection in the early postmenopausal period. Oestrogens possess regulatory role in attenuating the mi‐ croglia hyperactivation in response to cell stress that might trigger an overexpressed inflam‐ matory response. Acting as microglia stabilizer, oestrogens preserve the homeostasis of both the ubiquitin-proteasome degradation system and lysosome-autophagy recycling system. Crucial period for triggering the potential degenerative changes in women is perimeno‐ pause. It is defined by menstrual cycle and endocrine changes in ovarian-pituitary-hypo‐ thalamic feedback relationships, inaccurate oestrogen levels and decreased progesterone

Sincerely, levels. These changes in women are most commonly experienced as mild cognitive impair‐ ment, anxiety, irritability, mood swings and depression. In chapter five it is discussed how

**Dr. Gokhan Egilmez** University of New Haven, West Haven, CT United States of America depressive-like behaviour through interactions with neurotrophic factors and through an in‐ Chapter six shows how in perimenopausal period, endocrine and neural degenerative changes overlap, and thus perimenopause is a "critical period" in neuro-ageing, when the

VIII Preface Preface IX

#### **References**

[1] Food and Agriculture Organization of the United Nations. Sustainable Agribusi‐ ness and Food Value Chains. 2014. Retrieved from: http://www.fao.org/policy-support/policy-themes/sustainableneurodegenerative processes may initiate. In Alzheimer's disease, metabolic and inflamma‐ tory changes are characterized, with onset during menopausal transition and early years of menopause. Endocrine, neural and metabolic pathways due to endocrine changes are pre‐ senting new insights into the Aβ-centric AD pathogenesis. The following chapter presents

most studied neurodegenerative diseases characterized by brain pathological changes, i.e., amyloid plaque accumulation and neurofibrillary tangle deposition, synaptic loss, neuronal death and brain atrophy in later stages. These changes result in progressive memory and cognitive decline. Oestrogens, progesterone and androgens are important for AD pathogen‐ esis, and their effect to the brain results in gender susceptibility to the disease. Sex hormones play an important neuroprotective role against AD development, mild cognitive impair‐ ment and AD progression. Hormonal replacement therapy in AD treatment may represent a

new strategy for the development of personalized, gender-specific AD management.

In chapter eight authors show that higher incidence of Parkinson's disease is present in post‐ menopausal compared to premenopausal women of similar age, suggesting that oestrogens possess neuroprotective effects. Melatonin alone or in combination with L-DOPA protects nigrostriatal dopaminergic loss induced by 6-OHDA in a rat Parkinson's disease model and improves motor ability and biological alterations, compared with the results of L-DOPA-on‐ ly-treated rats. Rats treated with L-DOPA and melatonin showed decreased dyskinesia and showed better performance at motoric tests. L-DOPA and melatonin co-administration in oestrogen native animals resulted in reduced dyskinesia through the conservation of some

oestrogens and other shifted hormones influence all these changes including depression and

agribusiness-food-value-chains/en/ the link between Sex Hormones and Alzheimer's Disease . Alzheimer's disease is one of the

fluence on the serotonergic system.

entire value chain of food and agricultural products, value chain can be captured by five ways: salaries, net profits, tax revenues, consumer surplus, and externalities such as air pollu‐ tion (negative) and increase biodiversity (positive). All of these components of value chain need to be considered as potential improvement areas because majority of the countries in the world are in "developing" category, whose economic growth and socioeconomic status are heavily dependent on agricultural production. Indeed, the share of small-scale farmers signif‐ icantly increases in developing countries, which are indispensably in need of social and eco‐

In chapter three it is discussed that other potential neuroactive steroids, dehydroepiandros‐ terone (DHEA) and its sulphated metabolite DHEA-sulphate (DHEA(S)), are potent modu‐ lators of neurogenesis, neuronal growth and differentiation, and neuroprotection. Its serum concentrations decrease with age, with lowest concentrations at the time of onset of neuro‐ degenerative processes. Pathology expressed as cognitive decline, age-related neurological disorders and dementia and others may, in part at least, be attributed to decreased secretion

This book covers the agricultural value chain issues that occur in different parts of the world and aims to increase our understanding about the sustainable agricultural value chain para‐ digm. By reading through these chapters, the readers will witness various interesting, some‐ times sad, commonalities among different regions of the world, where smallholder farmers and producers are severely affected by various agricultural policy deficiencies or mistakes and inexistences. The book consists of 14 chapters, which comprehensively cover over 20 agricultural products from more than 15 different regions of the world. Various qualitative and quantitative research methods are presented including surveys, case studies, inter‐ views, price transmission, risk analysis, and multiagent system technology. A summary ta‐

Chapter four presents how oestrogenic pharmacotherapy can be applied in many neurode‐ generative disorders. Oestrogens delay the onset of frontotemporal dementia (FTLD) in pre‐ menopausal women compared to age-equivalent men and may provide neuroprotection in the early postmenopausal period. Oestrogens possess regulatory role in attenuating the mi‐ croglia hyperactivation in response to cell stress that might trigger an overexpressed inflam‐ matory response. Acting as microglia stabilizer, oestrogens preserve the homeostasis of both the ubiquitin-proteasome degradation system and lysosome-autophagy recycling system. Crucial period for triggering the potential degenerative changes in women is perimeno‐ pause. It is defined by menstrual cycle and endocrine changes in ovarian-pituitary-hypo‐ thalamic feedback relationships, inaccurate oestrogen levels and decreased progesterone levels. These changes in women are most commonly experienced as mild cognitive impair‐ ment, anxiety, irritability, mood swings and depression. In chapter five it is discussed how oestrogens and other shifted hormones influence all these changes including depression and depressive-like behaviour through interactions with neurotrophic factors and through an in‐

of DHEA that acts probably through diminished glutamate-induced excitotoxicity.

[1] Food and Agriculture Organization of the United Nations. Sustainable Agribusi‐

new strategy for the development of personalized, gender-specific AD management.

In chapter eight authors show that higher incidence of Parkinson's disease is present in post‐ menopausal compared to premenopausal women of similar age, suggesting that oestrogens possess neuroprotective effects. Melatonin alone or in combination with L-DOPA protects nigrostriatal dopaminergic loss induced by 6-OHDA in a rat Parkinson's disease model and improves motor ability and biological alterations, compared with the results of L-DOPA-on‐ ly-treated rats. Rats treated with L-DOPA and melatonin showed decreased dyskinesia and showed better performance at motoric tests. L-DOPA and melatonin co-administration in oestrogen native animals resulted in reduced dyskinesia through the conservation of some

Chapter six shows how in perimenopausal period, endocrine and neural degenerative changes overlap, and thus perimenopause is a "critical period" in neuro-ageing, when the neurodegenerative processes may initiate. In Alzheimer's disease, metabolic and inflamma‐ tory changes are characterized, with onset during menopausal transition and early years of menopause. Endocrine, neural and metabolic pathways due to endocrine changes are pre‐ senting new insights into the Aβ-centric AD pathogenesis. The following chapter presents the link between Sex Hormones and Alzheimer's Disease . Alzheimer's disease is one of the most studied neurodegenerative diseases characterized by brain pathological changes, i.e., amyloid plaque accumulation and neurofibrillary tangle deposition, synaptic loss, neuronal death and brain atrophy in later stages. These changes result in progressive memory and cognitive decline. Oestrogens, progesterone and androgens are important for AD pathogen‐ esis, and their effect to the brain results in gender susceptibility to the disease. Sex hormones play an important neuroprotective role against AD development, mild cognitive impair‐ ment and AD progression. Hormonal replacement therapy in AD treatment may represent a

Retrieved from: http://www.fao.org/policy-support/policy-themes/sustainable-

**Dr. Gokhan Egilmez**

United States of America

University of New Haven, West Haven, CT

nomic enhancements in low- and medium-income categories of their human capital.

ble is also provided to illustrate the main features of each chapter.

ness and Food Value Chains. 2014.

fluence on the serotonergic system.

agribusiness-food-value-chains/en/

Sincerely,

VIII Preface

**References**


**Section 1**

**AVC of Fresh Produce Markets**

**AVC of Fresh Produce Markets**

**Chapter 1**

**Provisional chapter**

**Agriculture Value Chain as an Alternative to Increase**

Specific material handling and treatment for specific agriculture products is required. Enhancing the productivity, competitiveness and efficiency of agriculture value chain is a priority for Indonesia to achieve competitiveness. This chapter discusses the overview of agriculture value chain in Indonesia and provides case studies related to supply chain risk management and logistics cost. Then, the author may propose recommendations to optimize the agricultural value chain. Each agriculture commodity probably has different type of tier, type of supply chain risks, issues and activities which leads to the different proportion of logistics and distribution cost in each tier. The results showed differences in strategy either speculation or postponement for inventory management to improve the value of horticulture along supply chain, while in aquaculture research also shows the same differences. Moreover, the value chain analysis helps to identify the value created by each stakeholder. In the value chain of catchment fish, ship owner plays the dominant role in the whole income distribution, while in the aquaculture, spreader get the highest profit margin. Trader gives the highest value added during transportation but earns the lowest profit. The value chain analysis of fresh vegetables shows the highest

**Keywords:** agriculture product, supply chain, risk, strategy, value chain analysis

**Agriculture Value Chain as an Alternative to Increase** 

DOI: 10.5772/intechopen.70141

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution,

© 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use,

distribution, and reproduction in any medium, provided the original work is properly cited.

and reproduction in any medium, provided the original work is properly cited.

Globalization offers opportunities for the developing countries to expand their business in both domestic and international markets. Currently, agriculture continues to be a fundamental instrument for sustainable development and poverty reduction [1]. Therefore, the

**Better Income's Distribution: The Case of Indonesia**

**Better Income's Distribution: The Case of Indonesia**

Adi Djoko Guritno

**Abstract**

**1. Introduction**

Adi Djoko Guritno

Additional information is available at the end of the chapter

portion of traders in the whole inventory cost.

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70141

**Provisional chapter**

### **Agriculture Value Chain as an Alternative to Increase Better Income's Distribution: The Case of Indonesia Better Income's Distribution: The Case of Indonesia**

**Agriculture Value Chain as an Alternative to Increase** 

DOI: 10.5772/intechopen.70141

Adi Djoko Guritno Adi Djoko Guritno Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70141

#### **Abstract**

Specific material handling and treatment for specific agriculture products is required. Enhancing the productivity, competitiveness and efficiency of agriculture value chain is a priority for Indonesia to achieve competitiveness. This chapter discusses the overview of agriculture value chain in Indonesia and provides case studies related to supply chain risk management and logistics cost. Then, the author may propose recommendations to optimize the agricultural value chain. Each agriculture commodity probably has different type of tier, type of supply chain risks, issues and activities which leads to the different proportion of logistics and distribution cost in each tier. The results showed differences in strategy either speculation or postponement for inventory management to improve the value of horticulture along supply chain, while in aquaculture research also shows the same differences. Moreover, the value chain analysis helps to identify the value created by each stakeholder. In the value chain of catchment fish, ship owner plays the dominant role in the whole income distribution, while in the aquaculture, spreader get the highest profit margin. Trader gives the highest value added during transportation but earns the lowest profit. The value chain analysis of fresh vegetables shows the highest portion of traders in the whole inventory cost.

**Keywords:** agriculture product, supply chain, risk, strategy, value chain analysis

### **1. Introduction**

Globalization offers opportunities for the developing countries to expand their business in both domestic and international markets. Currently, agriculture continues to be a fundamental instrument for sustainable development and poverty reduction [1]. Therefore, the

Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons

producer needs to strictly compete with other producers and also builds competitive advantage by adding the value of the product. To achieve these goals, controlling activity along the supply chain of the agriculture commodity is required and necessary starting from the plantation farm to the retailer. Agriculture value chain manages the flow of products and information along the supply chain by capturing the value added in each stage. It also offers the opportunity to reduce the cost and risk along the supply chain. Furthermore, the perishability of agriculture commodity results in the special material handling and treatment to control the quality of material. Different types of agriculture commodity probably need different kinds of material handling and treatments. More recently, the issues of food safety and food security become global issues since people are more aware and concern about their health. These conditions encourage the producers to increase their awareness and assure the quality of product to the customer. Therefore, activities along the supply chain of agricultural product should be managed by each stakeholder in order to minimize the cost and risk and add the value that can be perceived by the customer.

**2. Theoretical background**

ment, particularly in value chains [4].

channels for their products.

sourced [11].

risk and continuously evaluating the risk.

According to Ref. [3], analysis of the value chain (value chain analysis—VCA) seeks to understand how a business creates value for customers by examining the contribution of different activities in the business against the value. A value chain is about linkages generating value for the consumer. The productivity, efficiency and depth of agricultural value chains are important elements driving commercial agriculture and agribusiness [4]. Important barriers for developing country producers in this respect are the lack of an enabling environment offering institutional and infrastructural support, availability of resources and efficient and effective coordination in value chains. In particular, small-scale producers are at a disadvantage because they have little capital to invest, use traditional techniques and depend on family

Agriculture Value Chain as an Alternative to Increase Better Income's Distribution: The Case...

http://dx.doi.org/10.5772/intechopen.70141

5

Two complementary approaches can be followed to support agro-enterprise development for competitiveness and participation. One is to improve the investment climate to induce the entry of private investors, particularly small- and medium-sized enterprises (SMEs). Surveys of the rural investment climate in Indonesia, Nicaragua, Sri Lanka and Tanzania indicate that the lack of rural finance, infrastructure, business and public services is particularly binding. The other approach targets bottlenecks in small- and medium-sized agro-enterprise develop-

According to Ref. [8], factor conditions relate to the nation's endowment with resources such as physical, human, knowledge, technology and infrastructure. These factors enable or constrain value chain upgrading. Moreover, Ref. [9] revealed that three key elements for a balanced analysis of value chain are network structure, horizontal and (vertical) market channel relationships, value added and governance. Moreover, value chain actors may be motivated to improve their position in the chain by changing their production of value added, their relationships (governance) with other actors in the value chain and by choosing different market

SCRM is an attempt to control the risks in the supply chain of a commodity which provides recommendations for the stakeholders to optimize the supply chain activity. Each tier along the supply chain may handle different kinds of risks in which the activities to prevent the risks in each tier might be different as well [10]. The practice of SCRM consists of identifying the risk from the risk owner, analysing the probability and severity of the risk, monitoring the

In most value chains, each activity has a distinct cost structure determined by different cost drivers. Analysing cost requires disaggregating the value chain to identify the relative importance of each activity with respect to total cost, the cost drivers for each activity, how cost in one activity influence the others and which activities should be undertaken or out-

Several main activities related to logistics are the design of supply chain, procurement or purchasing, transportation, receiving, warehousing, material handling, distribution, return,

labour and lack contact with (international) market players [5–7].

Indonesia is one of the developing countries that have great potential in agriculture commodities. Its geographical conditions make Indonesia rich in natural resources especially in agriculture products including horticulture, fish and livestock. However, inability of Indonesia in managing the resources becomes the major constraint. Vegetables are one of the valuable horticultural commodities in Indonesia. According to Ref. [2], the vegetable production in Indonesia reached 11,005,954 tonnes/year for the last 5 years. The national vegetables production also increases every year, but this increase of production should be followed by good quality of vegetables.

Indonesian agro-industry needs to optimize the potential of natural resources by providing added value along the supply chain. Investigation on the current condition of several agriculture products value chain may facilitate the author to identify the obstacles and risks and determine the appropriate action to deal with these risks in the field. Managing and controlling the activity along the supply chain will enhance the efficiency of value chain and minimize the logistics cost. Nevertheless, inadequate infrastructure and lack of coordination within the supply chain lead to the increasing cost and inefficient flow of material and information. Collaboration between stakeholders in the supply chain, the strategies used and government support are necessary to optimize the application of agriculture value chain in Indonesia.

This article aims to provide an overview of the agriculture value chain in Indonesia for several agriculture commodities such as fish, aquaculture and horticulture commodity. Case studies related to supply chain risk management (SCRM) and logistics activity analysis are presented to evaluate and optimize the potential agriculture in Indonesia. SCRM helps to identify the potential risk in each tier and to provide the appropriate mitigation to reduce the exposure of each risk. Furthermore, the analysis of logistics activity in the supply chain by using activitybased costing is also needed as the supplement to evaluate and improve the agriculture value chain. Sampling method in these studies used convenience sampling, while the data collection was done through in-depth interview to each respondent along the supply chain. The number of respondents in each case study is varied.

### **2. Theoretical background**

producer needs to strictly compete with other producers and also builds competitive advantage by adding the value of the product. To achieve these goals, controlling activity along the supply chain of the agriculture commodity is required and necessary starting from the plantation farm to the retailer. Agriculture value chain manages the flow of products and information along the supply chain by capturing the value added in each stage. It also offers the opportunity to reduce the cost and risk along the supply chain. Furthermore, the perishability of agriculture commodity results in the special material handling and treatment to control the quality of material. Different types of agriculture commodity probably need different kinds of material handling and treatments. More recently, the issues of food safety and food security become global issues since people are more aware and concern about their health. These conditions encourage the producers to increase their awareness and assure the quality of product to the customer. Therefore, activities along the supply chain of agricultural product should be managed by each stakeholder in order to minimize the cost and risk and add the value that

Indonesia is one of the developing countries that have great potential in agriculture commodities. Its geographical conditions make Indonesia rich in natural resources especially in agriculture products including horticulture, fish and livestock. However, inability of Indonesia in managing the resources becomes the major constraint. Vegetables are one of the valuable horticultural commodities in Indonesia. According to Ref. [2], the vegetable production in Indonesia reached 11,005,954 tonnes/year for the last 5 years. The national vegetables production also increases every year, but this increase of production should be followed by good

Indonesian agro-industry needs to optimize the potential of natural resources by providing added value along the supply chain. Investigation on the current condition of several agriculture products value chain may facilitate the author to identify the obstacles and risks and determine the appropriate action to deal with these risks in the field. Managing and controlling the activity along the supply chain will enhance the efficiency of value chain and minimize the logistics cost. Nevertheless, inadequate infrastructure and lack of coordination within the supply chain lead to the increasing cost and inefficient flow of material and information. Collaboration between stakeholders in the supply chain, the strategies used and government support are necessary to optimize the application of agriculture value chain in

This article aims to provide an overview of the agriculture value chain in Indonesia for several agriculture commodities such as fish, aquaculture and horticulture commodity. Case studies related to supply chain risk management (SCRM) and logistics activity analysis are presented to evaluate and optimize the potential agriculture in Indonesia. SCRM helps to identify the potential risk in each tier and to provide the appropriate mitigation to reduce the exposure of each risk. Furthermore, the analysis of logistics activity in the supply chain by using activitybased costing is also needed as the supplement to evaluate and improve the agriculture value chain. Sampling method in these studies used convenience sampling, while the data collection was done through in-depth interview to each respondent along the supply chain. The

number of respondents in each case study is varied.

can be perceived by the customer.

quality of vegetables.

4 Agricultural Value Chain

Indonesia.

According to Ref. [3], analysis of the value chain (value chain analysis—VCA) seeks to understand how a business creates value for customers by examining the contribution of different activities in the business against the value. A value chain is about linkages generating value for the consumer. The productivity, efficiency and depth of agricultural value chains are important elements driving commercial agriculture and agribusiness [4]. Important barriers for developing country producers in this respect are the lack of an enabling environment offering institutional and infrastructural support, availability of resources and efficient and effective coordination in value chains. In particular, small-scale producers are at a disadvantage because they have little capital to invest, use traditional techniques and depend on family labour and lack contact with (international) market players [5–7].

Two complementary approaches can be followed to support agro-enterprise development for competitiveness and participation. One is to improve the investment climate to induce the entry of private investors, particularly small- and medium-sized enterprises (SMEs). Surveys of the rural investment climate in Indonesia, Nicaragua, Sri Lanka and Tanzania indicate that the lack of rural finance, infrastructure, business and public services is particularly binding. The other approach targets bottlenecks in small- and medium-sized agro-enterprise development, particularly in value chains [4].

According to Ref. [8], factor conditions relate to the nation's endowment with resources such as physical, human, knowledge, technology and infrastructure. These factors enable or constrain value chain upgrading. Moreover, Ref. [9] revealed that three key elements for a balanced analysis of value chain are network structure, horizontal and (vertical) market channel relationships, value added and governance. Moreover, value chain actors may be motivated to improve their position in the chain by changing their production of value added, their relationships (governance) with other actors in the value chain and by choosing different market channels for their products.

SCRM is an attempt to control the risks in the supply chain of a commodity which provides recommendations for the stakeholders to optimize the supply chain activity. Each tier along the supply chain may handle different kinds of risks in which the activities to prevent the risks in each tier might be different as well [10]. The practice of SCRM consists of identifying the risk from the risk owner, analysing the probability and severity of the risk, monitoring the risk and continuously evaluating the risk.

In most value chains, each activity has a distinct cost structure determined by different cost drivers. Analysing cost requires disaggregating the value chain to identify the relative importance of each activity with respect to total cost, the cost drivers for each activity, how cost in one activity influence the others and which activities should be undertaken or outsourced [11].

Several main activities related to logistics are the design of supply chain, procurement or purchasing, transportation, receiving, warehousing, material handling, distribution, return, replacement, disposal of waste and communications. The most important thing in an activity of logistics is how to make the whole stakeholder in the supply chain working together to obtain an efficient material flow [12].

**3. Agriculture value chain in Indonesia**

along the value chain can earn more profit.

**4.1. Case of fresh catchment sea-fish**

**4. Original case study**

Indonesia.

Agriculture sector in Indonesia has enormous potential for economic development since Indonesia's biodiversity becomes the strength and challenge for Indonesia to compete globally. Consumptive culture which is relatively high in Indonesia needs to be gradually transferred to the more productive sectors, so that Indonesia will have high competitiveness among other countries. Several countries in the world such as Japan, China and Thailand were already focused on the development of agriculture to enhance the country's competitive advantage. Moreover, one of the problems of agriculture in Indonesia is the inability to provide value added to the product before selling the product to others. In some cases, Indonesia exports the raw materials with a relatively cheap price. Then once it arrives at the destination country, they add value to the raw material by processing it into finished product which is then imported to Indonesia at a much higher price. It certainly gives a disadvantage for Indonesia. In the national scale, initial suppliers (farmers and fishermen) are one of the stakeholders who add the least value added to the product. It causes the decrease in the profit earned by them and repositions them as a price taker with low bargaining power. In addition, lack of supervision and assistance from the local government affects the income's distribution within a supply chain.

Agriculture Value Chain as an Alternative to Increase Better Income's Distribution: The Case...

http://dx.doi.org/10.5772/intechopen.70141

7

Currently, agro-industry in Indonesia is rapidly growing from small, medium to large scale. The existence of agro-industry in Indonesia is particularly important in providing added value to agricultural commodities through food processing. Agriculture value chain concept can be applied not only in the scale of production, but also can be implemented on a small scale for some commodities such as horticulture, rice, fisheries and many more. Making a living in agriculture involves not only selling the product but also various other things in the form of tourism, sales, processing, seedling, education and many more. By adding the value of the commodity, it can enhance the price of the product as well. Therefore, the stakeholders

Related to agriculture value chain practice in Indonesia, the following are several case studies related to the application of value chain analysis for several agricultural commodities in

Indonesia is one of the developing countries that have great potential in agriculture commodities. Its geographical conditions make Indonesia rich in natural resources especially in agriculture products including fish. In the fish commodity, Indonesia was able to produce 6,105,225 tonnes in which it consisted of 5,707,012 tonnes of fresh catchment sea-fish, hereinafter referred to as catchment fish, and 398,213 tonnes of aquaculture fish. Around 1,081,717 tonnes of catchment fish in Indonesia came from coastal area of Java Island [19]. Catchment

Calculation of logistics costs in every activity can be used to determine which tier has a dominant proportion of cost against activity [13–15]. The logistics activity along the corn supply chain is divided into six activities including procurement, material handling, maintenance, transportation and communication. The logistics cost analysis shows the proportion of logistics cost and its component cost, the most influence activity on their respective logistics activities and what activities can be controlled at every tier [16, 17].

From Ref. [18], one underlying aspect to appreciate in terms of customer demand or usage requirements is the relationship between the customer order-to-fulfilment lead-time (CLT) and the sum of the supplier order-to-fulfilment lead-time (SLT), the firm's cycle time (CT) and the delivery-to-customer lead-time (DTC) as shown in **Figure 1**. CLT denotes the amount of time a customer is willing to wait, once an order has been placed, to be satisfied by the firm; SLT denotes the amount of time the firm is willing to wait for its own wishes to be met by its suppliers in producing what the customer wants once the customer order is received; CT denotes the amount of time it takes the firm to manufacture and process a customer order and finally, DTC denotes the amount of time it takes the firm to deliver a completed customer order to the customer, so that CLT = SLT + CT + DTC.

### **3. Agriculture value chain in Indonesia**

replacement, disposal of waste and communications. The most important thing in an activity of logistics is how to make the whole stakeholder in the supply chain working together to

Calculation of logistics costs in every activity can be used to determine which tier has a dominant proportion of cost against activity [13–15]. The logistics activity along the corn supply chain is divided into six activities including procurement, material handling, maintenance, transportation and communication. The logistics cost analysis shows the proportion of logistics cost and its component cost, the most influence activity on their respective logistics activi-

From Ref. [18], one underlying aspect to appreciate in terms of customer demand or usage requirements is the relationship between the customer order-to-fulfilment lead-time (CLT) and the sum of the supplier order-to-fulfilment lead-time (SLT), the firm's cycle time (CT) and the delivery-to-customer lead-time (DTC) as shown in **Figure 1**. CLT denotes the amount of time a customer is willing to wait, once an order has been placed, to be satisfied by the firm; SLT denotes the amount of time the firm is willing to wait for its own wishes to be met by its suppliers in producing what the customer wants once the customer order is received; CT denotes the amount of time it takes the firm to manufacture and process a customer order and finally, DTC denotes the amount of time it takes the firm to deliver a completed customer

obtain an efficient material flow [12].

6 Agricultural Value Chain

ties and what activities can be controlled at every tier [16, 17].

order to the customer, so that CLT = SLT + CT + DTC.

**Figure 1.** Lead time approach for inventory classification.

Agriculture sector in Indonesia has enormous potential for economic development since Indonesia's biodiversity becomes the strength and challenge for Indonesia to compete globally. Consumptive culture which is relatively high in Indonesia needs to be gradually transferred to the more productive sectors, so that Indonesia will have high competitiveness among other countries. Several countries in the world such as Japan, China and Thailand were already focused on the development of agriculture to enhance the country's competitive advantage. Moreover, one of the problems of agriculture in Indonesia is the inability to provide value added to the product before selling the product to others. In some cases, Indonesia exports the raw materials with a relatively cheap price. Then once it arrives at the destination country, they add value to the raw material by processing it into finished product which is then imported to Indonesia at a much higher price. It certainly gives a disadvantage for Indonesia. In the national scale, initial suppliers (farmers and fishermen) are one of the stakeholders who add the least value added to the product. It causes the decrease in the profit earned by them and repositions them as a price taker with low bargaining power. In addition, lack of supervision and assistance from the local government affects the income's distribution within a supply chain.

Currently, agro-industry in Indonesia is rapidly growing from small, medium to large scale. The existence of agro-industry in Indonesia is particularly important in providing added value to agricultural commodities through food processing. Agriculture value chain concept can be applied not only in the scale of production, but also can be implemented on a small scale for some commodities such as horticulture, rice, fisheries and many more. Making a living in agriculture involves not only selling the product but also various other things in the form of tourism, sales, processing, seedling, education and many more. By adding the value of the commodity, it can enhance the price of the product as well. Therefore, the stakeholders along the value chain can earn more profit.

### **4. Original case study**

Related to agriculture value chain practice in Indonesia, the following are several case studies related to the application of value chain analysis for several agricultural commodities in Indonesia.

### **4.1. Case of fresh catchment sea-fish**

Indonesia is one of the developing countries that have great potential in agriculture commodities. Its geographical conditions make Indonesia rich in natural resources especially in agriculture products including fish. In the fish commodity, Indonesia was able to produce 6,105,225 tonnes in which it consisted of 5,707,012 tonnes of fresh catchment sea-fish, hereinafter referred to as catchment fish, and 398,213 tonnes of aquaculture fish. Around 1,081,717 tonnes of catchment fish in Indonesia came from coastal area of Java Island [19]. Catchment fish as perishable products requires special material handling during distribution and storage activity. Therefore, each stakeholder along the supply chain should control the quality of product through the temperature control. Based on **Figure 2**, the production of catchment fish significantly increases each year. In 2009, the production of catchment fish reached 4812 thousand tonnes, then it increased to 5039 thousand tonnes in 2010 and 5346 thousand tonnes in 2011. The increase of production did not significantly occurred in 2012 which only reached 1.6%, while the increase in 2013 reached 5%.

fish in the fishermen stage. FAF facilitates fishermen through ship owner and trader in terms of fish landing, auction, processing and marketing process. Both ship owner and trader must pay retribution with the amount of retribution varies for each FAF. However, it is around 5%

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The value added can be enhanced in each tier by optimizing every activity undertaken along the supply chain. Based on in-depth interview, the current practice of catchment fish supply chain is not optimal yet since inadequate infrastructure and inefficient activity are the main obstacles. In order to improve the value added along the supply chain, recognizing the most valuable activity is necessary to decide which activity could be improved to provide competitive advantage.

In the practice of cold supply chain, every logistics activity in each tier needs particular cost to encourage the appropriate temperature for controlling the quality of product. However, in some cases, the large cost required becomes the constraint in the cold chain practice. The total cost along the cold supply chain in a whole cannot be separated by any logistics activity at each tier. In the integrated supply chain system, changing in costs of particular logistics activity in one tier may affect others and the whole supply chain. The analysis of the logistics cost along the supply chain of catchment fish thus should be taken to identify the proportion of logistics costs, determine the cost components of the most influential and valuable activity and define which activities can be controlled to minimize the overall logistics costs. In addition, the logistics cost analysis can be used as one of the considerations in determining the

Moreover, fish that had completed the auction process was then placed in a container, such as Styrofoam or cold box, and ice cube was added to keep the product at the low temperature. Transportation used for distribution is differentiated based on the distribution distance where truck, container or car is used for long distance trip and motor cycle is used for short distance trip. In the peak season, the catchment fish which are not distributed yet will be stored in a particular period by trader. Wholesalers will keep them in the cold storage, while the small traders will keep in the cold box which is filled with ice. According to Ref. [21], temperature of cold storage which is around from −18 to −30°C may freeze the fish product by turning almost all the water content in the product into ice because the temperature is under the freezing point of water. Therefore, the use of cold storage tends to be more optimal to control the quality of fish.

The logistics activity in this case study encompasses procurement, material handling, inventory, transportation, maintenance and information. Calculation of logistics cost is only carried out on the *Euthynnus affinis* as the most dominant type of catchment fish in this study. In addition, **Figure 3** shows the proportion of logistics cost for non-freezer (using the ship with the cold storage and longer fishing trip) and freezer chains (using ice cube for storage during the trip and shorter fishing trip). Based on **Figure 2**, transportation cost accounts for the largest portion of the logistics cost with the slight difference between freezer (43.57%) and non-freezer chains (42.91%). It is because the freezer chain requires more fuel for longer trip and cold storage. For both chains, transportation cost of trader is dominant because traders deliver large quantity of product with limited capacity of vehicle which leads to the high

of the total production of catchment fish.

*4.1.1. Logistics cost of fresh catchment sea-fish*

selling price and profit margin.

The increasing number of catchment fish indicates the potential of this commodity in the future. However, currently, the increase in the quantity of production is not followed by proper material handling processes in which it may lead to the decrease in the quality of product. This quality deterioration may impact on the selling price of the product and may lead to the losses. Practice of cold supply chain management is needed to reduce the risk of quality deterioration during distribution by maintaining the temperature of catchment fish to remain at a low temperature which is below 0°C, so that microbial growth in the product can be minimized.

Furthermore, there are six main tiers in the supply chain of catchment fish including fishermen, ship owner, fish auction facility (FAF), trader, fish processing units (FPUs) and end customer. Data from 64 respondents consisting of 22 fishermen, 22 ship owners, 8 FAFs, 9 traders and 11 fish processing units (FPUs) were collected from the coastal area of Java Island. Fishermen in this study are the fishermen who do not have their own ships so they rent a ship on vessel providers (ship owner) and make payment based on the share-fishing. Based on this condition, fishermen will be the stakeholder who gets the greatest loss if the selling price is cut down due to the quality deterioration. Furthermore, Ref. [20] revealed that fishermen have low bargaining power in term of price, so the government provides fish auction facility (FAF) as an infrastructure to enhance the productivity and improve the price of catchment

**Figure 2.** The production of fresh catchment sea-fish in Indonesia [19].

fish in the fishermen stage. FAF facilitates fishermen through ship owner and trader in terms of fish landing, auction, processing and marketing process. Both ship owner and trader must pay retribution with the amount of retribution varies for each FAF. However, it is around 5% of the total production of catchment fish.

The value added can be enhanced in each tier by optimizing every activity undertaken along the supply chain. Based on in-depth interview, the current practice of catchment fish supply chain is not optimal yet since inadequate infrastructure and inefficient activity are the main obstacles. In order to improve the value added along the supply chain, recognizing the most valuable activity is necessary to decide which activity could be improved to provide competitive advantage.

### *4.1.1. Logistics cost of fresh catchment sea-fish*

fish as perishable products requires special material handling during distribution and storage activity. Therefore, each stakeholder along the supply chain should control the quality of product through the temperature control. Based on **Figure 2**, the production of catchment fish significantly increases each year. In 2009, the production of catchment fish reached 4812 thousand tonnes, then it increased to 5039 thousand tonnes in 2010 and 5346 thousand tonnes in 2011. The increase of production did not significantly occurred in 2012 which only reached

The increasing number of catchment fish indicates the potential of this commodity in the future. However, currently, the increase in the quantity of production is not followed by proper material handling processes in which it may lead to the decrease in the quality of product. This quality deterioration may impact on the selling price of the product and may lead to the losses. Practice of cold supply chain management is needed to reduce the risk of quality deterioration during distribution by maintaining the temperature of catchment fish to remain at a low temperature which is below 0°C, so that microbial growth in the product can

Furthermore, there are six main tiers in the supply chain of catchment fish including fishermen, ship owner, fish auction facility (FAF), trader, fish processing units (FPUs) and end customer. Data from 64 respondents consisting of 22 fishermen, 22 ship owners, 8 FAFs, 9 traders and 11 fish processing units (FPUs) were collected from the coastal area of Java Island. Fishermen in this study are the fishermen who do not have their own ships so they rent a ship on vessel providers (ship owner) and make payment based on the share-fishing. Based on this condition, fishermen will be the stakeholder who gets the greatest loss if the selling price is cut down due to the quality deterioration. Furthermore, Ref. [20] revealed that fishermen have low bargaining power in term of price, so the government provides fish auction facility (FAF) as an infrastructure to enhance the productivity and improve the price of catchment

1.6%, while the increase in 2013 reached 5%.

**Figure 2.** The production of fresh catchment sea-fish in Indonesia [19].

be minimized.

8 Agricultural Value Chain

In the practice of cold supply chain, every logistics activity in each tier needs particular cost to encourage the appropriate temperature for controlling the quality of product. However, in some cases, the large cost required becomes the constraint in the cold chain practice. The total cost along the cold supply chain in a whole cannot be separated by any logistics activity at each tier. In the integrated supply chain system, changing in costs of particular logistics activity in one tier may affect others and the whole supply chain. The analysis of the logistics cost along the supply chain of catchment fish thus should be taken to identify the proportion of logistics costs, determine the cost components of the most influential and valuable activity and define which activities can be controlled to minimize the overall logistics costs. In addition, the logistics cost analysis can be used as one of the considerations in determining the selling price and profit margin.

Moreover, fish that had completed the auction process was then placed in a container, such as Styrofoam or cold box, and ice cube was added to keep the product at the low temperature. Transportation used for distribution is differentiated based on the distribution distance where truck, container or car is used for long distance trip and motor cycle is used for short distance trip. In the peak season, the catchment fish which are not distributed yet will be stored in a particular period by trader. Wholesalers will keep them in the cold storage, while the small traders will keep in the cold box which is filled with ice. According to Ref. [21], temperature of cold storage which is around from −18 to −30°C may freeze the fish product by turning almost all the water content in the product into ice because the temperature is under the freezing point of water. Therefore, the use of cold storage tends to be more optimal to control the quality of fish.

The logistics activity in this case study encompasses procurement, material handling, inventory, transportation, maintenance and information. Calculation of logistics cost is only carried out on the *Euthynnus affinis* as the most dominant type of catchment fish in this study. In addition, **Figure 3** shows the proportion of logistics cost for non-freezer (using the ship with the cold storage and longer fishing trip) and freezer chains (using ice cube for storage during the trip and shorter fishing trip). Based on **Figure 2**, transportation cost accounts for the largest portion of the logistics cost with the slight difference between freezer (43.57%) and non-freezer chains (42.91%). It is because the freezer chain requires more fuel for longer trip and cold storage. For both chains, transportation cost of trader is dominant because traders deliver large quantity of product with limited capacity of vehicle which leads to the high

handling and information cost ranging from Rp 664 to 882/kg, the ship owners then sell the fish at a ranging price from Rp 11,125 to 12,625/kg. Total margins in the whole value chain are Rp 5750 (freezer) and 6625/kg (non-freezer) with the highest portion in the ship owner stage. Therefore, in terms of making profit, the highest profit margin ratio is gained by the ship owner among the value chain players. The high profit margin shows the good achievement for each stakeholder, but when looking at the whole value chain, unbalance profit margin

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Inefficient value chain of catchment fish can be minimized by balancing profit margin ratio on each tier. One of them is to replace the share-fishing system into a lease or rental system so that rental costs incurred depending on the length of rental time and the quantity of fish that fishermen obtained. Moreover, the increasing demand of catchment fish as the functional product is an opportunity and challenge for the stakeholders along the value chain. Nevertheless, the ability to provide appropriate quantity and good quality of products with profitable margins for every stakeholder is challenging. According to Ref. [22], the implementation of efficient strategy is the appropriate strategy for functional product where it focuses on the fulfilment of customer demand at the lowest prices by reducing the total cost of the activity with the largest cost. Since the ship owners have less expenditure, this case study focuses on the reducing cost in the fishermen and trader stages. Fishermen should reduce the procurement cost by using alternative equipment called 'rumpon' to reduce the use of diesel fuel and by joining association to be able to aggregate the needs of procurement cost. However, the government who plays an important role to enhance the efficiency of value chain should provide sustainable assistance and training to the fishermen, tighten supervision over the selling price so that every stakeholder can earn profitable margins, and develop infrastructure to support cold

leads to inefficiency value chain.

**Figure 4.** Value chain of fresh-sea fish.

*4.1.2. Developing strategies of supply chain*

**Figure 3.** The proportion of logistics cost for each logistics activity.

intensity of delivery. On the other hand, procurement accounts for the second largest portion and it is only owned by the fishermen. Procurement cost includes needs for fishing and labour cost which is entirely covered by fishermen. The material handling, maintenance, information and inventory costs have little portion in the logistics cost in which total of those four accounts for less than 25%.

Furthermore, material handling cost is dominated by the ship owners and traders with the cost components including post-fishing cost, inspection cost, depreciation of tools and loss during handling. Post-fishing cost encompasses retribution cost during auction process in the FAF, which is under the responsibility of ship owner and trader as the participants. The maintenance cost of tool and vehicle is dominated by the cost from fishermen, while information cost comprising of communication bill is dominated by traders and ship owners. Inventory cost accounts for the smallest portion because catchment fish is fast moving product so that inventory is not the dominant activity among other logistics activities.

The selling price of catchment fish in the market fluctuates significantly, ranging from Rp 9000 to 14,000/kg in the fishermen stage and Rp 13,000 to 23,000/kg in the trader stage. Based on the current market price, the market price of catchment fish processed by trader is sold at average price Rp 17,125/kg, while catchment fish in the fishermen stage is sold at a price Rp 11,375/kg in average as shown in **Figure 4**. The large gap occurs in the ship owner stage because they get the fish from the share-fishing with the higher portion and spend less operational cost. It is very difficult for the fishermen to get profitable margin since they are responsible for all the operational cost during fishing and share the fishing result with the ship owner. The fishermen play a role as a price taker because they have low bargaining power, while the ship owners have higher bargaining power in the auction process. With the material handling and information cost ranging from Rp 664 to 882/kg, the ship owners then sell the fish at a ranging price from Rp 11,125 to 12,625/kg. Total margins in the whole value chain are Rp 5750 (freezer) and 6625/kg (non-freezer) with the highest portion in the ship owner stage. Therefore, in terms of making profit, the highest profit margin ratio is gained by the ship owner among the value chain players. The high profit margin shows the good achievement for each stakeholder, but when looking at the whole value chain, unbalance profit margin leads to inefficiency value chain.

#### *4.1.2. Developing strategies of supply chain*

intensity of delivery. On the other hand, procurement accounts for the second largest portion and it is only owned by the fishermen. Procurement cost includes needs for fishing and labour cost which is entirely covered by fishermen. The material handling, maintenance, information and inventory costs have little portion in the logistics cost in which total of those four accounts

Furthermore, material handling cost is dominated by the ship owners and traders with the cost components including post-fishing cost, inspection cost, depreciation of tools and loss during handling. Post-fishing cost encompasses retribution cost during auction process in the FAF, which is under the responsibility of ship owner and trader as the participants. The maintenance cost of tool and vehicle is dominated by the cost from fishermen, while information cost comprising of communication bill is dominated by traders and ship owners. Inventory cost accounts for the smallest portion because catchment fish is fast moving product so that

The selling price of catchment fish in the market fluctuates significantly, ranging from Rp 9000 to 14,000/kg in the fishermen stage and Rp 13,000 to 23,000/kg in the trader stage. Based on the current market price, the market price of catchment fish processed by trader is sold at average price Rp 17,125/kg, while catchment fish in the fishermen stage is sold at a price Rp 11,375/kg in average as shown in **Figure 4**. The large gap occurs in the ship owner stage because they get the fish from the share-fishing with the higher portion and spend less operational cost. It is very difficult for the fishermen to get profitable margin since they are responsible for all the operational cost during fishing and share the fishing result with the ship owner. The fishermen play a role as a price taker because they have low bargaining power, while the ship owners have higher bargaining power in the auction process. With the material

inventory is not the dominant activity among other logistics activities.

**Figure 3.** The proportion of logistics cost for each logistics activity.

for less than 25%.

10 Agricultural Value Chain

Inefficient value chain of catchment fish can be minimized by balancing profit margin ratio on each tier. One of them is to replace the share-fishing system into a lease or rental system so that rental costs incurred depending on the length of rental time and the quantity of fish that fishermen obtained. Moreover, the increasing demand of catchment fish as the functional product is an opportunity and challenge for the stakeholders along the value chain. Nevertheless, the ability to provide appropriate quantity and good quality of products with profitable margins for every stakeholder is challenging. According to Ref. [22], the implementation of efficient strategy is the appropriate strategy for functional product where it focuses on the fulfilment of customer demand at the lowest prices by reducing the total cost of the activity with the largest cost. Since the ship owners have less expenditure, this case study focuses on the reducing cost in the fishermen and trader stages. Fishermen should reduce the procurement cost by using alternative equipment called 'rumpon' to reduce the use of diesel fuel and by joining association to be able to aggregate the needs of procurement cost. However, the government who plays an important role to enhance the efficiency of value chain should provide sustainable assistance and training to the fishermen, tighten supervision over the selling price so that every stakeholder can earn profitable margins, and develop infrastructure to support cold

**Figure 4.** Value chain of fresh-sea fish.

chain system through the provision of cold storage that is affordable for fishermen. By using cold storage, fishermen can get higher quality of product and higher selling price. On the other hand, trader should consider the Full Truck Load to minimize the transportation cost per unit.

### **4.2. Case of fresh vegetables**

Vegetables are one of the valuable horticultural commodities in Indonesia. The national vegetables production increases every year which should be followed by good quality of vegetables. Due to the perishable characteristics of vegetables, they need special handling throughout the supply chain. This research was conducted in the centre of vegetables in the highland area which is the Magelang region, Central Java and the Sleman region, Yogyakarta. Three main tiers involved in the distribution of fresh vegetables are shown in **Figure 5**.

As it is classified as fast moving product and having perishable characteristics, vegetables are not necessary to be kept in the long period of time and it leads to the low inventory cost along the supply chain. This research revealed that inventory cost of fresh vegetables accounted for 1.22% of total logistics cost which is equivalent to Rp 28.58/kg. Inventory cost comprises of holding cost, labour cost and losses during inventory. In addition, **Figure 5** shows the increasing portion of inventory cost along the supply chain. Farmer accounts for only 2.14% of the whole inventory cost, while trader has the largest portion of inventory cost in the whole supply chain. The holding cost such as electricity and space rental in trader is higher than in collector and farmer due to the larger number of products being handled by trader. The storage period also increases as the supply goes to customer since collector and trader collect fresh vegetables from more than one supplier before distribute to their customer.

In order to enhance this value chain, both trader and collector should control their inventory activity by strengthening the integration and communication in terms of quantity demand among the stakeholder. Therefore, the inventory can be efficiently managed.

(CLT > SLT + CT + DTC) as characterized by predictable demand and relatively the consumer preferences change rapidly as shown in **Table 1**. This type of supply chain is reliable and predictable in terms of delivery quantities. In this case, supplier has a strong bargaining power, because they have many suppliers (more than 50 farmers). Approximately 80% of the varieties are non-unique plant such as cabbage, squash, leeks, pack coy, chicory, tomatoes and

Notes: CLT: customer order-to-delivery lead-time; SLT: supplier order-to-fulfilment lead-time; CT: firm's cycle time;

**Vegetables Lead-time (hours) Supply chain** 

Broccoli 12 6 6 6 Unpredicted

Squash 48 4 6 6 Scallions 12 2 2 6 Pakcoy 12 2 2 4 Chicory 12 4 4 4 Tomato 24 4 6 6 Small tomato 24 4 6 6

Green lettuce 8 4 4 4 Lettuce 8 4 4 4 Beetroot 12 8 6 6 Red spinach 8 4 4 4 Kailan 8 4 4 4

Cabbage 16 4 3 6 Predicted demand,

**characteristics**

fluctuative consumer's demand, reliable supply chain, predicted delivered products' quantity, strong bargaining power, many suppliers

demand, stable consumers' demand, unreliable supply chain, unpredicted delivered products' quantity, weak bargaining power, few suppliers

**management CLT CT SLT DLT**

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**Inventory** 

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Speculation

Postponement

Meanwhile, 20% of the rest (other farmers) grows unique varieties, namely broccoli, lettuce, green lettuce, beetroot, red spinach and kaylan. These vegetables have negative lead time (CLT < SLT + CT + DTC) as indicated by demand level that is difficult to be predicted but relatively occupy stable consumer preferences. The lead time in this supply chain tends unreliable due to the fluctuation in the quantity of delivery. The bargaining power of suppliers is weak

Based on this fact, the most proper inventory management for non-unique vegetables is inventory postponement, while the most proper inventory management for non-unique veg-

During year 2010–2014, aquaculture production showed a positive trends with an increasing reach 23.74%/year on average The positive performance for the value of aquaculture

small cherry tomatoes.

DLT: delivery-to-customer lead-time.

**Table 1.** Management inventory at supplier level.

Non-unique vegetables

Unique vegetables

etables is inventory speculation.

**4.3. Case of aquaculture business**

as it is only supplied by a limited number of farmers.

In other cases, the study of lead time in the inventory management of fresh vegetables was conducted in the Yogyakarta region. The data were collected based on purposive sampling method, followed by in-depth interviews and group discussions to suppliers at each tier. The results from Ref. [15] show that several vegetable varieties have positive lead time

**Figure 5.** The supply chain of fresh vegetables and inventory cost percentage in each tier.

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Notes: CLT: customer order-to-delivery lead-time; SLT: supplier order-to-fulfilment lead-time; CT: firm's cycle time; DLT: delivery-to-customer lead-time.

**Table 1.** Management inventory at supplier level.

chain system through the provision of cold storage that is affordable for fishermen. By using cold storage, fishermen can get higher quality of product and higher selling price. On the other hand, trader should consider the Full Truck Load to minimize the transportation cost per unit.

Vegetables are one of the valuable horticultural commodities in Indonesia. The national vegetables production increases every year which should be followed by good quality of vegetables. Due to the perishable characteristics of vegetables, they need special handling throughout the supply chain. This research was conducted in the centre of vegetables in the highland area which is the Magelang region, Central Java and the Sleman region, Yogyakarta. Three main

As it is classified as fast moving product and having perishable characteristics, vegetables are not necessary to be kept in the long period of time and it leads to the low inventory cost along the supply chain. This research revealed that inventory cost of fresh vegetables accounted for 1.22% of total logistics cost which is equivalent to Rp 28.58/kg. Inventory cost comprises of holding cost, labour cost and losses during inventory. In addition, **Figure 5** shows the increasing portion of inventory cost along the supply chain. Farmer accounts for only 2.14% of the whole inventory cost, while trader has the largest portion of inventory cost in the whole supply chain. The holding cost such as electricity and space rental in trader is higher than in collector and farmer due to the larger number of products being handled by trader. The storage period also increases as the supply goes to customer since collector and trader collect fresh vegetables from more than one supplier before distribute to their

In order to enhance this value chain, both trader and collector should control their inventory activity by strengthening the integration and communication in terms of quantity demand

In other cases, the study of lead time in the inventory management of fresh vegetables was conducted in the Yogyakarta region. The data were collected based on purposive sampling method, followed by in-depth interviews and group discussions to suppliers at each tier. The results from Ref. [15] show that several vegetable varieties have positive lead time

among the stakeholder. Therefore, the inventory can be efficiently managed.

**Figure 5.** The supply chain of fresh vegetables and inventory cost percentage in each tier.

tiers involved in the distribution of fresh vegetables are shown in **Figure 5**.

**4.2. Case of fresh vegetables**

12 Agricultural Value Chain

customer.

(CLT > SLT + CT + DTC) as characterized by predictable demand and relatively the consumer preferences change rapidly as shown in **Table 1**. This type of supply chain is reliable and predictable in terms of delivery quantities. In this case, supplier has a strong bargaining power, because they have many suppliers (more than 50 farmers). Approximately 80% of the varieties are non-unique plant such as cabbage, squash, leeks, pack coy, chicory, tomatoes and small cherry tomatoes.

Meanwhile, 20% of the rest (other farmers) grows unique varieties, namely broccoli, lettuce, green lettuce, beetroot, red spinach and kaylan. These vegetables have negative lead time (CLT < SLT + CT + DTC) as indicated by demand level that is difficult to be predicted but relatively occupy stable consumer preferences. The lead time in this supply chain tends unreliable due to the fluctuation in the quantity of delivery. The bargaining power of suppliers is weak as it is only supplied by a limited number of farmers.

Based on this fact, the most proper inventory management for non-unique vegetables is inventory postponement, while the most proper inventory management for non-unique vegetables is inventory speculation.

#### **4.3. Case of aquaculture business**

During year 2010–2014, aquaculture production showed a positive trends with an increasing reach 23.74%/year on average The positive performance for the value of aquaculture production also increases in the same period with an average increase of 16.12%/year. Meanwhile, demand from Java Island will continue to grow because per capita consumption of fish in Java Island is still below per capita consumption outside Java Island. This case study was conducted in the Sleman region and the Klaten region, while Tilapia (*Oreochromis niloticus*) and Catfish (*Siluriformes*) are in the focus of this case study.

The main stakeholders in supply chain of aquaculture consist of six tiers including fish larvae producer, spreader, enlarger, wholesaler (collectors), retailer and consumer. In a supply chain, the amount of value added provided by each tier could be different because of their different respective functions in the activities of the supply chain running. In the analysis of logistics cost, Ref. [22] revealed that procurement activity is accounted for the highest portion in the total logistics cost of Tilapia and Catfish in aquaculture business. Procurement activity as the initial activity in this aquaculture business is very important because it will determine the success of the rest of the activities in this business. Good initial activity leads to the good result and yield. In addition, the second highest cost is material handling.

Margin value is obtained from the difference between selling price and purchasing price. **Figure 6** shows that the highest margin occurs in the spreader stage, while the lowest one is in the enlarger stage. Spreader gives value added by producing Tilapia with the size equal to 50–60 pcs/kg. Different margins between the Sleman region and the Klaten region are influenced by differences in the production yield of Tilapia fish in each area which may affect the selling price of the fish. Moreover, distribution margin for Catfish between the Sleman and Klaten regions is not significantly different (**Figure 7**) due to the similarity of commodity price in both areas. Similar with Tilapia fish, the highest margin occurs in the spreader stage. On the other hand, the lowest margin in the value chain of Catfish is in the collector stage.

in the Sleman region. It is because the water temperature in the Klaten region is lower than the Sleman region, while the spawning process takes the warm water with the temperature around 25°C. This results in the higher use of resources in the Klaten region which leads to

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The increasing production of aquaculture followed by the demand of aquaculture is an opportunity for aquaculture business to rapidly grow. To enhance its profitability and sustainability supply, improvement should be taken into the stakeholder's consideration. Based on the value chain analysis aforementioned, the fish larvae producer should increase the quality of spawning process and encourage the use of feed alternative with the similar quality but with lower cost. As the second tier, spreader should enhance the ability to choose the good fish seed as well as choose the supplier who is able to provide good quality of fish seed. On the other hand, vertical integration with the fish larvae producer may also lead to the high availability of raw material. Next, enlarger should develop feed alternative as a side component of main feed with the lower cost and do the push-based strategy. They should also buy in the large quantity to the big organizations or suppliers in order to get lower price or discount. Employing pull-based strategy, finding many suppliers to maintain the inventory and enhancing sales volume are the strategies that should be conducted by the wholesalers [23].

In Indonesia, there are many long supply chains where the role of intermediaries becomes quite dominant. In many cases, the added value given to the product in each tier of supply chain is relatively minimal, so that the increase in prices is not followed by the value added of the product. This has led to a considerable gap between the selling prices received by the initial suppliers (farmer or fishermen) and purchasing price paid by the consumer. In addition, the integration between stakeholders has not been applied so that the profit is not optimal as a whole. Currently, creating added value can be achieved by understanding the regional

the higher cost to get the same quantity of yield (see **Figure 6**).

**Figure 7.** The value chain of Catfish in Sleman and Klaten region.

**5. Concluding remarks**

resource, connecting them and disseminate the result.

From the calculation of profit margin, different profit margins earned by each tier are occurred as shown in **Figures 6** and **7**. For aquaculture of Tilapia and Catfish, spreader earns for the highest profit margin among all tiers in both the Sleman and Klaten regions, while wholesaler or collector earns for the smallest. Moreover, profit margin obtained by Tilapia fish larvae producer in the Klaten region is smaller than the profit margin of Tilapia fish larvae producer

**Figure 6.** The value chain of Tilapia fish in the Sleman and Klaten regions.

Agriculture Value Chain as an Alternative to Increase Better Income's Distribution: The Case... http://dx.doi.org/10.5772/intechopen.70141 15

**Figure 7.** The value chain of Catfish in Sleman and Klaten region.

production also increases in the same period with an average increase of 16.12%/year. Meanwhile, demand from Java Island will continue to grow because per capita consumption of fish in Java Island is still below per capita consumption outside Java Island. This case study was conducted in the Sleman region and the Klaten region, while Tilapia (*Oreochromis niloti-*

The main stakeholders in supply chain of aquaculture consist of six tiers including fish larvae producer, spreader, enlarger, wholesaler (collectors), retailer and consumer. In a supply chain, the amount of value added provided by each tier could be different because of their different respective functions in the activities of the supply chain running. In the analysis of logistics cost, Ref. [22] revealed that procurement activity is accounted for the highest portion in the total logistics cost of Tilapia and Catfish in aquaculture business. Procurement activity as the initial activity in this aquaculture business is very important because it will determine the success of the rest of the activities in this business. Good initial activity leads to the good

Margin value is obtained from the difference between selling price and purchasing price. **Figure 6** shows that the highest margin occurs in the spreader stage, while the lowest one is in the enlarger stage. Spreader gives value added by producing Tilapia with the size equal to 50–60 pcs/kg. Different margins between the Sleman region and the Klaten region are influenced by differences in the production yield of Tilapia fish in each area which may affect the selling price of the fish. Moreover, distribution margin for Catfish between the Sleman and Klaten regions is not significantly different (**Figure 7**) due to the similarity of commodity price in both areas. Similar with Tilapia fish, the highest margin occurs in the spreader stage. On the

From the calculation of profit margin, different profit margins earned by each tier are occurred as shown in **Figures 6** and **7**. For aquaculture of Tilapia and Catfish, spreader earns for the highest profit margin among all tiers in both the Sleman and Klaten regions, while wholesaler or collector earns for the smallest. Moreover, profit margin obtained by Tilapia fish larvae producer in the Klaten region is smaller than the profit margin of Tilapia fish larvae producer

other hand, the lowest margin in the value chain of Catfish is in the collector stage.

**Figure 6.** The value chain of Tilapia fish in the Sleman and Klaten regions.

*cus*) and Catfish (*Siluriformes*) are in the focus of this case study.

14 Agricultural Value Chain

result and yield. In addition, the second highest cost is material handling.

in the Sleman region. It is because the water temperature in the Klaten region is lower than the Sleman region, while the spawning process takes the warm water with the temperature around 25°C. This results in the higher use of resources in the Klaten region which leads to the higher cost to get the same quantity of yield (see **Figure 6**).

The increasing production of aquaculture followed by the demand of aquaculture is an opportunity for aquaculture business to rapidly grow. To enhance its profitability and sustainability supply, improvement should be taken into the stakeholder's consideration. Based on the value chain analysis aforementioned, the fish larvae producer should increase the quality of spawning process and encourage the use of feed alternative with the similar quality but with lower cost. As the second tier, spreader should enhance the ability to choose the good fish seed as well as choose the supplier who is able to provide good quality of fish seed. On the other hand, vertical integration with the fish larvae producer may also lead to the high availability of raw material. Next, enlarger should develop feed alternative as a side component of main feed with the lower cost and do the push-based strategy. They should also buy in the large quantity to the big organizations or suppliers in order to get lower price or discount. Employing pull-based strategy, finding many suppliers to maintain the inventory and enhancing sales volume are the strategies that should be conducted by the wholesalers [23].

### **5. Concluding remarks**

In Indonesia, there are many long supply chains where the role of intermediaries becomes quite dominant. In many cases, the added value given to the product in each tier of supply chain is relatively minimal, so that the increase in prices is not followed by the value added of the product. This has led to a considerable gap between the selling prices received by the initial suppliers (farmer or fishermen) and purchasing price paid by the consumer. In addition, the integration between stakeholders has not been applied so that the profit is not optimal as a whole. Currently, creating added value can be achieved by understanding the regional resource, connecting them and disseminate the result.

In several aforementioned case studies, stakeholders who gain the highest profit are the intermediary parties with relatively low operational costs or logistics costs. Low bargaining power of initial supplier (farmer or fishermen) is still a fundamental obstacle why the profit earned is sometimes not worth the effort that has been nurtured. In addition, the additional charges given to the initial supplier are sometimes too big, causing the smaller profit earned. Inequalities in profit among stakeholders show the inefficiency of supply chain. Furthermore, value chain analysis can be performed to determine which activities classified into core and support activities. Analysis using the cost parameters enables the determination of level income distribution in a commodity. The analysis can be used to formulate an improvement strategy. In this case, the government also needs to play an active role in controlling and mentoring. Therefore, the distribution of profit and the income gap among the stakeholders in a particular commodity is not too significant.

[3] Pearce JA, Robinson RB. Strategic Management: Formulation, Implementation, and Control. 11th ed. Boston: McGraw-Hill Higher Education; 2009. p. 928. DOI: 0071263756,

Agriculture Value Chain as an Alternative to Increase Better Income's Distribution: The Case...

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17

[4] Asian Development Bank. Evaluation Knowledge Study: Support for Agricultural Value Chain Development Report [Internet]. 2012. Available from: https://www.adb. org/sites/default/files/evaluation-document/35898/files/eks-agriculturalvaluechain.pdf

[5] De Janvry A, Sadoulet E. Achieving success in rural development: Toward implementation of an integral approach. Agricultural Economics. 2005;**32**(s1):75-89. DOI:

[6] Daviron B, Gibbon P. Global commodity Chains and African export agriculture. Journal

[7] Reardon T, Timmer P, Berdegue J. The rapid rise of suoermarkets in developing countries: Induced organizational, institutional and technological change. Agrifood System.

[8] Porter ME. The Competitive Advantage of Nations. New York: Free Press; 1990. p. 896.

[9] Trienekens JH. Agricultural value Chains in developing countries a framework for analysis. International Food and Agribusiness Management Review. 2011;**14**(2):51-82

[10] Guritno AD. Supply chain risk management: An approach to reduce the agricultural product's logistics costs. In: International Conference on Agro-industry (ICoA) 2015; 7-9November 2015; Japan. UEA: KnowledgeE; 2015. pp. 6-11. DOI: 10.18502/kls.v3i3.397

[11] Grant RM. Contemporary Strategy Analysis. 7th ed. United Kingdom: John Wiley &

[12] Waters CDJ. Supply Chain Risk Management: Vulnerability and Resilience in Logistics. United Kingdom: Kogan Page Publisher; 2007. p. 256. DOI: 0749448547, 9780749448547

[13] Lailossa G. W. The new paradigm of cold chain management systems and it's logistics on Tuna fishery sector in Indonesia. AACL Bioflux. 2015;**8**(3):381-389. DOI: 10.1108/

[14] Pishvaee MS, Basiri H, Sajadieh MS. National logistics cost. In: Farahani RZ, Asgari N, Davarzani H, editors. Supply Chain and Logistics in National, International and Governmental Environment. Berlin: Physica-Verlag HD; 2009. p. 4. DOI: 10.1007/

[15] Guritno AD, Fujianti R, Kusumasari D. Assessment of the supply chain factors and classification of inventory management in supplier's level of fresh vegetables. Agriculture

[16] Gumus T, Guneri F. Multi-echelon inventory management in supply chain with uncertain demand and lead time: Literature review from an operational research perspective.

of Agrarian Change. 2002;**2**(2):137-161. DOI: 10.1111/1471-0366.00028

9780071263757

2004;**1**(2):168-183

DOI: 0684841479

09600030310503334

978-3-7908-2156-7

[Accessed: 28 January 2017]

10.1111/j.0169-5150.2004.00015.x

Sons Ltd; 2010. p. 516. DOI: 978-0-470-95377-8

and Agricultural Science Procedia. 2015;**3**:51-55

### **Acknowledgements**

Many thanks address to Universitas Gadjah Mada which has been willing to fund this research through PUPT scheme (University Research Excellence) term 2015–2016. A sincere thank you also goes to Ms. Megita Ryanjani Tanuputri who has spent her time to do data processing, analysis and preparing this manuscript. Also, thank you to Ms. Nur Rahma Laila, Mr. Henry Putra Pradana, and Ms. Mutia Laraswati who have enumerated the data and jointly conducted a field survey.

### **Author details**

Adi Djoko Guritno

Address all correspondence to: adidjoko@tip-ugm.org

Department of Agroindustrial Technology, Faculty of Agricultural Technology, Universitas Gadjah Mada, Indonesia

### **References**


[3] Pearce JA, Robinson RB. Strategic Management: Formulation, Implementation, and Control. 11th ed. Boston: McGraw-Hill Higher Education; 2009. p. 928. DOI: 0071263756, 9780071263757

In several aforementioned case studies, stakeholders who gain the highest profit are the intermediary parties with relatively low operational costs or logistics costs. Low bargaining power of initial supplier (farmer or fishermen) is still a fundamental obstacle why the profit earned is sometimes not worth the effort that has been nurtured. In addition, the additional charges given to the initial supplier are sometimes too big, causing the smaller profit earned. Inequalities in profit among stakeholders show the inefficiency of supply chain. Furthermore, value chain analysis can be performed to determine which activities classified into core and support activities. Analysis using the cost parameters enables the determination of level income distribution in a commodity. The analysis can be used to formulate an improvement strategy. In this case, the government also needs to play an active role in controlling and mentoring. Therefore, the distribution of profit and the income gap among the stakeholders in a

Many thanks address to Universitas Gadjah Mada which has been willing to fund this research through PUPT scheme (University Research Excellence) term 2015–2016. A sincere thank you also goes to Ms. Megita Ryanjani Tanuputri who has spent her time to do data processing, analysis and preparing this manuscript. Also, thank you to Ms. Nur Rahma Laila, Mr. Henry Putra Pradana, and Ms. Mutia Laraswati who have enumerated the data and jointly

Department of Agroindustrial Technology, Faculty of Agricultural Technology, Universitas

[1] World Bank. World Development Report 2008: Agriculture for Development [Internet]. 2008. Available from: http://documents.worldbank.org/curated/en/587251468175472382/ World-development-report-2008-agriculture-for-development [Accessed: 17-February-2017]

[2] Directorate General of Horticulture. The Production of Vegetablesin Indonesia [Internet]. 2016 [Updated: 2016-08-16]. Available from: http://www.pertanian.go.id/ Data5tahun/pdf-HORTI2016/2-Produksi%20Nasional%20Sayuran.pdf [Accessed: 28

particular commodity is not too significant.

Address all correspondence to: adidjoko@tip-ugm.org

**Acknowledgements**

16 Agricultural Value Chain

conducted a field survey.

**Author details**

Adi Djoko Guritno

**References**

Gadjah Mada, Indonesia

January 2017]


Proceedings of the Institution of Mechanical Engineers, Part B: Journal of Engineering Manufacture. 2007;**221**:1553-1570

**Chapter 2**

**Provisional chapter**

**SamenMarkt®, a Proposal for Restoring Trust in the**

**SamenMarkt®, a Proposal for Restoring Trust in the** 

Olaf van Kooten, Caroline Nevejan, Frances Brazier,

Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

Frances Brazier, Michel Oey and Coen Hubers

**System Technology**

**System Technology**

Michel Oey and Coen Hubers

**Abstract**

**1. Introduction**

http://dx.doi.org/10.5772/intechopen.70140

agent-based simulation, big data

Olaf van Kooten, Caroline Nevejan,

**Horticultural Fresh Food Market by Using Multi-Agent**

In the horticultural fresh food supply chain network in the Netherlands, a crisis is emerging. The market is out of balance and many growers are facing bankruptcy, in the period of 2011–2013, 50% of the growers were not able to pay interest and redemption. Trust between participants in the supply chain network has decreased. This chapter presents the currently not established and identifies design requirements for new systems to address this challenge and provide directions for possible improvement. As a result, this chapter introduces the concept of SamenMarkt®, a participatory system in which multi-agent system technology enables distributed price negotiation, distribution and communication between producers, retailers and consumers. A SWOT analysis of the concept of SamenMarkt® is provided together with a research and development plan in which simulation and emulation create the basis for stakeholder- and participant involvement in the design process of a distributed digital market place. Further research aims to study how SamenMarkt® can provide a solution space for the emerging global food crises. At present, we are using agent-based modelling to simulate the present market and scenarios. The next step will be to build the actual

agent-based platform for real-time negotiations and business intelligence.

**Horticultural Fresh Food Market by Using Multi-Agent** 

DOI: 10.5772/intechopen.70140

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution,

© 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use,

distribution, and reproduction in any medium, provided the original work is properly cited.

and reproduction in any medium, provided the original work is properly cited.

During the past few decades, Dutch greenhouse vegetable supply chains have been in constant transition. Up to 1996, growers collectively owned their local auction cooperatives. The

**Keywords:** market analysis, trust conditions, horticultural fresh food supply chain networks,


**Provisional chapter**

### **SamenMarkt®, a Proposal for Restoring Trust in the Horticultural Fresh Food Market by Using Multi-Agent System Technology Horticultural Fresh Food Market by Using Multi-Agent System Technology**

**SamenMarkt®, a Proposal for Restoring Trust in the** 

DOI: 10.5772/intechopen.70140

Olaf van Kooten, Caroline Nevejan, Frances Brazier, Michel Oey and Coen Hubers Frances Brazier, Michel Oey and Coen Hubers Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70140

Olaf van Kooten, Caroline Nevejan,

#### **Abstract**

Proceedings of the Institution of Mechanical Engineers, Part B: Journal of Engineering

[17] Lailossa GW. The new paradigm of cold chain management systems and it's logistics on

[18] Wallin C, Rungtusanatham MJ, Rabinovich E. What is the "Right" inventory management approach for a purchased item? International Journal of Operations and Production

[19] Statistics Indonesia. Production of Fresh Sea-Fish According to Province and Sub-sector (ton) on 2000 – 2013 [Internet]. Available from: www.bps.go.id [Accessed: 19-April-2016]

[20] Guritno AD, Suwondo E. An application of data envelopment analysis to determine the efficiency level of the fish auction facility in coastal area, java Island. In: Proceeding of 1st International Conference on Tropical Agriculture (ICTA 2016); 25-26 October 2016;

[21] FAO. Freezing and Refrigerated Storage in Fisheries [Internet]. Available from: http:// www.fao.org/3/contents/19deb470-de18-5d73-92ce-a2caefdac8ea/v3630e08.htm

[22] Fisher ML. What is the right supply chain for your products? Harvard Business Review.

[23] Guritno AD. Logistics cost structure analysis for the development of supply chain strategies on aquaculture business. In: Proceeding of The Asian Business and Management Conference (ABMC); 13-15 October 2016; Japan. Japan: The International Academic

tuna fishery sector in Indonesia. AACL Bioflux. 2015;**8**:381-389

Management. 2006;**26**(1):50-68. DOI: 10.1108/01443570610637012

Yogyakarta. New York: Springer International Publishing; 2017

Manufacture. 2007;**221**:1553-1570

18 Agricultural Value Chain

[Accessed: 20 February 2017]

Forum (IAFOR); 2016. p. 29-34

1997;**75**(2):105-116

In the horticultural fresh food supply chain network in the Netherlands, a crisis is emerging. The market is out of balance and many growers are facing bankruptcy, in the period of 2011–2013, 50% of the growers were not able to pay interest and redemption. Trust between participants in the supply chain network has decreased. This chapter presents the currently not established and identifies design requirements for new systems to address this challenge and provide directions for possible improvement. As a result, this chapter introduces the concept of SamenMarkt®, a participatory system in which multi-agent system technology enables distributed price negotiation, distribution and communication between producers, retailers and consumers. A SWOT analysis of the concept of SamenMarkt® is provided together with a research and development plan in which simulation and emulation create the basis for stakeholder- and participant involvement in the design process of a distributed digital market place. Further research aims to study how SamenMarkt® can provide a solution space for the emerging global food crises. At present, we are using agent-based modelling to simulate the present market and scenarios. The next step will be to build the actual agent-based platform for real-time negotiations and business intelligence.

**Keywords:** market analysis, trust conditions, horticultural fresh food supply chain networks, agent-based simulation, big data

### **1. Introduction**

During the past few decades, Dutch greenhouse vegetable supply chains have been in constant transition. Up to 1996, growers collectively owned their local auction cooperatives. The

Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons

auction clock determined the price received for produce per day, all of which, by joint agreement, went 'through the clock' as it was termed. These collectives, legal cooperative companies, merged over time into larger regional collectives primarily to improve efficiency, their position in the market and reduce costs. However, as the market changed, so did the need for decentralized auctions. In 1996 all but one (i.e. Veiling ZON) of these collectives, nine in total, merged into one single cooperative organization, Verenigde Tuinbouwveiling Nederland (VTN, transl. United Horticultural Auction Netherlands) to provide produce on a weekly basis as requested by retail. VTN's commercial subsidiary, The Greenery BV, represented the growers. With nearly 90% market share of the Dutch supply, The Greenery was initially fully confident that they would become the foremost supply chain partner in Dutch vegetables, with direct sales to retail without in between external trade parties through acquiring ownership of three major wholesale companies in 1998. Over the years, however, the market share of The Greenery has dropped from 90% to less than 20% for a number of the product groups.

need to be a re-establishment of trust among stakeholders in the supply chain. Trust can only be re-established if all stakeholders are included in the transformation process to design sus-

SamenMarkt®, a Proposal for Restoring Trust in the Horticultural Fresh Food Market by Using...

http://dx.doi.org/10.5772/intechopen.70140

21

This chapter introduces the concept of SamenMarkt®, a distributed market concept designed to re-establish trust between stakeholders in the food supply network using a multi-agent system-based Internet technology to coordinate demand and supply, supporting multiple distributed market mechanisms to support the production of horticultural fresh food in rela-

Section 2 presents the current supply chain dynamics using the YUTPA (you in unity of time, place and action) framework to identify requirements for the SamenMarkt® platform. The YUTPA framework is used to identify factors of trust in relation to survival and well-being. Section 3 describes the strengths of a multi-agent system approach to system design for distributed markets within a supply chain. Section 4 presents the concept of SamenMarkt® in more detail. Section 5 provides an initial impression of the research design and roadmap for

The lack of trust between partners in the supply chain currently prohibits collaboration between stakeholders to develop a shared roadmap for transformation towards a more sustainable organization of the horticultural fresh food market. This chapter presents a YUTPA analysis (defined as 'being with You in Unity of Time, Place and Action') of how trust is established in relation to well-being and survival for each stakeholder in the market [3]. The YUTPA framework distinguishes four dimensions of place, time, relation and action, each with their own different factors of significance. In a specific situation, a factor has specific values. The values are determined in discussions with stakeholders by posing questions on the importance and value of each factor in specific situations [4]. As a result, trade-offs for establishing trust are translated into design requirements, in this case for

YUTPA analyses are made for each of the main stakeholders in the horticultural fresh food market namely: the growers, the cooperatives, the traders, retailers and the consumers [6]. The trade-offs for trust in four dimensions of place, time, action and relation for different stakeholders (grower, trader, retailer and consumer) in the horticultural fresh food supply chain network are discussed below. The requirements for SamenMarkt® are presented in italics.

• **Body sense**: From consumers' perspective, the quality of food affects the experience of taste, the amount of household waste [7], as well as the contribution of food to their health

tion to price negotiation, provisioning and distribution of the produced products.

change. Section 6 discusses strengths and weaknesses of the SamenMarkt® proposal.

**2. Analysing the current crisis using the YUTPA framework for identifying factors of trust in relation to survival and well-being**

SamenMarkt® [5].

**2.1. Place**

tainable survival and well-being for each of the stakeholders.

In the transition to The Greenery, the choice was made to change the market mechanisms significantly. The known and trusted auction mechanism, the clock, was replaced by a much less transparent mechanism, namely negotiation of deals directly with retailers, negotiated by traders employed by The Greenery. Growers used to the auction clock as a fair and just pricing mechanism did not trust the prices set by The Greenery's traders. Within the first few years, growers started to leave The Greenery. They set up new cooperative organizations to organize the sales of their produce. Today instead of the two organizations that were active in 1996, Veiling ZON and The Greenery, there are now six cooperative organizations that represent the growers.

Over the same period of time, there has been consolidation and expansion of a small number of the growers' companies. The biggest grower in 1996 had roughly 10 ha of glasshouse, whereas today a small number of growers have well over 50 ha. The increase in scale requires significant financial investments, most often involving loans from local banks. More volume means more profit.

The growth was possible due to the potential of the markets in the upcoming Central European countries, but the credit crises in 2008 changed the market almost overnight.

As the prices decreased, an increasing number of growers were faced with serious financial problems for which the banks provided little or no support. In addition, traders introduced unprecedented volatility into the market by speculation, negotiating prices for virtual produce, creating the impression of 'over-supply' negatively influencing price. Ultimately, this had led to a situation in 2015, in which more than 65% of the growers are struggling to survive [1, 2].

Since 2008, various initiatives have been undertaken to transform the supply chain into a more rational market orientation. The financial constraints, however, have strongly influenced growers' flexibility, creativity, and entrepreneurship. Their primary focus is price. The same holds for other partners in the supply chain: cooperatives and traders. There is deep mistrust between these parties, making it almost impossible for them to be able to create a roadmap for change for their future. To survive the horticultural fresh food sector, there will need to be a re-establishment of trust among stakeholders in the supply chain. Trust can only be re-established if all stakeholders are included in the transformation process to design sustainable survival and well-being for each of the stakeholders.

This chapter introduces the concept of SamenMarkt®, a distributed market concept designed to re-establish trust between stakeholders in the food supply network using a multi-agent system-based Internet technology to coordinate demand and supply, supporting multiple distributed market mechanisms to support the production of horticultural fresh food in relation to price negotiation, provisioning and distribution of the produced products.

Section 2 presents the current supply chain dynamics using the YUTPA (you in unity of time, place and action) framework to identify requirements for the SamenMarkt® platform. The YUTPA framework is used to identify factors of trust in relation to survival and well-being. Section 3 describes the strengths of a multi-agent system approach to system design for distributed markets within a supply chain. Section 4 presents the concept of SamenMarkt® in more detail. Section 5 provides an initial impression of the research design and roadmap for change. Section 6 discusses strengths and weaknesses of the SamenMarkt® proposal.

### **2. Analysing the current crisis using the YUTPA framework for identifying factors of trust in relation to survival and well-being**

The lack of trust between partners in the supply chain currently prohibits collaboration between stakeholders to develop a shared roadmap for transformation towards a more sustainable organization of the horticultural fresh food market. This chapter presents a YUTPA analysis (defined as 'being with You in Unity of Time, Place and Action') of how trust is established in relation to well-being and survival for each stakeholder in the market [3]. The YUTPA framework distinguishes four dimensions of place, time, relation and action, each with their own different factors of significance. In a specific situation, a factor has specific values. The values are determined in discussions with stakeholders by posing questions on the importance and value of each factor in specific situations [4]. As a result, trade-offs for establishing trust are translated into design requirements, in this case for SamenMarkt® [5].

YUTPA analyses are made for each of the main stakeholders in the horticultural fresh food market namely: the growers, the cooperatives, the traders, retailers and the consumers [6]. The trade-offs for trust in four dimensions of place, time, action and relation for different stakeholders (grower, trader, retailer and consumer) in the horticultural fresh food supply chain network are discussed below. The requirements for SamenMarkt® are presented in italics.

### **2.1. Place**

auction clock determined the price received for produce per day, all of which, by joint agreement, went 'through the clock' as it was termed. These collectives, legal cooperative companies, merged over time into larger regional collectives primarily to improve efficiency, their position in the market and reduce costs. However, as the market changed, so did the need for decentralized auctions. In 1996 all but one (i.e. Veiling ZON) of these collectives, nine in total, merged into one single cooperative organization, Verenigde Tuinbouwveiling Nederland (VTN, transl. United Horticultural Auction Netherlands) to provide produce on a weekly basis as requested by retail. VTN's commercial subsidiary, The Greenery BV, represented the growers. With nearly 90% market share of the Dutch supply, The Greenery was initially fully confident that they would become the foremost supply chain partner in Dutch vegetables, with direct sales to retail without in between external trade parties through acquiring ownership of three major wholesale companies in 1998. Over the years, however, the market share of The Greenery has dropped from 90% to less than 20% for a

In the transition to The Greenery, the choice was made to change the market mechanisms significantly. The known and trusted auction mechanism, the clock, was replaced by a much less transparent mechanism, namely negotiation of deals directly with retailers, negotiated by traders employed by The Greenery. Growers used to the auction clock as a fair and just pricing mechanism did not trust the prices set by The Greenery's traders. Within the first few years, growers started to leave The Greenery. They set up new cooperative organizations to organize the sales of their produce. Today instead of the two organizations that were active in 1996, Veiling ZON and The Greenery, there are now six cooperative organizations that

Over the same period of time, there has been consolidation and expansion of a small number of the growers' companies. The biggest grower in 1996 had roughly 10 ha of glasshouse, whereas today a small number of growers have well over 50 ha. The increase in scale requires significant financial investments, most often involving loans from local banks. More volume

The growth was possible due to the potential of the markets in the upcoming Central European

As the prices decreased, an increasing number of growers were faced with serious financial problems for which the banks provided little or no support. In addition, traders introduced unprecedented volatility into the market by speculation, negotiating prices for virtual produce, creating the impression of 'over-supply' negatively influencing price. Ultimately, this had led to a situation in 2015, in which more than 65% of the growers are struggling to survive [1, 2]. Since 2008, various initiatives have been undertaken to transform the supply chain into a more rational market orientation. The financial constraints, however, have strongly influenced growers' flexibility, creativity, and entrepreneurship. Their primary focus is price. The same holds for other partners in the supply chain: cooperatives and traders. There is deep mistrust between these parties, making it almost impossible for them to be able to create a roadmap for change for their future. To survive the horticultural fresh food sector, there will

countries, but the credit crises in 2008 changed the market almost overnight.

number of the product groups.

20 Agricultural Value Chain

represent the growers.

means more profit.

• **Body sense**: From consumers' perspective, the quality of food affects the experience of taste, the amount of household waste [7], as well as the contribution of food to their health [8]. From growers' perspective, there is a direct relation between the quality of the food and their personal effort. Many growers work long days and are unsure of the quality of their produce till the very last moment. In addition, they do not know the price for which they will be able to sell their produce, creating uncertainty and stress. Traders and retailers do not have a direct physical relation to the horticultural fresh food produce. They strive for the best quality at the lowest possible price.

*SamenMarkt*® *needs to offer more agency to growers in the supply chain network. Growers themselves need to be prepared and facilitated to this purpose. Consumer participation is carefully monitored by retail organizations to anticipate behaviour on the basis of previous buying behaviour. Consumer agency, including awareness and responsibility, can be ameliorated. Traders and retailers determine price. They need to provide more transparency in what they do, the prices they make, the arguments* 

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23

• **Duration of engagement**: For retailers and traders, the duration of engagement is very different to the duration of engagement of the growers and to the duration of the engagement of the consumers. Currently, as the produce travels through the supply chain network, engagement stops when it enters a next step in the supply chain network, i.e. as the result of change of ownership. Growers have no insight into what happens after a trader has bought the goods. Retailers are unaware of what growers do; consumers are unaware of how quality relates to price. Duration of engagement of one stakeholder in the supply chain network stops when the next stakeholder takes over. Only the produce 'knows' what happens. For the traders on the short term, this lack of transparency offers opportunities for great bargains. On the long term, this lack of transparency, due to an impaired market insight potentially erodes the mechanism of supply and demand undermining the present production system of the sector. As a result, the Netherlands vegetable market might become totally dependent on import [10, 2]. *SamenMarkt*® *needs to allow for different durations of engagement of all stakeholders to prevent the supply chain network becoming a series of broken intervals in which anything can happen and no one is in control. A well-designed duration of engagement between stakeholders allows for feedback, learning* 

• **Integrating rhythm**: In a supply chain network, rhythm in interaction between the different stakeholders is crucial for success. Such rhythm can be orchestrated for different reasons. The rhythm in the current horticultural fresh food supply chain network is defined by retail's demand for 'pallets' of produce [7]. Traders seek trailers, inside the Netherlands or outside. Growers have a small window within which they option to determine when to place their products on the market, when to make the products available for which price. The longer they wait in a week, the lower or higher the prices may become. Consumers are often completely unaware of how produce comes to the shelves in the supermarket. They demand good quality and divers products for little money throughout the whole year [11], where a few years ago consumers knew the season of specific vegetables and aware of the character of harvests. Also, consumer behaviour is only measured by data of buying and not by qualitative research about quality of food, ways of producing food [12]. The rising economic significance of biological food produce indicates that consumers are sensitive to these issues. *SamenMarkt*® *needs to facilitate alternative ways for integrating rhythm in the supply chain network. New ways of information sharing between all stakeholders in the supply chain network can create novel ways of establishing such rhythms. In such novel ways, autonomy of each stakeholder, as well as inter-*

*they use and the qualities they deliver*.

*curves and adaptation and as such increases trust*.

*dependency between stakeholders, needs to be facilitated*.

**2.2. Time**

*SamenMarkt*® *needs to represent the physicality of the horticultural fresh food market and to address the sense of quality of the products*.

• **Emotional space**: Growers are proud of their companies. Their physical location demands continual attention with many factors of uncertainty to the value of their work (weather, quality, prices and timing). The emotional space is defined by uncertainty on the one side and pride and autonomy on the other side. For traders, the emotional space is defined in a business environment in which all strive to win and get better quality for less money. It is a 'game-environment' where results of activities are only measured in financial gain. Some retailers, like the growers, are proud of their business. However, the vast majority of retail consists of supermarkets in which marketing and management all strive for efficient and successful business. The main driver for retailers is the necessity to have all products with the proper specifications available every day of the year, no matter how high the demand is, at the lowest price or at most the same price the competitor is paying. For consumers, the emotional space is defined by the availability of products, the price, the appearance, the experience of shopping, the conformity with their life style and the experience of taste.

*SamenMarkt*® *must contribute to a more balanced and relaxed climate in the supply chain network by taking away uncertainties and strengthening ties within the supply chain network. Strengthening ties create understanding for other stakeholders' positions and increases awareness of interdependencies in the supply chain network. Individual acceleration needs to be tempered by the context of the whole network*.

• **Environmental impact**: For growers, a sustainable environmental impact is very important. It defines the value and quality of their products. The weather, the land, fertility and possible pollution are all factors of importance to growers. Traders, retailers and consumers are rarely confronted with environmental impact. They expect the grower to deal with these aspects.

### *SamenMarkt*® *should offer insight and respect for the growers' practice in dealing with environmental impact*.

• **Situated agency**: In the current horticultural fresh food market in the Netherlands, it seems that only the traders and the retailers have the sole power to influence the supply chain network [9]. They rule negotiation processes and are free, for example, to create virtual produce to lower prices. Consumers can only buy or not buy, growers produce as much as possible. The communication between consumers and producers is blocked and by 2015 completely dependent on the price negotiation between traders and retailers who do not offer transparency, not even to the growers.

*SamenMarkt*® *needs to offer more agency to growers in the supply chain network. Growers themselves need to be prepared and facilitated to this purpose. Consumer participation is carefully monitored by retail organizations to anticipate behaviour on the basis of previous buying behaviour. Consumer agency, including awareness and responsibility, can be ameliorated. Traders and retailers determine price. They need to provide more transparency in what they do, the prices they make, the arguments they use and the qualities they deliver*.

### **2.2. Time**

[8]. From growers' perspective, there is a direct relation between the quality of the food and their personal effort. Many growers work long days and are unsure of the quality of their produce till the very last moment. In addition, they do not know the price for which they will be able to sell their produce, creating uncertainty and stress. Traders and retailers do not have a direct physical relation to the horticultural fresh food produce. They strive for

*SamenMarkt*® *needs to represent the physicality of the horticultural fresh food market and to address* 

• **Emotional space**: Growers are proud of their companies. Their physical location demands continual attention with many factors of uncertainty to the value of their work (weather, quality, prices and timing). The emotional space is defined by uncertainty on the one side and pride and autonomy on the other side. For traders, the emotional space is defined in a business environment in which all strive to win and get better quality for less money. It is a 'game-environment' where results of activities are only measured in financial gain. Some retailers, like the growers, are proud of their business. However, the vast majority of retail consists of supermarkets in which marketing and management all strive for efficient and successful business. The main driver for retailers is the necessity to have all products with the proper specifications available every day of the year, no matter how high the demand is, at the lowest price or at most the same price the competitor is paying. For consumers, the emotional space is defined by the availability of products, the price, the appearance, the experience of shopping, the conformity with their life style and the

*SamenMarkt*® *must contribute to a more balanced and relaxed climate in the supply chain network by taking away uncertainties and strengthening ties within the supply chain network. Strengthening ties create understanding for other stakeholders' positions and increases awareness of interdependencies in the supply chain network. Individual acceleration needs to be tempered by the context of the whole* 

• **Environmental impact**: For growers, a sustainable environmental impact is very important. It defines the value and quality of their products. The weather, the land, fertility and possible pollution are all factors of importance to growers. Traders, retailers and consumers are rarely confronted with environmental impact. They expect the grower to deal with

*SamenMarkt*® *should offer insight and respect for the growers' practice in dealing with environmental* 

• **Situated agency**: In the current horticultural fresh food market in the Netherlands, it seems that only the traders and the retailers have the sole power to influence the supply chain network [9]. They rule negotiation processes and are free, for example, to create virtual produce to lower prices. Consumers can only buy or not buy, growers produce as much as possible. The communication between consumers and producers is blocked and by 2015 completely dependent on the price negotiation between traders and retailers who do not

the best quality at the lowest possible price.

*the sense of quality of the products*.

22 Agricultural Value Chain

experience of taste.

*network*.

*impact*.

these aspects.

offer transparency, not even to the growers.

• **Duration of engagement**: For retailers and traders, the duration of engagement is very different to the duration of engagement of the growers and to the duration of the engagement of the consumers. Currently, as the produce travels through the supply chain network, engagement stops when it enters a next step in the supply chain network, i.e. as the result of change of ownership. Growers have no insight into what happens after a trader has bought the goods. Retailers are unaware of what growers do; consumers are unaware of how quality relates to price. Duration of engagement of one stakeholder in the supply chain network stops when the next stakeholder takes over. Only the produce 'knows' what happens. For the traders on the short term, this lack of transparency offers opportunities for great bargains. On the long term, this lack of transparency, due to an impaired market insight potentially erodes the mechanism of supply and demand undermining the present production system of the sector. As a result, the Netherlands vegetable market might become totally dependent on import [10, 2].

*SamenMarkt*® *needs to allow for different durations of engagement of all stakeholders to prevent the supply chain network becoming a series of broken intervals in which anything can happen and no one is in control. A well-designed duration of engagement between stakeholders allows for feedback, learning curves and adaptation and as such increases trust*.

• **Integrating rhythm**: In a supply chain network, rhythm in interaction between the different stakeholders is crucial for success. Such rhythm can be orchestrated for different reasons. The rhythm in the current horticultural fresh food supply chain network is defined by retail's demand for 'pallets' of produce [7]. Traders seek trailers, inside the Netherlands or outside. Growers have a small window within which they option to determine when to place their products on the market, when to make the products available for which price. The longer they wait in a week, the lower or higher the prices may become. Consumers are often completely unaware of how produce comes to the shelves in the supermarket. They demand good quality and divers products for little money throughout the whole year [11], where a few years ago consumers knew the season of specific vegetables and aware of the character of harvests. Also, consumer behaviour is only measured by data of buying and not by qualitative research about quality of food, ways of producing food [12]. The rising economic significance of biological food produce indicates that consumers are sensitive to these issues.

*SamenMarkt*® *needs to facilitate alternative ways for integrating rhythm in the supply chain network. New ways of information sharing between all stakeholders in the supply chain network can create novel ways of establishing such rhythms. In such novel ways, autonomy of each stakeholder, as well as interdependency between stakeholders, needs to be facilitated*.

• **Synchronizing performance**: When doing business, stakeholders have to synchronize their performance during negotiation. Currently for the growers, the traders and the retailers, such synchronization is solely determined by price strategy and politics. There is no rhythm on which they can build trust. It is a 'hit and run' climate in which each party hopes to survive. There is no synchronization with the practice of the grower. All adapt to the intensely fluctuating prices. For example, the flower auction FloraHolland, owned by the growers, provides a more stable market. Consumers do not need to synchronize their performance with that of the growers: they buy what is available. To a given extent, however, growers synchronize their performance with the consumers, for example near Mother's Day or Valentine's Day by storing products in order to have sufficient supply for the enormous demand, with a consequent deterioration of the quality.

• **Reputation:** Communication between growers and consumers is fundamental for building a reliable reputation system. For example, branding enables growers to communicate with consumers, which can create a reputation. Current market dynamics, however, mostly prevents such communication. Unless the grower is involved with the traders and retailers, prices of the quality products are subjected to the 'wild west' market dynamics that cur-

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25

*SamenMarkt*® *needs to build a reliable reputation system based on quality of fresh food products facilitating communication between growers and producers and allowing traders and retailers to contribute* 

• **Engagement:** Currently, engagement is intense and defined by the specific task and function that stakeholders hold in the supply chain network. Frustration and lack of trust, lack of information and lack of communication, currently, define this engagement, creating an unbalanced market. The banks, not part of the analyses of this chapter, play a disruptive role in stakeholder engagement by forcing 'debt politics' into the supply chain network. The huge financial debt of some growers defines their engagement in the supply chain network. Their panic and stress undermine the market (personal communication of several

*SamenMarkt*® *needs to create a reliable and trustworthy environment in which all stakeholders participate in which exploitation and betrayal are not rewarding. SamenMarkt*® *needs to build new alliances* 

• **Communion:** No processes currently exit where all stakeholders together create meaning and significance in and about the supply chain network as a whole. Growers meet at family parties, traders and retail meet at conferences and fairs and consumers see each other shop in the supermarket. In other times and in other places, celebrating a harvest was common and fundamental to the community. Such celebrations inspire the community and help people to sustain and survive the hardship of life to which the hunting, gathering and production of food largely contribute. The well-known tragedy of the commons [14] indicates the need for processes of shared meaning, also for mundane things like food. Such processes of meaning help people to know what is good to do and what is not good to do. This can effectively balance the psychological realities with the sociological and economic

*SamenMarkt*® *needs to facilitate processes of 'shared meaning' creation. In such processes of shared meaning, cultural knowledge helps to clarify what is good to do and what is not good to do in the social and economic reality of the supply chain network. Processes for shared meaning embody the ethical* 

• **Tuning (i.e. synchronizing physical and mental actions with the requirements of the context):** When growing horticultural fresh food, one needs to tune to the growing process and one needs to be sensitive and adapt to environmental impact and other factors

rently characterize the price fights between traders and retailers [13].

*in constructive ways to a shared reputation system*.

*between stakeholders in the supply chain network*.

realities in a shared ethical framework.

*dimension of market dynamics [15]*.

**2.4. Action**

bankers).

*SamenMarkt*® *needs to facilitate new ways of synchronizing performance. Building on rhythm and synchronizing both with the growing of products and needs and preferences of consumers. Not only price should determine synchronization between participants in the supply chain. Quality and joint effort are also triggers for creating sustainable rhythm [10]*.

• **Making moments to signify**: Consumers can enjoy buying the right produce, at the right time enabling them to prepare good food at home. Retailers and traders do not celebrate or mourn specific moments in relation to the products other than those related to price. For growers, the relation with the product is much deeper. In family gatherings, in church and other moments when people gather, their produce is discussed. In local communities, harvest feasts mirror important moments. Towns celebrate, for example, the first white asparagus. In a different way, supermarkets use this need for 'making moments to signify' in marketing campaigns around Christmas, Easter, the Sugar Feast, etc. connecting certain products to specific celebrations.

*SamenMarkt*® *needs to facilitate the making of specific moments in time when all involved in the supply chain network meet and create shared meaning in participation in SamenMarkt*® *to sustain duration of engagement, to make synchronizing performance easier (especially when most communication is via phone or Internet) and to integrate rhythms*.

### **2.3. Relation**

• **Role:** Currently, roles of all stakeholders are very distinct, but also limited to tasks at hand. Growers produce the products and are not involved in the organization of the market. Traders and retailers determine price, and most often do not directly contribute to how and which kinds of products with specific quality are grown. Consumers buy the produce offered. This division of roles seems straightforward, yet the fragmentation and the lack of healthy communication as a result cause the instable market dynamics in price and quality that now characterize the horticultural fresh food market [1].

*SamenMarkt*® *needs to be designed for participation of all stakeholders with specific roles in the supply chain network to enable communication between different roles that supports interaction, transparency and situated agency*.

• **Reputation:** Communication between growers and consumers is fundamental for building a reliable reputation system. For example, branding enables growers to communicate with consumers, which can create a reputation. Current market dynamics, however, mostly prevents such communication. Unless the grower is involved with the traders and retailers, prices of the quality products are subjected to the 'wild west' market dynamics that currently characterize the price fights between traders and retailers [13].

*SamenMarkt*® *needs to build a reliable reputation system based on quality of fresh food products facilitating communication between growers and producers and allowing traders and retailers to contribute in constructive ways to a shared reputation system*.

• **Engagement:** Currently, engagement is intense and defined by the specific task and function that stakeholders hold in the supply chain network. Frustration and lack of trust, lack of information and lack of communication, currently, define this engagement, creating an unbalanced market. The banks, not part of the analyses of this chapter, play a disruptive role in stakeholder engagement by forcing 'debt politics' into the supply chain network. The huge financial debt of some growers defines their engagement in the supply chain network. Their panic and stress undermine the market (personal communication of several bankers).

*SamenMarkt*® *needs to create a reliable and trustworthy environment in which all stakeholders participate in which exploitation and betrayal are not rewarding. SamenMarkt*® *needs to build new alliances between stakeholders in the supply chain network*.

• **Communion:** No processes currently exit where all stakeholders together create meaning and significance in and about the supply chain network as a whole. Growers meet at family parties, traders and retail meet at conferences and fairs and consumers see each other shop in the supermarket. In other times and in other places, celebrating a harvest was common and fundamental to the community. Such celebrations inspire the community and help people to sustain and survive the hardship of life to which the hunting, gathering and production of food largely contribute. The well-known tragedy of the commons [14] indicates the need for processes of shared meaning, also for mundane things like food. Such processes of meaning help people to know what is good to do and what is not good to do. This can effectively balance the psychological realities with the sociological and economic realities in a shared ethical framework.

*SamenMarkt*® *needs to facilitate processes of 'shared meaning' creation. In such processes of shared meaning, cultural knowledge helps to clarify what is good to do and what is not good to do in the social and economic reality of the supply chain network. Processes for shared meaning embody the ethical dimension of market dynamics [15]*.

### **2.4. Action**

• **Synchronizing performance**: When doing business, stakeholders have to synchronize their performance during negotiation. Currently for the growers, the traders and the retailers, such synchronization is solely determined by price strategy and politics. There is no rhythm on which they can build trust. It is a 'hit and run' climate in which each party hopes to survive. There is no synchronization with the practice of the grower. All adapt to the intensely fluctuating prices. For example, the flower auction FloraHolland, owned by the growers, provides a more stable market. Consumers do not need to synchronize their performance with that of the growers: they buy what is available. To a given extent, however, growers synchronize their performance with the consumers, for example near Mother's Day or Valentine's Day by storing products in order to have sufficient supply for

*SamenMarkt*® *needs to facilitate new ways of synchronizing performance. Building on rhythm and synchronizing both with the growing of products and needs and preferences of consumers. Not only price should determine synchronization between participants in the supply chain. Quality and joint* 

• **Making moments to signify**: Consumers can enjoy buying the right produce, at the right time enabling them to prepare good food at home. Retailers and traders do not celebrate or mourn specific moments in relation to the products other than those related to price. For growers, the relation with the product is much deeper. In family gatherings, in church and other moments when people gather, their produce is discussed. In local communities, harvest feasts mirror important moments. Towns celebrate, for example, the first white asparagus. In a different way, supermarkets use this need for 'making moments to signify' in marketing campaigns around Christmas, Easter, the Sugar Feast, etc. connecting certain

*SamenMarkt*® *needs to facilitate the making of specific moments in time when all involved in the supply chain network meet and create shared meaning in participation in SamenMarkt*® *to sustain duration of engagement, to make synchronizing performance easier (especially when most communication is via* 

• **Role:** Currently, roles of all stakeholders are very distinct, but also limited to tasks at hand. Growers produce the products and are not involved in the organization of the market. Traders and retailers determine price, and most often do not directly contribute to how and which kinds of products with specific quality are grown. Consumers buy the produce offered. This division of roles seems straightforward, yet the fragmentation and the lack of healthy communication as a result cause the instable market dynamics in price and quality

*SamenMarkt*® *needs to be designed for participation of all stakeholders with specific roles in the supply chain network to enable communication between different roles that supports interaction, transparency* 

that now characterize the horticultural fresh food market [1].

the enormous demand, with a consequent deterioration of the quality.

*effort are also triggers for creating sustainable rhythm [10]*.

products to specific celebrations.

*phone or Internet) and to integrate rhythms*.

**2.3. Relation**

24 Agricultural Value Chain

*and situated agency*.

• **Tuning (i.e. synchronizing physical and mental actions with the requirements of the context):** When growing horticultural fresh food, one needs to tune to the growing process and one needs to be sensitive and adapt to environmental impact and other factors for doing the right thing at the right time with the growing tomato. Growers tune to their produce. Consumers, when preparing food, also 'tune' to the produce at hand. Can it be used for a salad, or is it too ripe already and should it be used for a curry? Retailers also tune to the materiality of the food. Fresh food needs a specific ripeness when sold; unsold goods need to be stored and may have to be presented differently (in combination with other goods, as prepared food already, as a bargain, etc.). Traders, however, do not tune to the materiality of the food. Food has a monetary value. For traders, scarcity and abundance are price drivers. Also, when the Dutch market does not have what they need, at the right price, traders import or export goods from the rest of the European market and beyond. The market is also changing: the demand for locally produced food, for example, is increasing significantly both in Europe as well as in the USA [16].

*SamenMarkt*® *needs to open up the space for innovation of quality of products and growing, branding and marketing techniques. When price dynamics are in more balance such a space will emerge and* 

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The results of the analyses above are expressed in indicative values based on perceptions and arguments for each of the factors in the four dimensions, depicted in **Figure 1** in a general YUTPA graph. Note that maximum trust is achieved when all factors have a maximum value. This YUTPA graph indicates that trust in the current market is based in the first place on stakeholders' roles in the network and the negotiations they perform. Synchronizing performance and quality of deeds contribute to the establishment of trust in the current situation.

**Figure 1.** The YUTPA analyses of the current supply chain network in the horticultural fresh food sector show a significant lack of trust between participants (the length of the arrows are indicative for the Dutch situation and based

*stakeholders can make calculated risks for investing in innovation*.

**2.5. Discussion of the YUTPA analyses**

on interviews, they are not quantitative).

*SamenMarkt*® *needs to include representation of the materiality of fresh food produce making it possible for all stakeholders in the network, including the traders, to tune to each other and to anticipate necessary adaptation*.

• **Reciprocity:** (i.e. mutual dependence [17]): Reciprocity contributes to the establishment of trust only within certain circles of growers. Within these circles, growers share information, share tools and ideas with specific other growers, for example within growers' associations. Reciprocity plays a small role in the larger supply chain network. Stakeholders do business with each other, but the increasing need for sourcing reliability of the retailers and their service providers induces a trend towards more vertical reciprocity in the supply chain.

*SamenMarkt*® *needs to facilitate processes of reciprocity in sharing information and communication. Such a culture will need time to develop. Especially in relation to 'making moments to signify' such a culture can emerge*.

• **Negotiation:** All stakeholders in the supply chain network negotiate with each other. These negotiations are characterized by hard market dynamics focused on the short-term profit, without any consideration of negative consequences for each other. Prices are defined by market dynamics in which production costs are not considered to be relevant. The price is usually set at the start of the week by the major retailer in North-West Europe (personal communication by traders). Surplus of products is either just destroyed or causes erosion of margins [7, 18]. The results of negotiations create an unbalanced market in which prices fluctuate significantly per day. As a result, growers' companies face bankruptcy and Dutch food markets are increasingly dependent on import and export. Traders and retailers maximize their profit, and consumers are mostly unaware of these dynamics.

*SamenMarkt*® *needs to offer new price dynamics to which production and distribution costs as well as expected consumption are foundational. Price mechanisms need to create a more balanced market in which all stakeholders can earn a decent living*.

• **Quality of deeds:** Different activities in the supply chain network are specific for each stakeholder and are defined by producing specific quality and quantity of the produced and traded goods. The only actions that define what happens next in the network are price negotiations. Investment in new qualities of products, innovation techniques and new alliances is currently hindered by the hard price dynamics.

*SamenMarkt*® *needs to open up the space for innovation of quality of products and growing, branding and marketing techniques. When price dynamics are in more balance such a space will emerge and stakeholders can make calculated risks for investing in innovation*.

#### **2.5. Discussion of the YUTPA analyses**

for doing the right thing at the right time with the growing tomato. Growers tune to their produce. Consumers, when preparing food, also 'tune' to the produce at hand. Can it be used for a salad, or is it too ripe already and should it be used for a curry? Retailers also tune to the materiality of the food. Fresh food needs a specific ripeness when sold; unsold goods need to be stored and may have to be presented differently (in combination with other goods, as prepared food already, as a bargain, etc.). Traders, however, do not tune to the materiality of the food. Food has a monetary value. For traders, scarcity and abundance are price drivers. Also, when the Dutch market does not have what they need, at the right price, traders import or export goods from the rest of the European market and beyond. The market is also changing: the demand for locally produced food, for example, is increas-

*SamenMarkt*® *needs to include representation of the materiality of fresh food produce making it possible for all stakeholders in the network, including the traders, to tune to each other and to anticipate* 

• **Reciprocity:** (i.e. mutual dependence [17]): Reciprocity contributes to the establishment of trust only within certain circles of growers. Within these circles, growers share information, share tools and ideas with specific other growers, for example within growers' associations. Reciprocity plays a small role in the larger supply chain network. Stakeholders do business with each other, but the increasing need for sourcing reliability of the retailers and their service providers induces a trend towards more vertical reciprocity in the supply chain. *SamenMarkt*® *needs to facilitate processes of reciprocity in sharing information and communication. Such a culture will need time to develop. Especially in relation to 'making moments to signify' such a* 

• **Negotiation:** All stakeholders in the supply chain network negotiate with each other. These negotiations are characterized by hard market dynamics focused on the short-term profit, without any consideration of negative consequences for each other. Prices are defined by market dynamics in which production costs are not considered to be relevant. The price is usually set at the start of the week by the major retailer in North-West Europe (personal communication by traders). Surplus of products is either just destroyed or causes erosion of margins [7, 18]. The results of negotiations create an unbalanced market in which prices fluctuate significantly per day. As a result, growers' companies face bankruptcy and Dutch food markets are increasingly dependent on import and export. Traders and retailers maxi-

*SamenMarkt*® *needs to offer new price dynamics to which production and distribution costs as well as expected consumption are foundational. Price mechanisms need to create a more balanced market in* 

• **Quality of deeds:** Different activities in the supply chain network are specific for each stakeholder and are defined by producing specific quality and quantity of the produced and traded goods. The only actions that define what happens next in the network are price negotiations. Investment in new qualities of products, innovation techniques and new alli-

mize their profit, and consumers are mostly unaware of these dynamics.

*which all stakeholders can earn a decent living*.

ances is currently hindered by the hard price dynamics.

ing significantly both in Europe as well as in the USA [16].

*necessary adaptation*.

26 Agricultural Value Chain

*culture can emerge*.

The results of the analyses above are expressed in indicative values based on perceptions and arguments for each of the factors in the four dimensions, depicted in **Figure 1** in a general YUTPA graph. Note that maximum trust is achieved when all factors have a maximum value. This YUTPA graph indicates that trust in the current market is based in the first place on stakeholders' roles in the network and the negotiations they perform. Synchronizing performance and quality of deeds contribute to the establishment of trust in the current situation.

**Figure 1.** The YUTPA analyses of the current supply chain network in the horticultural fresh food sector show a significant lack of trust between participants (the length of the arrows are indicative for the Dutch situation and based on interviews, they are not quantitative).

SamenMarkt® will need to be designed to focus on designing specific factors in each dimension for re-establishing trust in the horticultural supply chain network. Between these factors, trade-offs can be established.

with other software agents and human stakeholders. Agents reason with their own knowledge, with the knowledge they have received from other agents and with the knowledge they have observed and acquired from their interactions with the environment, and act [23]. Agents are capable of negotiating on behalf of their owners, in distributed markets at negligible cost and speed, given the relevant knowledge, and rules of the game. They can, for example, bid at auctions, and/or negotiate the terms of an agreement with a consumer or a retailer. Agents can also be designed to organize the logistics of transportation and/or financial transactions, given sufficient knowledge. Agent technology is currently being used within many existing markets in which negotiations are multiple (e.g. between producers and consumers in the energy market) and complexity high [24]. Agents are also used for negotiations in which identity is to be protected, e.g. chemical auctions, they negotiate agreements and perform transactions in supply chain networks, they regulate production lines, control production of oil and gas produc-

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tions, perform scheduling for call centres, provide recommendations and plan trips.

and/or online sales providers can offer their services through their own agents.

only known to the participants involved.

to include agents for logistics of delivery.

How can a multi-agent market system for the horticultural fresh food market be designed? We are at present developing a market simulation with agent-based modelling in order to determine the prerequisites for such a market. In the last phase of our project, different market mechanisms will be designed and evaluated ranging from distributed auctions to 1–1 negotiation. Growers will be represented by their own agents—agents that have been instructed about the produce they are offering, the minimum price, quality specifications, volume, shelf-life, date of availability, sustainability, etc. Stakeholders (retailers or consumers/ groups of consumers) wishing to procure produce are represented by their own agents each of which knows their owner's wishes and preferences. Logistics providers in turn have their own agents with their own knowledge of transport, price, ecology friendliness, speed and services with which they can negotiate propositions. And distribution centres, retail stores

AgentScape® hosts these agents and their negotiations. Once agents have devised one or more (possible) agreements between producers, logistic providers, distribution agencies and/or consumers these agreements, commitment is needed. Commitment can either (1) automatically be effectuated by the stakeholders with prior authorization from their owners or (2) sent to the stakeholders whom, in turn, close the deals themselves with the parties involved. This second option is the option to be pursued in this project. Note that details of an agreement are

However, knowledge can be anonymously aggregated and made available to all stakeholders, e.g. total market supply and demand, and average price at any one moment in time and over time (aggregated from all local markets), average price. This information would make it possible for all stakeholders (and their agents) in this system to be well informed with insight into the fluctuations in supply, demand and price over any given period of interest, i.e. business intelligence. This situation is comparable to stock market exchanges, where supply and demand are known at any point in time, but not the details of the individual buyers. The same is possible for the fresh vegetable and fruit market. Note that the SamenMarkt® will also need

This is a complex market, but with the distributed internet technology, it is feasible to implement a digital trading platform that can comply with all the previous constraints, i.e. SamenMarkt®. It will create an open market situation, where price information is transparent, the transaction

In the dimension of 'relation', a better reputation system can offer more transparency in the relations between participants. As a result, also 'roles' and 'engagement' will improve and participation in the supply chain network will engender more trust. Participatory systems can offer such a reputation system.

Designing the time dimension has great potential for improving the establishment of trust in the supply chain network. An elaborate design of 'integrating rhythm', 'synchronizing performance' and 'duration of engagement' can facilitate a larger awareness of being part of the larger whole of the supply chain network in which one participates. Communication in participatory systems can facilitate such trust interventions in the time dimension for all stakeholders involved.

For the place dimension, an elaborate design of situated agency in the different roles and responsibilities at distinct times will generate a more balanced emotional space in which awareness of others—in other places yet part of the same supply chain network—contributes to establishing trust. A participatory system can design such situated agency and the ability to adapt situated agencies over time.

In the dimension of 'action', in particular, the tuning of actions between the different participants needs to be facilitated. When tuning is improved, negotiations tend to result in win/win outcomes. Participatory systems can contribute to such tuning by communicating and anticipating certain development of other participants in the supply chain network. SamenMarkt® also needs to support the space for innovation of the quality of deeds (both actions and activities) by creating space and time for this as well as finding a way to validate such efforts.

Currently, 30 interviews with stakeholders are being performed with parties in the horticultural fresh food supply chain network to elicit more detailed design requirements for SamenMarkt® and the transformation process.

### **3. Participatory system for the horticultural fresh food market**

Participatory systems in today's networked society are characterized by the potential, scale and speed of distributing information and communication that technology can provide [19–22]. Participatory systems are social-technical systems designed to support participation through engagement, empowerment and trust, enabling participants to act and take responsibility for their actions.

SamenMarkt® is to be a participatory system—a social technical system enabled by distributed information and coordination technology. Modelled and implemented as a multi-agent system, SamenMarkt® is a large-scale distributed market system in which software agents (small piece of code that can run on a computer as well as in the cloud and act autonomously on behalf of a user) representing their own stakeholders, negotiate terms of trade and agreement, in multiple local markets across the world. To this purpose, agents are able to reason, learn and interact with other software agents and human stakeholders. Agents reason with their own knowledge, with the knowledge they have received from other agents and with the knowledge they have observed and acquired from their interactions with the environment, and act [23]. Agents are capable of negotiating on behalf of their owners, in distributed markets at negligible cost and speed, given the relevant knowledge, and rules of the game. They can, for example, bid at auctions, and/or negotiate the terms of an agreement with a consumer or a retailer. Agents can also be designed to organize the logistics of transportation and/or financial transactions, given sufficient knowledge. Agent technology is currently being used within many existing markets in which negotiations are multiple (e.g. between producers and consumers in the energy market) and complexity high [24]. Agents are also used for negotiations in which identity is to be protected, e.g. chemical auctions, they negotiate agreements and perform transactions in supply chain networks, they regulate production lines, control production of oil and gas productions, perform scheduling for call centres, provide recommendations and plan trips.

SamenMarkt® will need to be designed to focus on designing specific factors in each dimension for re-establishing trust in the horticultural supply chain network. Between these factors,

In the dimension of 'relation', a better reputation system can offer more transparency in the relations between participants. As a result, also 'roles' and 'engagement' will improve and participation in the supply chain network will engender more trust. Participatory systems can

Designing the time dimension has great potential for improving the establishment of trust in the supply chain network. An elaborate design of 'integrating rhythm', 'synchronizing performance' and 'duration of engagement' can facilitate a larger awareness of being part of the larger whole of the supply chain network in which one participates. Communication in participatory systems can facilitate such trust interventions in the time dimension for all

For the place dimension, an elaborate design of situated agency in the different roles and responsibilities at distinct times will generate a more balanced emotional space in which awareness of others—in other places yet part of the same supply chain network—contributes to establishing trust. A participatory system can design such situated agency and the ability

In the dimension of 'action', in particular, the tuning of actions between the different participants needs to be facilitated. When tuning is improved, negotiations tend to result in win/win outcomes. Participatory systems can contribute to such tuning by communicating and anticipating certain development of other participants in the supply chain network. SamenMarkt® also needs to support the space for innovation of the quality of deeds (both actions and activities) by creating space and time for this as well as finding a way to validate such efforts.

Currently, 30 interviews with stakeholders are being performed with parties in the horticultural fresh food supply chain network to elicit more detailed design requirements for

Participatory systems in today's networked society are characterized by the potential, scale and speed of distributing information and communication that technology can provide [19–22]. Participatory systems are social-technical systems designed to support participation through engagement, empowerment and trust, enabling participants to act and take respon-

SamenMarkt® is to be a participatory system—a social technical system enabled by distributed information and coordination technology. Modelled and implemented as a multi-agent system, SamenMarkt® is a large-scale distributed market system in which software agents (small piece of code that can run on a computer as well as in the cloud and act autonomously on behalf of a user) representing their own stakeholders, negotiate terms of trade and agreement, in multiple local markets across the world. To this purpose, agents are able to reason, learn and interact

**3. Participatory system for the horticultural fresh food market**

trade-offs can be established.

28 Agricultural Value Chain

offer such a reputation system.

to adapt situated agencies over time.

SamenMarkt® and the transformation process.

stakeholders involved.

sibility for their actions.

How can a multi-agent market system for the horticultural fresh food market be designed? We are at present developing a market simulation with agent-based modelling in order to determine the prerequisites for such a market. In the last phase of our project, different market mechanisms will be designed and evaluated ranging from distributed auctions to 1–1 negotiation. Growers will be represented by their own agents—agents that have been instructed about the produce they are offering, the minimum price, quality specifications, volume, shelf-life, date of availability, sustainability, etc. Stakeholders (retailers or consumers/ groups of consumers) wishing to procure produce are represented by their own agents each of which knows their owner's wishes and preferences. Logistics providers in turn have their own agents with their own knowledge of transport, price, ecology friendliness, speed and services with which they can negotiate propositions. And distribution centres, retail stores and/or online sales providers can offer their services through their own agents.

AgentScape® hosts these agents and their negotiations. Once agents have devised one or more (possible) agreements between producers, logistic providers, distribution agencies and/or consumers these agreements, commitment is needed. Commitment can either (1) automatically be effectuated by the stakeholders with prior authorization from their owners or (2) sent to the stakeholders whom, in turn, close the deals themselves with the parties involved. This second option is the option to be pursued in this project. Note that details of an agreement are only known to the participants involved.

However, knowledge can be anonymously aggregated and made available to all stakeholders, e.g. total market supply and demand, and average price at any one moment in time and over time (aggregated from all local markets), average price. This information would make it possible for all stakeholders (and their agents) in this system to be well informed with insight into the fluctuations in supply, demand and price over any given period of interest, i.e. business intelligence. This situation is comparable to stock market exchanges, where supply and demand are known at any point in time, but not the details of the individual buyers. The same is possible for the fresh vegetable and fruit market. Note that the SamenMarkt® will also need to include agents for logistics of delivery.

This is a complex market, but with the distributed internet technology, it is feasible to implement a digital trading platform that can comply with all the previous constraints, i.e. SamenMarkt®. It will create an open market situation, where price information is transparent, the transaction costs are minimal and all necessary market information is available free of charge. Provided the interface to use this agent-based market is user friendly, the financial transactions are sufficiently secured and if a sufficient number of actors take part in this market, the trustworthiness of this marketplace will create more room for a better and more innovative and sustainable (less waste) development of the entire fresh food network [25].

**Opportunities:**

well.

**Threats:**

**2.** Diminution of waste

**4.** Insufficient ease of use

**5.** Not enough flexibility

support for this research.

ply chain network of tomatoes.

Phase 1

**6.** Not enough financial security.

**3.** Efficiency of logistic services

**1.** Tuning of production with the expected consumption

**5.** Quality controlled logistics and certification

**6.** Optimal positioning of products for consumption

**1.** Obliterate investments in present day supply chains

**5. Research design for the creation of SamenMarkt®**

**2.** Fear of losing position in the new market place

**3.** Neophobia, i.e. fear of new things/situations.

**4.** Incorporating physical measurements in the logistic process

**7.** Creating a sustainable supply chain network in which all stakeholders can survive and be

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31

The SWOT analysis of SamenMarkt® indicates a 'high risk-high gain' concept [27]. The business model will need to incorporate an elaborate transition plan for SamenMarkt® to be successful. Special attention is needed for the user interfaces for the different stakeholders and transparency of the overall system. The initiated advisory board in which both growers and traders are represented helps to identify possible issues in time and also helps with creating

The following steps have been identified in the iterative design process for SamenMarkt®.

**1.** Formulation of concept SamenMarkt® on the basis of YUTPA analyses of the current sup-

### **4. Strength and weaknesses of SamenMarkt®**

An initial SWOT (strengths, weaknesses, opportunities and threat) analysis based on expert insight, conducted by authors shows the following issues of concern.

SWOT analysis is an acronym for strengths, weaknesses, opportunities, and threats and is a structured planning method that evaluates those four elements of an organization, project or business venture [26]. By analysing the interviews (30 in total) and scoring recurring remarks, we performed the SWOT analysis according to Panagiotou [27].

#### **Strengths:**


#### **Weaknesses:**


### **Opportunities:**

costs are minimal and all necessary market information is available free of charge. Provided the interface to use this agent-based market is user friendly, the financial transactions are sufficiently secured and if a sufficient number of actors take part in this market, the trustworthiness of this marketplace will create more room for a better and more innovative and sustainable

An initial SWOT (strengths, weaknesses, opportunities and threat) analysis based on expert

SWOT analysis is an acronym for strengths, weaknesses, opportunities, and threats and is a structured planning method that evaluates those four elements of an organization, project or business venture [26]. By analysing the interviews (30 in total) and scoring recurring remarks,

**1.** A large proportion of stakeholders need to participate for SamenMarkt® to be successful

**5.** Financial transactions need to be anonymous, while the system needs to offer transparency

**2.** Transition to 'sharing in information' is difficult without visible gain beforehand

(less waste) development of the entire fresh food network [25].

insight, conducted by authors shows the following issues of concern.

we performed the SWOT analysis according to Panagiotou [27].

**4.** Open communication between all actors in the network

**6.** Consumers can communicate explicit and latent desires

**4.** Physicality and quality of products might need to be certified

**6.** Laws on competition regulation by the Dutch and European authorities.

**5.** Producers can communicate the story of the products

**7.** Market intelligence is available for everyone

**8.** Trust in the supply chain is re-established.

**3.** Large-scale reselling becomes visible

**Strengths:**

30 Agricultural Value Chain

**Weaknesses:**

**1.** Supply and demand are real

**3.** Reduction in transaction costs

**2.** Price speculations become obsolete

**4. Strength and weaknesses of SamenMarkt®**


### **Threats:**


The SWOT analysis of SamenMarkt® indicates a 'high risk-high gain' concept [27]. The business model will need to incorporate an elaborate transition plan for SamenMarkt® to be successful. Special attention is needed for the user interfaces for the different stakeholders and transparency of the overall system. The initiated advisory board in which both growers and traders are represented helps to identify possible issues in time and also helps with creating support for this research.

### **5. Research design for the creation of SamenMarkt®**

The following steps have been identified in the iterative design process for SamenMarkt®.

Phase 1

**1.** Formulation of concept SamenMarkt® on the basis of YUTPA analyses of the current supply chain network of tomatoes.

**2.** Funding and partners are identified and approached, the advisory board is created. The advisory board composed of industry experts functions as sounding board for the research.

Phase 3

Phase 4

and be well.

**6. Conclusion**

chain of our food.

fresh food.

international partners)

**4.** Orchestration of transformation processes.

**3.** Establishing business and governance structures

**4.** Introduction orchestration transition to SamenMarkt®.

**1.** Development business case and governance structure of SamenMarkt®.

**1.** Identifying investors, owners and shareholders SamenMarkt®

**2.** Second distributed model by design team and advisory board of the horticulture sector.

**3.** Series of validations with different stakeholders in horticultural supply chain network of

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33

**2.** Acquiring support form societal and business stakeholders (government, financial sector,

The first phase of SamenMarkt® is carried out and financed by TU Delft and Hogeschool Inholland in 2012–2014. The second phase started as of January 2015–June 2015. In the second phase, further funding and partnerships are acquired. Phase three is expected to last between September 2015 and September 2017 after which phase four can start. By September 2020, SamenMarkt® can be a sustainable functioning market in which all participants can survive

The present simulation model of the tomato market in North-West Europe developed in phase two and three of this project shows that mistrust and personal gain causes major losses and large price fluctuations in the supply chain. The chain hardly allows for any innovation to survive the initial process. And the margins of most vegetable commodities are involved in a race to the bottom. It also shows that a digital trade platform in its simplest form already will have a positive effect on price stability due to the elimination of some of the emotional factors influencing the present trade. A proper functioning distributed digital trading platform that will be embraced by most actors in the supply chain will improve efficiency, reduce redundancy and increase trust in the vegetable sector resulting in a more sustainable supply

Further research will focus on translating the concept of SamenMarkt® to larger and more complex global food markets. Further research will also show whether the concept of SamenMarkt® is actually capable of playing a role of significance in the emerging global food

Phase 2


**Figure 2.** Using the YUTPA framework to identify design requirements for SamenMarkt®, a new solution space for the horticultural fresh food sector.

Phase 3

**2.** Funding and partners are identified and approached, the advisory board is created. The advisory board composed of industry experts functions as sounding board for the research.

**1.** Thirty interviews identifying local dynamics in the supply chain have been carried out to validate the initial YUTPA analysis and fine tune design requirements (**Figure 2**).

**2.** The first simulation model is created. Advisory board of horticulture sector guides this

**3.** Validation of the first simulation in workshop with different stakeholders in the supply

**Figure 2.** Using the YUTPA framework to identify design requirements for SamenMarkt®, a new solution space for the

chain network of the horticulture sector in the Netherlands.

Phase 2

32 Agricultural Value Chain

simulation.

horticultural fresh food sector.


Phase 4


The first phase of SamenMarkt® is carried out and financed by TU Delft and Hogeschool Inholland in 2012–2014. The second phase started as of January 2015–June 2015. In the second phase, further funding and partnerships are acquired. Phase three is expected to last between September 2015 and September 2017 after which phase four can start. By September 2020, SamenMarkt® can be a sustainable functioning market in which all participants can survive and be well.

### **6. Conclusion**

The present simulation model of the tomato market in North-West Europe developed in phase two and three of this project shows that mistrust and personal gain causes major losses and large price fluctuations in the supply chain. The chain hardly allows for any innovation to survive the initial process. And the margins of most vegetable commodities are involved in a race to the bottom. It also shows that a digital trade platform in its simplest form already will have a positive effect on price stability due to the elimination of some of the emotional factors influencing the present trade. A proper functioning distributed digital trading platform that will be embraced by most actors in the supply chain will improve efficiency, reduce redundancy and increase trust in the vegetable sector resulting in a more sustainable supply chain of our food.

Further research will focus on translating the concept of SamenMarkt® to larger and more complex global food markets. Further research will also show whether the concept of SamenMarkt® is actually capable of playing a role of significance in the emerging global food crises. The authors of this chapter argue that in SamenMarkt® trusted relations between producers and consumers will be restored, and negotiation of prices and distribution of products will be more efficiently organized enabled by distributed information and communication technology (ICT) technology to deal with large, complex real-time data with accessible and effective interfaces.

[6] Ondersteijn CJ, Wijnands JH, Huirne RB, van Kooten O, editors. Quantifying the Agri-

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35

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[8] Schepers H, van Kooten O. Profitability of 'ready-to-eat' strategies". Towards modelassisted negotiation in a fresh-produce chain. Agrotechnology and Food Innovations, Wageningen University and Research, Springer Verlaag, Dordrecht, The Netherlands;

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### **Acknowledgements**

The authors wish to thank members of the SamenMarkt® advisory board for generously sharing knowledge and insight: Peter Duijvesteijn, Martin van der Sande, Dick van der Kaaij, Hans Verwegen and Ruerd Ruben. The authors want to thank students Luc van Koppen and Bob Dijkhuizen for engaging full enthusiasm with the research.

### **Author details**

Olaf van Kooten2,3\*, Caroline Nevejan1 , Frances Brazier<sup>1</sup> , Michel Oey1 and Coen Hubers1,2

\*Address all correspondence to: olaf.vankooten@wur.nl

1 Technical University Delft, Delft, The Netherlands

2 Inholland University of Applied Sciences, Delft, The Netherlands

3 Wageningen University and Research, Wageningen, The Netherlands

### **References**


[6] Ondersteijn CJ, Wijnands JH, Huirne RB, van Kooten O, editors. Quantifying the Agrifood Supply Chain. Springer, Dordrecht, The Netherlands; 2006

crises. The authors of this chapter argue that in SamenMarkt® trusted relations between producers and consumers will be restored, and negotiation of prices and distribution of products will be more efficiently organized enabled by distributed information and communication technology (ICT) technology to deal with large, complex real-time data with accessible and

The authors wish to thank members of the SamenMarkt® advisory board for generously sharing knowledge and insight: Peter Duijvesteijn, Martin van der Sande, Dick van der Kaaij, Hans Verwegen and Ruerd Ruben. The authors want to thank students Luc van Koppen and

, Frances Brazier<sup>1</sup>

[1] Verheul J. Kans voor krachtiger afzetorganisaties. Groenten & Fruit: Glasgroenten.

[2] van Velden P. De Nederlandse Tuinbouw - End of an Era II. Foodlog.nl 30 August 2014;**14**:42. Available from: https://www.foodlog.nl/artikel/the-end-of-an-era-ii/allcomments/

[3] Nevejan C. Witnessed presence and the YUTPA framework. Psychnology Journal. 2009;

[5] In a workshop between professor Olaf van Kooten en dr. Caroline Nevejan in 2012, as result of a YUTPA analyses of current dynamics in the horticultural supply chain in the Netherlands, the concept of SamenMarkt® emerged. Together with professor Frances Brazier, drs. Coen Hubers and dr. Michel Oey the concept of SamenMarkt® has been

[4] Nevejan C, Brazier F. Granularity in reciprocity. AI & Society. 2012;**27**(1):129-147

, Michel Oey1

and Coen Hubers1,2

Bob Dijkhuizen for engaging full enthusiasm with the research.

\*Address all correspondence to: olaf.vankooten@wur.nl

2 Inholland University of Applied Sciences, Delft, The Netherlands

3 Wageningen University and Research, Wageningen, The Netherlands

1 Technical University Delft, Delft, The Netherlands

effective interfaces.

34 Agricultural Value Chain

**Author details**

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further elaborated

Olaf van Kooten2,3\*, Caroline Nevejan1

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**Chapter 3**

**Provisional chapter**

**Citrus Value Chain(s): A Survey of Pakistan Citrus**

**Citrus Value Chain(s): A Survey of Pakistan Citrus** 

DOI: 10.5772/intechopen.70161

Pakistan is producing more than 30 types of different fruits of which citrus fruit is leading among all fruit and constitutes about 30% of total fruit production in the country. Above 90% of citrus fruits are produced in Punjab province and distributed through different value chains in domestic as well as in international markets. A large part of citrus fruit produced in Pakistan is mostly consumed locally without much value addition; however, 10–12% of total production is exported after value addition. The value chains are very diverse, and a number of different players actively participate in these chains, which ultimately decide the destination of citrus fruit in these supply chain(s). Knowing all these facts, the main aim of this research is to identify different value chains of citrus fruit (Kinnow) in Pakistan and also to identify and discuss the role and function of different value chain players in the citrus industry in Pakistan. A survey involving of different players of Pakistan's citrus industry was conducted in 2013–2014 to better understand the citrus value chain(s). Using a convenience sampling technique, a total of 245 respondents were interviewed during a period of 4–5 months from three leading citrus-producing districts. It was found that citrus value chains can be classified into two major types: unprocessed citrus value chain and processed citrus value chains. It was also found that in the past, a large number of citrus growers were involved in preharvest contracting for their orchards and only a small number of citrus growers sold their orchards directly into local and foreign markets. The proportion has been gradually changed now and growers are becoming progressive and more market oriented. **Keywords:** citrus fruit, value chains, key players, citrus growers, pre-harvest contractors,

> © 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution,

© 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use,

distribution, and reproduction in any medium, provided the original work is properly cited.

and reproduction in any medium, provided the original work is properly cited.

The agriculture sector plays a pivotal role in Pakistan's economy and it holds the key to prosperity. A number of agricultural resources, fertile land, well-irrigated plains and variety of

Muhammad Imran Siddique and Elena Garnevska

Muhammad Imran Siddique and Elena Garnevska

Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70161

**Abstract**

Pakistan

**1. Pakistan citrus industry**

**Industry**

**Industry**


**Provisional chapter**

### **Citrus Value Chain(s): A Survey of Pakistan Citrus Industry Industry**

**Citrus Value Chain(s): A Survey of Pakistan Citrus** 

DOI: 10.5772/intechopen.70161

Muhammad Imran Siddique and Elena Garnevska

[20] Rezaee SA, Oey M, Nevejan C, Brazier F. Participatory demand-supply systems. Procedia

[21] Castells M. The Rise of the Network Society: The Information Age: Economy, Society,

[22] Thackara J. In the Bubble: Design in a Complex World. Camebridge, Massachusetts,

[23] Pournaras E, Warnier M, Brazier F. A distributed agent-based approach to stabilization of global resource utilization. In: Complex, Intelligent and Software Intensive Systems, 2009. CISIS'09. International Conference on 2009 March 16; Los Alamitos, CA USA. pp.

[24] Brazier FM, Cornelissen F, Gustavsson R, Jonker CM, Lindeberg O, Polak B, Treur J. A multi-agent system performing one-to-many negotiation for load balancing of electricity

[25] Brazier F, Nevejan C. Vision for Participatory Systems Design. Procedia Computer

[26] Pickton DW, Wright S. What's swot in strategic analysis? Strategic Change. 1998;**7**(2):

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and Culture. Cichester, Sussex, United Kingdom. John Wiley & Sons; 2011

Computer Science. 2015;**44**:105-114

London England, MIT Press; 2005

Science, 2015;**44**:105-114, ISSN 1877-0509; 2014

185-192

36 Agricultural Value Chain

101-109

Muhammad Imran Siddique and Elena Garnevska Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70161

#### **Abstract**

Pakistan is producing more than 30 types of different fruits of which citrus fruit is leading among all fruit and constitutes about 30% of total fruit production in the country. Above 90% of citrus fruits are produced in Punjab province and distributed through different value chains in domestic as well as in international markets. A large part of citrus fruit produced in Pakistan is mostly consumed locally without much value addition; however, 10–12% of total production is exported after value addition. The value chains are very diverse, and a number of different players actively participate in these chains, which ultimately decide the destination of citrus fruit in these supply chain(s). Knowing all these facts, the main aim of this research is to identify different value chains of citrus fruit (Kinnow) in Pakistan and also to identify and discuss the role and function of different value chain players in the citrus industry in Pakistan. A survey involving of different players of Pakistan's citrus industry was conducted in 2013–2014 to better understand the citrus value chain(s). Using a convenience sampling technique, a total of 245 respondents were interviewed during a period of 4–5 months from three leading citrus-producing districts. It was found that citrus value chains can be classified into two major types: unprocessed citrus value chain and processed citrus value chains. It was also found that in the past, a large number of citrus growers were involved in preharvest contracting for their orchards and only a small number of citrus growers sold their orchards directly into local and foreign markets. The proportion has been gradually changed now and growers are becoming progressive and more market oriented.

**Keywords:** citrus fruit, value chains, key players, citrus growers, pre-harvest contractors, Pakistan

### **1. Pakistan citrus industry**

The agriculture sector plays a pivotal role in Pakistan's economy and it holds the key to prosperity. A number of agricultural resources, fertile land, well-irrigated plains and variety of

Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons

seasons are favourable for the Pakistan agricultural industry. Despite the decline in the share of agriculture in gross domestic production (GDP), nearly two-thirds of the population still depend on this sector for their livelihood [1]. Agriculture is considered as one of the major drivers of economic growth in the country. It has been estimated that in 2014–2015, the total production of agriculture crops was 116 million tonnes. Pakistan produces about 13.5 million tonnes of fruit and vegetables annually. In 2014–2015, the total fruit production was recorded at 7.01 million tonnes, which composed of 48.3% of the total fruit and vegetables production in the country [2, 3].

The production of citrus fruit has been increasing since 1993–1994; however, it started to decline in 1999. The citrus fruit crop requires a critical low temperature for its ripening which if not achieved may lead to decline in the production of fruit [4]. Therefore, one of the reasons of varied citrus fruit production might be due to the temperature variations in the citrus growing areas of Pakistan. Such a great variation in temperature was recorded in 2006–2007 in citrus-producing areas due to which citrus production dropped from 2.4 to 1.4 million tonnes; however, the area under citrus fruit orchards remained the

In Pakistan, citrus fruit has been predominantly cultivated in four provinces, namely: Punjab, Khyber Pakhtunkhwa (KPK), Sindh and Baluchistan. Among all four provinces, Punjab is considered to be the hub of citrus production. **Table 1** represents the major citrus growing

Punjab province, according to Pakistan Horticulture Development and Export Company (PHDEC) (2005), produces more than 90% of total Kinnow production whereas KPK mainly produces oranges among all citrus fruits in the country. Sargodha, Toba Tek Singh and Mandi Bahauddin are three known districts for their citrus production in Punjab province. Different varieties of citrus fruits are also grown in small proportions in other

Mandarins (Feutrell's Early and Kinnow) and sweet orange (Mausami or Musambi and Red Blood) are very important among all the citrus varieties cultivated in Pakistan. **Table 2** shows different varieties of citrus produced in the country. Punjab province, being the hub of citrus production (Kinnow), produced 97.1% of citrus fruit (Kinnow) in

In Punjab province, three districts, Sargodha, Toba Tek Singh and Mandi Bahauddin, constitute around 55% of the total area under citrus cultivation and produce nearly 62% of citrus fruit [6]. In Sargodha district, Bhalwal produces 650,000 metric tonnes of Kinnow annually

Punjab Sargodha, Toba Tek Singh, Mandi Bahauddin, Sahiwal,

Khyber Pakhtunkhwa (KPK) Malakand, Swat, Nowshera, Lower Dir, Dera Ismail

Sindh Naushero Feroze, Khairpur, Nawabshah, Sukkur,

Baluchistan Nasirabad, Dolan, Lasbela, Gwadar, Sibi,

Sanghar

Khanewal, Vehari, Bahawalpur, Multan, Okara, Layyah,

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Jhang, Kasur, Bahawalnagar, Faisalabad

Khan, Mardan, Haripur

same [3].

districts.

2014–2015 [3].

Source: [7, 8]

**Table 1.** Major citrus growing areas in Pakistan.

districts in all the four provinces of the country.

**Province Major districts**

#### **1.1. Citrus production**

The overall trend for all fruit production in Pakistan is increasing except for the year 2006– 2007, when a great decrease of production of all fruits as well as citrus fruits was observed due to unfavourable weather (hailstorm) and water shortage, as shown in **Figure 1**. The area under all fruits and production both has been increasing gradually. Citrus fruit is prominent in terms of its production followed by mango, dates and guava. The total citrus production was 2.4 million tonnes in 2014–2015 that constitutes 35.2% of total fruit production) [3]. Citrus fruit includes mandarins (Kinnow), oranges, grapefruit, lemons and limes, of which mandarin (Kinnow) is of significant importance to Pakistan.

Pakistan's total production of citrus fruit (primarily Kinnow) is approximately 2.0 million metric tonnes annually. Although there is no remarkable increase in area under citrus production, the production has increased up to 30.8% since 1991–1992. In 1991–1992, Pakistan produced 1.62 million tonnes citrus, which increased to 2.1 million tonnes in 2008–2009 and 2.4 million tonnes in 2014–2015 [3].

**Figure 1.** Area and production of all fruit in Pakistan. Source: [3, 5, 6].

The production of citrus fruit has been increasing since 1993–1994; however, it started to decline in 1999. The citrus fruit crop requires a critical low temperature for its ripening which if not achieved may lead to decline in the production of fruit [4]. Therefore, one of the reasons of varied citrus fruit production might be due to the temperature variations in the citrus growing areas of Pakistan. Such a great variation in temperature was recorded in 2006–2007 in citrus-producing areas due to which citrus production dropped from 2.4 to 1.4 million tonnes; however, the area under citrus fruit orchards remained the same [3].

In Pakistan, citrus fruit has been predominantly cultivated in four provinces, namely: Punjab, Khyber Pakhtunkhwa (KPK), Sindh and Baluchistan. Among all four provinces, Punjab is considered to be the hub of citrus production. **Table 1** represents the major citrus growing districts in all the four provinces of the country.

Punjab province, according to Pakistan Horticulture Development and Export Company (PHDEC) (2005), produces more than 90% of total Kinnow production whereas KPK mainly produces oranges among all citrus fruits in the country. Sargodha, Toba Tek Singh and Mandi Bahauddin are three known districts for their citrus production in Punjab province. Different varieties of citrus fruits are also grown in small proportions in other districts.

Mandarins (Feutrell's Early and Kinnow) and sweet orange (Mausami or Musambi and Red Blood) are very important among all the citrus varieties cultivated in Pakistan. **Table 2** shows different varieties of citrus produced in the country. Punjab province, being the hub of citrus production (Kinnow), produced 97.1% of citrus fruit (Kinnow) in 2014–2015 [3].

In Punjab province, three districts, Sargodha, Toba Tek Singh and Mandi Bahauddin, constitute around 55% of the total area under citrus cultivation and produce nearly 62% of citrus fruit [6]. In Sargodha district, Bhalwal produces 650,000 metric tonnes of Kinnow annually


**Table 1.** Major citrus growing areas in Pakistan.

seasons are favourable for the Pakistan agricultural industry. Despite the decline in the share of agriculture in gross domestic production (GDP), nearly two-thirds of the population still depend on this sector for their livelihood [1]. Agriculture is considered as one of the major drivers of economic growth in the country. It has been estimated that in 2014–2015, the total production of agriculture crops was 116 million tonnes. Pakistan produces about 13.5 million tonnes of fruit and vegetables annually. In 2014–2015, the total fruit production was recorded at 7.01 million tonnes, which composed of 48.3% of the total fruit and vegetables production

The overall trend for all fruit production in Pakistan is increasing except for the year 2006– 2007, when a great decrease of production of all fruits as well as citrus fruits was observed due to unfavourable weather (hailstorm) and water shortage, as shown in **Figure 1**. The area under all fruits and production both has been increasing gradually. Citrus fruit is prominent in terms of its production followed by mango, dates and guava. The total citrus production was 2.4 million tonnes in 2014–2015 that constitutes 35.2% of total fruit production) [3]. Citrus fruit includes mandarins (Kinnow), oranges, grapefruit, lemons and limes, of which manda-

Pakistan's total production of citrus fruit (primarily Kinnow) is approximately 2.0 million metric tonnes annually. Although there is no remarkable increase in area under citrus production, the production has increased up to 30.8% since 1991–1992. In 1991–1992, Pakistan produced 1.62 million tonnes citrus, which increased to 2.1 million tonnes in 2008–2009 and

> Area '000' hectares

Productio n '000' tonnes

**Year**

in the country [2, 3].

38 Agricultural Value Chain

**1.1. Citrus production**

rin (Kinnow) is of significant importance to Pakistan.

2.4 million tonnes in 2014–2015 [3].

**Figure 1.** Area and production of all fruit in Pakistan. Source: [3, 5, 6].


**Table 2.** Varieties of citrus fruit in Pakistan.

and is considered as the centre of Kinnow (mandarin) production (Pakistan Horticulture Development & Export Company (PHDEC), 2005). **Figure 2** demonstrates citrus fruit production in four provinces of Pakistan.

In 2014–2015, the total citrus production in Khyber Pakhtunkhwa (KPK) was 1.29%, in Sindh 1.26% and in Baluchistan it was 0.29%. In the late 1990s, the production of citrus fruit in the Baluchistan province increased and it was due to the increase in the area under citrus cultivation and hence production under citrus fruit was increased in Baluchistan in the late 1990s [3, 6, 9].

In Punjab province, Kinnow production was 1.80 million tonnes followed by oranges, which was about 94 thousand tonnes in 2009–2010 among different varieties of citrus fruits. In

> Punjab, Kinnow was 87.1% of the total citrus production and 80.3% of the total area under citrus cultivation. Oranges come next to Kinnow in production and area under cultivation and constitutes 4.5% of the total citrus production and 6% of the total area under citrus cultivation in Punjab. Grapefruit production is the lowest and it was only 3 thousand tonnes. Different

**Type of Citrus 2011–2012 Percent of total citrus** 

**production Area**

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**Production ('000' tonnes)**

The consumption of fresh citrus fruit in developing countries has been increasing; however, it is still low compared to the developed countries. In Pakistan, per capita consumption of citrus fruit is almost static since 1999 except in 2007 when it dropped to 7.8 from 13.5 kg, as shown in **Figure 3**. The rapid increase in the population may be one of the major factors keeping the consumption level nearly constant despite the increase in citrus production from 1.8 million tonnes in 1999 to 2.1 million tonnes in 2009. Per capita income has increased from US\$450 in 1999 to US\$917 in 2009 [11]. However, the sharp decline in per capita consumption in 2007 was a result of lowest production of 1.4 million tonnes from 2.4 million tonnes in 2006, which resulted in lower domestic supply and availability of citrus fruit in the country. The high peak of 2005 in **Figure 3** reflects the highest per capita consumption of citrus fruit due to decreased exports of the citrus fruit from 151.3 thousand tonnes in 2004 to 79.2 thousand

types of citrus grown in Punjab province in 2009–2010 are shown in **Table 3**.

**Production and area of different types of citrus fruit in Punjab**

**Table 3.** Production of different types of citrus fruit in Punjab.

**('000' Hectares)**

Kinnow 154.6 1876.0 89.43 Oranges 9.4 80.0 3.81 Musambi 7.2 61.5 2.93 Mandarin 1.2 9.3 0.44 Sweet Lime 3.9 29.5 1.41 Sour Orange 0.1 1.0 0.05 Lemon 4.6 26.0 1.2 Sour Lime 0.8 3.8 0.2 Grapefruit 0.3 2.3 0.1 Other 1.2 8.4 0.4 Total 183.2 2097.7 100.00

**1.2. Citrus consumption**

Source: [10]

tonnes in 2005.

**Figure 2.** Province-wise production of citrus fruit in Pakistan. Source: [3, 6].


**Table 3.** Production of different types of citrus fruit in Punjab.

Punjab, Kinnow was 87.1% of the total citrus production and 80.3% of the total area under citrus cultivation. Oranges come next to Kinnow in production and area under cultivation and constitutes 4.5% of the total citrus production and 6% of the total area under citrus cultivation in Punjab. Grapefruit production is the lowest and it was only 3 thousand tonnes. Different types of citrus grown in Punjab province in 2009–2010 are shown in **Table 3**.

#### **1.2. Citrus consumption**

and is considered as the centre of Kinnow (mandarin) production (Pakistan Horticulture Development & Export Company (PHDEC), 2005). **Figure 2** demonstrates citrus fruit produc-

**Sweet Orange** Succri, Musambi, Washington Navel, Jaffa, Red Blood,

**Grapefruit** Mash Seedless, Duncan, Foster and Shamber **Lemon** Eureka, Lisbon Lemon and rough Lemon

**Mandarins** Feutrell's Early and Kinnow

**Lime** Kagzi lime and Sweet lime

Ruby Red and Valencia Late.

In 2014–2015, the total citrus production in Khyber Pakhtunkhwa (KPK) was 1.29%, in Sindh 1.26% and in Baluchistan it was 0.29%. In the late 1990s, the production of citrus fruit in the Baluchistan province increased and it was due to the increase in the area under citrus cultivation and hence production under citrus fruit was increased in Baluchistan in the late 1990s

In Punjab province, Kinnow production was 1.80 million tonnes followed by oranges, which was about 94 thousand tonnes in 2009–2010 among different varieties of citrus fruits. In

tion in four provinces of Pakistan.

**Table 2.** Varieties of citrus fruit in Pakistan.

**Figure 2.** Province-wise production of citrus fruit in Pakistan. Source: [3, 6].

[3, 6, 9].

Source: [8]

40 Agricultural Value Chain

The consumption of fresh citrus fruit in developing countries has been increasing; however, it is still low compared to the developed countries. In Pakistan, per capita consumption of citrus fruit is almost static since 1999 except in 2007 when it dropped to 7.8 from 13.5 kg, as shown in **Figure 3**. The rapid increase in the population may be one of the major factors keeping the consumption level nearly constant despite the increase in citrus production from 1.8 million tonnes in 1999 to 2.1 million tonnes in 2009. Per capita income has increased from US\$450 in 1999 to US\$917 in 2009 [11]. However, the sharp decline in per capita consumption in 2007 was a result of lowest production of 1.4 million tonnes from 2.4 million tonnes in 2006, which resulted in lower domestic supply and availability of citrus fruit in the country. The high peak of 2005 in **Figure 3** reflects the highest per capita consumption of citrus fruit due to decreased exports of the citrus fruit from 151.3 thousand tonnes in 2004 to 79.2 thousand tonnes in 2005.

**Figure 3.** World citrus fruit consumption trend. Source: [12].

**Figure 3** shows the annual per capita consumption (kg) of fresh citrus fruit in important countries. There was an increase in per capita consumption in Brazil that reached to the highest level in 2011 and then dropped very sharply in 2012 and 2013.

The agricultural value chains in Pakistan are very diverse and start with citrus growers/ producers. Like other fruits, citrus fruit value chain is primarily controlled by the private sector. However, Government plays a facilitative role by providing basic infrastructure and regulatory measures for easy business transactions. It is generally observed that marketing intermediaries exploit agricultural crop producers by charging high margin on their investment [16]. Citrus fruit value chain(s) starts with the involvement of pre-harvest contractor directly with citrus growers. According to Chaudry [15], the typical citrus value chains in Pakistan are shown in **Figure 5**. The role of each player in the citrus value chain is presented

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43

All the players involved in these value chains execute their usual functions as they do in other food value chains; however, the pre-harvest contractors are the most important power-

Keeping in mind the increase in production, constant domestic consumption and available surplus of citrus fruit for export, a number of questions arises; how many different citrus value chains operate in the country? Who are the players involved in the citrus value chains? Despite the availability of citrus fruit, why only a small amount of citrus fruit is being exported? To answer these questions, this study aims to identify and analyse different value chains of citrus fruit (Kinnow) that are operating in Pakistan and also to identify and discuss the role and functions of each value chain players in the citrus industry in Pakistan. Furthermore, this study identifies future opportunities and challenges of citrus sector in

later in the results and discussion sections.

Pakistan.

ful player in Pakistan citrus value chains [15, 16].

**Figure 4.** Pakistan citrus area, production and exports. Source: [6, 14].

### **1.3. Citrus exports**

With the changing consumer preferences towards consumption of fresh and convenience food, the global demand for fresh fruit is increasing [8, 13]. Pakistan is one of the largest citrus producing countries and ranked 13th in the production of citrus fruit [5]. It has been observed that fresh citrus exports from Pakistan have been increasing since 1995–1996 as shown in **Figure 4**.

Among all citrus fruits, Kinnow mandarin constitutes about 97% in the total exports of citrus fruit from the country [8, 14]. In 2014–2015, the total exports of citrus fruit from Pakistan were 393 thousand tonnes, which account for a total value of \$204 million that represents about 16.4% of the total citrus production. As compared to 2000–2001, the total exports of citrus were exactly threefold in 2009–2010 which accounted for \$99.4 million of foreign revenue. Despite the increase in production, only a small amount of citrus fruit (8–12%) is being exported.

The majority of the farmers in Pakistan own and cultivate a small size of agricultural land of less than 2 hectare. However, in Punjab, average citrus farm size was 12.3 hectare, which is considered relatively large compared to other crops [15]. The size of citrus orchard ranges from less than 1 hectare to as big as 65 hectare in different regions of the country. A few large citrus growers do exist; however, small and medium size growers are the majority [16].

**Figure 4.** Pakistan citrus area, production and exports. Source: [6, 14].

**Figure 3** shows the annual per capita consumption (kg) of fresh citrus fruit in important countries. There was an increase in per capita consumption in Brazil that reached to the highest

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Brazil

Mexico

USA

Spain

Pakistan

China

**Year**

With the changing consumer preferences towards consumption of fresh and convenience food, the global demand for fresh fruit is increasing [8, 13]. Pakistan is one of the largest citrus producing countries and ranked 13th in the production of citrus fruit [5]. It has been observed that fresh citrus exports from Pakistan have been increasing since 1995–1996 as shown in

Among all citrus fruits, Kinnow mandarin constitutes about 97% in the total exports of citrus fruit from the country [8, 14]. In 2014–2015, the total exports of citrus fruit from Pakistan were 393 thousand tonnes, which account for a total value of \$204 million that represents about 16.4% of the total citrus production. As compared to 2000–2001, the total exports of citrus were exactly threefold in 2009–2010 which accounted for \$99.4 million of foreign revenue. Despite the increase in production, only a small amount of citrus fruit (8–12%) is being

The majority of the farmers in Pakistan own and cultivate a small size of agricultural land of less than 2 hectare. However, in Punjab, average citrus farm size was 12.3 hectare, which is considered relatively large compared to other crops [15]. The size of citrus orchard ranges from less than 1 hectare to as big as 65 hectare in different regions of the country. A few large citrus growers do exist; however, small and medium size growers are the majority [16].

level in 2011 and then dropped very sharply in 2012 and 2013.

**Figure 3.** World citrus fruit consumption trend. Source: [12].

**1.3. Citrus exports**

0.0

10.0

20.0

30.0

40.0

**Consumption (kg/capita/year)**

50.0

60.0

70.0

42 Agricultural Value Chain

**Figure 4**.

exported.

The agricultural value chains in Pakistan are very diverse and start with citrus growers/ producers. Like other fruits, citrus fruit value chain is primarily controlled by the private sector. However, Government plays a facilitative role by providing basic infrastructure and regulatory measures for easy business transactions. It is generally observed that marketing intermediaries exploit agricultural crop producers by charging high margin on their investment [16]. Citrus fruit value chain(s) starts with the involvement of pre-harvest contractor directly with citrus growers. According to Chaudry [15], the typical citrus value chains in Pakistan are shown in **Figure 5**. The role of each player in the citrus value chain is presented later in the results and discussion sections.

All the players involved in these value chains execute their usual functions as they do in other food value chains; however, the pre-harvest contractors are the most important powerful player in Pakistan citrus value chains [15, 16].

Keeping in mind the increase in production, constant domestic consumption and available surplus of citrus fruit for export, a number of questions arises; how many different citrus value chains operate in the country? Who are the players involved in the citrus value chains? Despite the availability of citrus fruit, why only a small amount of citrus fruit is being exported? To answer these questions, this study aims to identify and analyse different value chains of citrus fruit (Kinnow) that are operating in Pakistan and also to identify and discuss the role and functions of each value chain players in the citrus industry in Pakistan. Furthermore, this study identifies future opportunities and challenges of citrus sector in Pakistan.

A statistical package Predictive Analytics Software–version 21 (PASW-21), previously known as Statistical Product and Service Solutions (SPSS), was used to analyse the collected data. Fisher's exact test was used to test the significance of different demographical variables and

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The results of this study revealed that citrus (Kinnow) value chains can be classified into two major types: unprocessed citrus (Kinnow) value chain and processed citrus (Kinnow) value

Unprocessed citrus (Kinnow) graded and packed before selling to the local market and does not include usually washing and waxing. **Figure 6** presents the unprocessed citrus (Kinnow)

About 50–60% Kinnow is marketed in the country for domestic consumption while nearly 30% Kinnow is accounted for post-harvest losses [8]. Citrus growers, pre-harvest contractors, local (provincial) commission agents, inter-provincial commission agents, local wholesalers, inter-provincial wholesalers, local and inter-provincial retailers are different actors of unpro-

The major players of the unprocessed citrus (Kinnow) value chain are citrus growers and preharvest contractors and their marketing strategies intensely affect the citrus supply chain in the country. It was common practice in the past where about 90% of the citrus growers used to sell their orchard to pre-harvest contractors. The predominate reasons include unavailability of finances, lack of market information, ease of the transaction, avoiding the future price fluctuations and norms of the business [15]. Citrus growers are becoming more market oriented and adapting different marketing channels to get high price for their products instead of selling solely to pre-harvest contractors. The improved education level, government support and technological developments are the reasons for this change. One of the citrus growers replied

*'Now nearly every citrus grower has an access to prices of different local and provincial markets which has helped us to involve ourselves into direct marketing of our fruit. Being ignorant of different market prices in the past, we were unable to decide where to sell, hence carried out with the pre-harvest contractor. Thanks for the government support, who provided us this opportunity to market our produce* 

Kinnow processing is of two types: (1) for export and involves washing, waxing, grading and

the selection of the value chain particularly involving pre-harvest contractor.

chain. The description of these value chains is presented in the next section.

**3. Results and discussion**

value chain in the country.

**3.1. Citrus (Kinnow) value chain systems**

*3.1.1. Unprocessed citrus (Kinnow) value chain*

cessed citrus (Kinnow) value chain in Pakistan.

*directly and earn good profit'.*

packing and (2) for juice extraction.

*3.1.2. Processed citrus (Kinnow) value chain*

when asked about direct marketing of his fruit in the market:

**Figure 5.** Value chains of citrus in Pakistan. Source: [15].

### **2. Method**

Both qualitative (exploratory) and quantitative (descriptive and inferential) research methods were used for this study depending upon the research questions. A survey involving different players of Pakistan's citrus industry was conducted in 2013–2014 using semi-structured interviews assisted by a questionnaire. Primary data were collected through surveys, while secondary data were obtained from published documents, reports, journals and government publications of various public and private institutions and departments.

Using a convenience sampling technique, a total of 245 respondents were interviewed during a period of 4–5 months from three leading citrus producing districts, namely Sargodha, Toba Tek Singh and Mandi Bahauddin. The respondents included were 126 citrus growers, 99 preharvest contractors and 20 processing factories/exporters from these three districts. Due to unavailability of population size (sampling frame), time and budget constraint, a convenient sampling technique was used for the selection of the respondents. The underlying reason of interviewing different players in the citrus value chains was to study closely their functions and participation in different existing value chains. It also helped identifying and understanding different value chains operating in the country. This study also identified future opportunities and challenges of citrus sector in Pakistan.

A statistical package Predictive Analytics Software–version 21 (PASW-21), previously known as Statistical Product and Service Solutions (SPSS), was used to analyse the collected data. Fisher's exact test was used to test the significance of different demographical variables and the selection of the value chain particularly involving pre-harvest contractor.

### **3. Results and discussion**

**2. Method**

44 Agricultural Value Chain

Both qualitative (exploratory) and quantitative (descriptive and inferential) research methods were used for this study depending upon the research questions. A survey involving different players of Pakistan's citrus industry was conducted in 2013–2014 using semi-structured interviews assisted by a questionnaire. Primary data were collected through surveys, while secondary data were obtained from published documents, reports, journals and government

Using a convenience sampling technique, a total of 245 respondents were interviewed during a period of 4–5 months from three leading citrus producing districts, namely Sargodha, Toba Tek Singh and Mandi Bahauddin. The respondents included were 126 citrus growers, 99 preharvest contractors and 20 processing factories/exporters from these three districts. Due to unavailability of population size (sampling frame), time and budget constraint, a convenient sampling technique was used for the selection of the respondents. The underlying reason of interviewing different players in the citrus value chains was to study closely their functions and participation in different existing value chains. It also helped identifying and understanding different value chains operating in the country. This study also identified future opportu-

publications of various public and private institutions and departments.

nities and challenges of citrus sector in Pakistan.

**Figure 5.** Value chains of citrus in Pakistan. Source: [15].

#### **3.1. Citrus (Kinnow) value chain systems**

The results of this study revealed that citrus (Kinnow) value chains can be classified into two major types: unprocessed citrus (Kinnow) value chain and processed citrus (Kinnow) value chain. The description of these value chains is presented in the next section.

### *3.1.1. Unprocessed citrus (Kinnow) value chain*

Unprocessed citrus (Kinnow) graded and packed before selling to the local market and does not include usually washing and waxing. **Figure 6** presents the unprocessed citrus (Kinnow) value chain in the country.

About 50–60% Kinnow is marketed in the country for domestic consumption while nearly 30% Kinnow is accounted for post-harvest losses [8]. Citrus growers, pre-harvest contractors, local (provincial) commission agents, inter-provincial commission agents, local wholesalers, inter-provincial wholesalers, local and inter-provincial retailers are different actors of unprocessed citrus (Kinnow) value chain in Pakistan.

The major players of the unprocessed citrus (Kinnow) value chain are citrus growers and preharvest contractors and their marketing strategies intensely affect the citrus supply chain in the country. It was common practice in the past where about 90% of the citrus growers used to sell their orchard to pre-harvest contractors. The predominate reasons include unavailability of finances, lack of market information, ease of the transaction, avoiding the future price fluctuations and norms of the business [15]. Citrus growers are becoming more market oriented and adapting different marketing channels to get high price for their products instead of selling solely to pre-harvest contractors. The improved education level, government support and technological developments are the reasons for this change. One of the citrus growers replied when asked about direct marketing of his fruit in the market:

*'Now nearly every citrus grower has an access to prices of different local and provincial markets which has helped us to involve ourselves into direct marketing of our fruit. Being ignorant of different market prices in the past, we were unable to decide where to sell, hence carried out with the pre-harvest contractor. Thanks for the government support, who provided us this opportunity to market our produce directly and earn good profit'.*

#### *3.1.2. Processed citrus (Kinnow) value chain*

Kinnow processing is of two types: (1) for export and involves washing, waxing, grading and packing and (2) for juice extraction.

of fruit in the season are the qualities of sellers preferred by these Kinnow processors and exporters. Sellers to processors and exporters are paid through cheques. One of the exporters commented on the selection of seller (grower/contractor/commission agent/wholesaler):

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*'In our export business, we need to make promises with our importers for certain quantity of fruit in the season; therefore, all exporters try to deal with the seller who can commit constant supply of citrus. A well reputed, financially strong with good moral character seller is our first choice to deal with'.*

In Sargodha, about 150 Kinnow processing factories are functioning but only 25–30 processing factories are exporting citrus to different countries. The reasons of such a low export from the country include high demand for seedless Kinnow (hybrid mandarin) in the developed countries (not produced in Pakistan), marketing practices and failure to meet the quality certification standards. One of the respondents who wanted to export to European countries

*'I always take good care of my orchards; hence, I manage to get good quality fruit in each season. Realising the quality, I decided to export my fruit to Europe last year but I was told that I should grow citrus to meet quality certification standards required for export which I am following now. Hopefully, I would* 

A few processing units are also being constructed in other districts as well, for example, dis-

A total of 52 fruit processing and juice extraction factories are operating in Pakistan [18]. Only five of them are processing citrus fruit for juice extraction. About 6% to the total citrus produced in the country is processed for juice extraction [18]. These factories are concentrated in the major citrus producing areas such as Sargodha, Bhalwal and Mateela cities. Citrus growers and pre-harvest contractors sell mostly drop off, low quality and non-marketable fruit to

commented:

*be able to export my citrus to Europe soon'.*

**Figure 7.** Processed citrus (Kinnow) value chain for export.

trict Mandi Bahauddin, district Toba Tek Singh and district Multan.

*3.1.2.2. Processed citrus (Kinnow) value chain for juice extraction*

**Figure 6.** Unprocessed citrus (Kinnow) value chain for local market.

#### *3.1.2.1. Processed citrus (Kinnow) value chain for export*

Only 8–12% Kinnow is processed for export to different countries. In 2013–2014, the major exports of Kinnow mandarin were to Afghanistan (113,000 tonnes), Russian Federation (72,000 tonnes) and United Arab Emirates (68,000 tonnes). A complete list of countries is attached in Appendix A [17]. Processed citrus (Kinnow) value chain comprises citrus growers, pre-harvest contractors, local commission agents/wholesalers, Kinnow processing factories and exporters (**Figure 7**). The processed citrus value chain and unprocessed citrus value chain are nearly similar except Kinnow processing factory, and exporters are involved in processed value chain at the end stage of the process.

Citrus growers, pre-harvest contractors and commission agents sell citrus fruit directly to factories (Kinnow processing) and exporters. Pre-harvest contractors and some commission agents act on behalf of these Kinnow processors and exporters and purchase citrus fruit for them. These agents are provided with some credit or advance payments to buy citrus fruit. A good family and financial background, market reputation and ability of constant supply

**Figure 7.** Processed citrus (Kinnow) value chain for export.

*3.1.2.1. Processed citrus (Kinnow) value chain for export*

**Figure 6.** Unprocessed citrus (Kinnow) value chain for local market.

46 Agricultural Value Chain

value chain at the end stage of the process.

Only 8–12% Kinnow is processed for export to different countries. In 2013–2014, the major exports of Kinnow mandarin were to Afghanistan (113,000 tonnes), Russian Federation (72,000 tonnes) and United Arab Emirates (68,000 tonnes). A complete list of countries is attached in Appendix A [17]. Processed citrus (Kinnow) value chain comprises citrus growers, pre-harvest contractors, local commission agents/wholesalers, Kinnow processing factories and exporters (**Figure 7**). The processed citrus value chain and unprocessed citrus value chain are nearly similar except Kinnow processing factory, and exporters are involved in processed

Citrus growers, pre-harvest contractors and commission agents sell citrus fruit directly to factories (Kinnow processing) and exporters. Pre-harvest contractors and some commission agents act on behalf of these Kinnow processors and exporters and purchase citrus fruit for them. These agents are provided with some credit or advance payments to buy citrus fruit. A good family and financial background, market reputation and ability of constant supply of fruit in the season are the qualities of sellers preferred by these Kinnow processors and exporters. Sellers to processors and exporters are paid through cheques. One of the exporters commented on the selection of seller (grower/contractor/commission agent/wholesaler):

*'In our export business, we need to make promises with our importers for certain quantity of fruit in the season; therefore, all exporters try to deal with the seller who can commit constant supply of citrus. A well reputed, financially strong with good moral character seller is our first choice to deal with'.*

In Sargodha, about 150 Kinnow processing factories are functioning but only 25–30 processing factories are exporting citrus to different countries. The reasons of such a low export from the country include high demand for seedless Kinnow (hybrid mandarin) in the developed countries (not produced in Pakistan), marketing practices and failure to meet the quality certification standards. One of the respondents who wanted to export to European countries commented:

*'I always take good care of my orchards; hence, I manage to get good quality fruit in each season. Realising the quality, I decided to export my fruit to Europe last year but I was told that I should grow citrus to meet quality certification standards required for export which I am following now. Hopefully, I would be able to export my citrus to Europe soon'.*

A few processing units are also being constructed in other districts as well, for example, district Mandi Bahauddin, district Toba Tek Singh and district Multan.

#### *3.1.2.2. Processed citrus (Kinnow) value chain for juice extraction*

A total of 52 fruit processing and juice extraction factories are operating in Pakistan [18]. Only five of them are processing citrus fruit for juice extraction. About 6% to the total citrus produced in the country is processed for juice extraction [18]. These factories are concentrated in the major citrus producing areas such as Sargodha, Bhalwal and Mateela cities. Citrus growers and pre-harvest contractors sell mostly drop off, low quality and non-marketable fruit to these juice factories, which process it into juice concentrate and sell it to different retail shops and supermarkets in the country.

oriented [19]. The results also showed that nearly 80% of the citrus growers were very experienced and were involved in the citrus industry for many years. The size of the citrus orchards

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The size of these citrus orchards was further reduced when the orchard was divided among the next generations. Previously, it was found that majority of the citrus growers (more than 90%) preferred to market their produce through pre-harvest contractors, thus reducing the direct involvement of the citrus growers in the value chains. Due to better government policies in the education sector and increasing market awareness, the level of literacy rate has increased in the last 10 years. All citrus growers were educated and became aware of market information and opportunities. As citrus growers are becoming more market oriented, they are searching for reliable market information to find alternative value chains other than selling directly to pre-harvest contractors. According to this study, about 46% of the citrus growers are selling their orchard to pre-harvest contractors. This finding is contrary to the previous study conducted by Chaudry [15] and Ali [16] who reported that 95% of citrus growers sold

Nearly 30% of the citrus growers in the sample sold their orchard to commission agents/ wholesalers or exporters. Price was settled on commission basis at a rate of 7–8% of the total sale price of the produce with the commission agent or wholesaler. Exporters and processing factories usually announce citrus fruit purchase price per 40 kg for the season. It is negotiable in certain cases, for example, if citrus grower(s) contract for complete season fruit supply. There is no government control over prices of Kinnow and it is determined by market forces (demand and supply). The only problem while selling to exporter was that it only purchased good quality fruit with good size and colour (selective fruit purchase). This was one of the reasons, citrus growers switch to alternative buyers who purchase and pay the price for the whole produce. Nearly 6% citrus growers sold their produce to different buyers instead of

**Education Illiterate Undergraduate Graduate Postgraduate**

Percent (%) 3.2 74.6 15.1 7.1

**1.0–20 20.1**–**60 60.1–160**

Percent (%) 46% 30% 18% 6%

**Commission agent/ wholesaler**

**Processing factory/**

**Different buyers**

**exporter**

was small, and majority of the citrus growers possessed less than 20 acres (**Table 4**).

their orchards to pre-harvest contractors about 15 years ago.

**Age (years) 1.0–30 31–60 61–90** Percent (%) 6.3 76.2 17.5

**Experience (years) ≤10 11**–**25 >26** Percent (%) 21.4 40.5 38.1

Percent (%) 53.2 30.2 16.7

**contractor**

**Table 4.** Descriptive statistics for citrus growers.

selling to only one buyer.

**Area under citrus** 

**Sell orchard to Pre-harvest** 

**(acres)**

One of the contractors who supply to exporters and processors replied:

*'I always try to sell exporters and processors because they pay premium price for my fruit. However, these exporters and processors only purchase selective fruit from me and leave small size, non-uniform and unripe fruit. I don't mind it; I sell this non-selective fruit to juice factories and recover my cost. Job done'.*

**Figure 8** shows different functionaries of processed citrus (Kinnow) value chain.

### **3.2. Description of different value chain players**

Different players of citrus (Kinnow) value chain including citrus growers, pre-harvest contractors, commission agents, wholesalers and retailers are described and discussed below.

#### *3.2.1. Citrus growers*

The results of this study revealed that majority of the citrus growers (76.2%) were 31–60 years of age and only 6.3% were quite young (under 25 years old) in the citrus industry. However, about 17% citrus growers were above 60 years of age. The literacy rate was more than 90% in the citrus growers (having at least 5 years of schooling) and only 3.2% respondents were illiterate. It was reported that the literacy rate was increasing in the citrus growing areas in Pakistan, thus providing basis for the growth of citrus growers and making them more market

**Figure 8.** Processed citrus (Kinnow) value chain for juice extraction.

oriented [19]. The results also showed that nearly 80% of the citrus growers were very experienced and were involved in the citrus industry for many years. The size of the citrus orchards was small, and majority of the citrus growers possessed less than 20 acres (**Table 4**).

The size of these citrus orchards was further reduced when the orchard was divided among the next generations. Previously, it was found that majority of the citrus growers (more than 90%) preferred to market their produce through pre-harvest contractors, thus reducing the direct involvement of the citrus growers in the value chains. Due to better government policies in the education sector and increasing market awareness, the level of literacy rate has increased in the last 10 years. All citrus growers were educated and became aware of market information and opportunities. As citrus growers are becoming more market oriented, they are searching for reliable market information to find alternative value chains other than selling directly to pre-harvest contractors. According to this study, about 46% of the citrus growers are selling their orchard to pre-harvest contractors. This finding is contrary to the previous study conducted by Chaudry [15] and Ali [16] who reported that 95% of citrus growers sold their orchards to pre-harvest contractors about 15 years ago.

Nearly 30% of the citrus growers in the sample sold their orchard to commission agents/ wholesalers or exporters. Price was settled on commission basis at a rate of 7–8% of the total sale price of the produce with the commission agent or wholesaler. Exporters and processing factories usually announce citrus fruit purchase price per 40 kg for the season. It is negotiable in certain cases, for example, if citrus grower(s) contract for complete season fruit supply. There is no government control over prices of Kinnow and it is determined by market forces (demand and supply). The only problem while selling to exporter was that it only purchased good quality fruit with good size and colour (selective fruit purchase). This was one of the reasons, citrus growers switch to alternative buyers who purchase and pay the price for the whole produce. Nearly 6% citrus growers sold their produce to different buyers instead of selling to only one buyer.


**Table 4.** Descriptive statistics for citrus growers.

these juice factories, which process it into juice concentrate and sell it to different retail shops

*'I always try to sell exporters and processors because they pay premium price for my fruit. However, these exporters and processors only purchase selective fruit from me and leave small size, non-uniform and unripe fruit. I don't mind it; I sell this non-selective fruit to juice factories and recover my cost.* 

Different players of citrus (Kinnow) value chain including citrus growers, pre-harvest contractors, commission agents, wholesalers and retailers are described and discussed below.

The results of this study revealed that majority of the citrus growers (76.2%) were 31–60 years of age and only 6.3% were quite young (under 25 years old) in the citrus industry. However, about 17% citrus growers were above 60 years of age. The literacy rate was more than 90% in the citrus growers (having at least 5 years of schooling) and only 3.2% respondents were illiterate. It was reported that the literacy rate was increasing in the citrus growing areas in Pakistan, thus providing basis for the growth of citrus growers and making them more market

One of the contractors who supply to exporters and processors replied:

**Figure 8** shows different functionaries of processed citrus (Kinnow) value chain.

and supermarkets in the country.

**3.2. Description of different value chain players**

**Figure 8.** Processed citrus (Kinnow) value chain for juice extraction.

*Job done'.*

48 Agricultural Value Chain

*3.2.1. Citrus growers*


the produce and bargaining power for selling the fruit in the market. One of the citrus grow-

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*'It is always a problem for me to buy inputs once my orchard starts flowering. Pre-harvest contractor, on one hand, purchase my orchard well in time and on the other hand, help in providing me the required* 

There are different types of citrus orchard contractors operating in the country. They can be divided into three broad categories on the basis of their purchasing power of citrus fruit for

Small-sized contractors with buying power less than US\$0.1 million (1 US dollar = 85 PKR) are called '*Den Daar*' and usually work domestically in the local markets only. Being a small-scale operator and limited finances, they work in groups and buy an orchard on shared basis. They sell fruit on daily basis in the local market where they are called '*Phariwala*' in the local language or sometimes they sell directly to a wholesaler or com-

Medium-sized contractors buy fruit that value between US\$0.1 to US\$0.5 million. They work for commission agents/wholesalers/exporters and usually do not invest their own money. Sometimes they buy the orchard with their own money but usually they contract with the citrus grower at the pre-harvest stage by estimating the future production from the orchard and also make a future contract with the commission agents/wholesalers/ exporters. This way they play an intermediary role between two parties without investing their own finances. Commission agents/wholesalers/exporters are then responsible to pay all the money to the contractor in the form of partial payments. Initially, commission agents/wholesalers/exporters pay one-fourth of the total orchard value under the contract to the contractor who pays to the citrus grower as an advance. Usually, this whole agreement is not documented; therefore, there are chances of fraudulent through this whole transaction. One of the possibilities is that citrus grower might refuse to sell at the harvest

The large-sized contractors are few in number and usually buy orchards from mediumand large-sized citrus growers. They typically have strong finances with purchasing power greater than US\$0.5M. Sometimes, they work for commission agents/wholesalers/ exporters and buy orchards/fruit for them. They usually sell fruit to exporters and in different local or inter-provincial markets depending upon the price. However, if the prices are low, they can store fruit in the cold storages (privately owned) for some time and sell

stage due to high price offered by other contractors or buyers.

ers commented on pre-harvest sale of his orchard:

*inputs which otherwise I cannot afford'.*

*3.2.2.1. Types of contractors*

**i)** Small-sized contractors

mission agent.

**ii)** Medium-sized contractors

**iii)** Large-sized contractors

in the market when price increases.

trading purposes.

**Table 5.** Citrus pre-harvest contractors general information.

#### *3.2.2. Citrus pre-harvest contractors*

A total of 99 pre-harvest contractors were interviewed for the study. About 70% pre-harvest contractors had US\$0.1–\$0.5 million business volume and were considered medium-sized contractors. Pre-harvest contractors either used their own money to buy the orchards or acted as an agent on the behalf of the other actors of the citrus supply chain, for example, commission agents, wholesalers, processors or exporters. The results revealed that majority of the pre-harvest contractors (80% of the respondents) had more than 10 years of experience, as shown in **Table 5**. However, small pre-harvest contractors had less than 10 years of experience due to the fact that they work seasonally in the market and were not a regular player of citrus supply chain in the country.

Majority of the citrus growers were well educated and experienced businessmen, whereas, only 35% pre-harvest contractors were illiterate (not even 2 years at school) but they work with either well-educated business partners or family members (brother, son).

About 50% of the pre-harvest contractors sold their fruit to commission agents or wholesalers, as shown in **Table 5**. Price is paid on commission basis at a rate of 7–8% of the total sale price of the produce. Usually, there was 1-year contract (written or verbal) between pre-harvest contractors and commission agents or wholesalers to supply a certain quantity of fruit under the contract on a fix price. Nearly 40% of the pre-harvest contractors sold their fruit directly to exporters. Usually, price was announced by processors and exporter association; however, in some cases it was negotiable.

Citrus growers sold their orchards in advance to contractors for different reasons. Firstly, citrus growers in Pakistan were not financially sound enough to market their produce. Secondly, responsibility of looking after the orchard is shared between farmers and pre-harvest contractors, and lessen farmer's financial burden for fertiliser and pesticides which is now provided by the pre-harvest contractors. On the other hand, pre-harvest contractor took control over the produce and bargaining power for selling the fruit in the market. One of the citrus growers commented on pre-harvest sale of his orchard:

*'It is always a problem for me to buy inputs once my orchard starts flowering. Pre-harvest contractor, on one hand, purchase my orchard well in time and on the other hand, help in providing me the required inputs which otherwise I cannot afford'.*

#### *3.2.2.1. Types of contractors*

There are different types of citrus orchard contractors operating in the country. They can be divided into three broad categories on the basis of their purchasing power of citrus fruit for trading purposes.

**i)** Small-sized contractors

*3.2.2. Citrus pre-harvest contractors*

**Sell fruit to Commission agent/**

50 Agricultural Value Chain

**wholesaler**

Percent (%) 35% 65%

**Table 5.** Citrus pre-harvest contractors general information.

supply chain in the country.

in some cases it was negotiable.

A total of 99 pre-harvest contractors were interviewed for the study. About 70% pre-harvest contractors had US\$0.1–\$0.5 million business volume and were considered medium-sized contractors. Pre-harvest contractors either used their own money to buy the orchards or acted as an agent on the behalf of the other actors of the citrus supply chain, for example, commission agents, wholesalers, processors or exporters. The results revealed that majority of the pre-harvest contractors (80% of the respondents) had more than 10 years of experience, as shown in **Table 5**. However, small pre-harvest contractors had less than 10 years of experience due to the fact that they work seasonally in the market and were not a regular player of citrus

**Size of contractors Less than \$0.1 million \$0.1–\$0.5 million More than \$0.5 million**

**Experience Less than 10 years 10–20 years More than 20 years**

**Exporter Different buyers**

Percent (%) 20% 70% 10%

Percent (%) 20% 45% 35%

Percent (%) 50% 40% 10% **Education status Illiterate Educated to minimum level**

Majority of the citrus growers were well educated and experienced businessmen, whereas, only 35% pre-harvest contractors were illiterate (not even 2 years at school) but they work

About 50% of the pre-harvest contractors sold their fruit to commission agents or wholesalers, as shown in **Table 5**. Price is paid on commission basis at a rate of 7–8% of the total sale price of the produce. Usually, there was 1-year contract (written or verbal) between pre-harvest contractors and commission agents or wholesalers to supply a certain quantity of fruit under the contract on a fix price. Nearly 40% of the pre-harvest contractors sold their fruit directly to exporters. Usually, price was announced by processors and exporter association; however,

Citrus growers sold their orchards in advance to contractors for different reasons. Firstly, citrus growers in Pakistan were not financially sound enough to market their produce. Secondly, responsibility of looking after the orchard is shared between farmers and pre-harvest contractors, and lessen farmer's financial burden for fertiliser and pesticides which is now provided by the pre-harvest contractors. On the other hand, pre-harvest contractor took control over

with either well-educated business partners or family members (brother, son).

Small-sized contractors with buying power less than US\$0.1 million (1 US dollar = 85 PKR) are called '*Den Daar*' and usually work domestically in the local markets only. Being a small-scale operator and limited finances, they work in groups and buy an orchard on shared basis. They sell fruit on daily basis in the local market where they are called '*Phariwala*' in the local language or sometimes they sell directly to a wholesaler or commission agent.

**ii)** Medium-sized contractors

Medium-sized contractors buy fruit that value between US\$0.1 to US\$0.5 million. They work for commission agents/wholesalers/exporters and usually do not invest their own money. Sometimes they buy the orchard with their own money but usually they contract with the citrus grower at the pre-harvest stage by estimating the future production from the orchard and also make a future contract with the commission agents/wholesalers/ exporters. This way they play an intermediary role between two parties without investing their own finances. Commission agents/wholesalers/exporters are then responsible to pay all the money to the contractor in the form of partial payments. Initially, commission agents/wholesalers/exporters pay one-fourth of the total orchard value under the contract to the contractor who pays to the citrus grower as an advance. Usually, this whole agreement is not documented; therefore, there are chances of fraudulent through this whole transaction. One of the possibilities is that citrus grower might refuse to sell at the harvest stage due to high price offered by other contractors or buyers.

**iii)** Large-sized contractors

The large-sized contractors are few in number and usually buy orchards from mediumand large-sized citrus growers. They typically have strong finances with purchasing power greater than US\$0.5M. Sometimes, they work for commission agents/wholesalers/ exporters and buy orchards/fruit for them. They usually sell fruit to exporters and in different local or inter-provincial markets depending upon the price. However, if the prices are low, they can store fruit in the cold storages (privately owned) for some time and sell in the market when price increases.

#### *3.2.3. Descriptions of the other players involved in Pakistan citrus value chains*

#### **i)** Commission agents

The commission agent ('Arhti' in local language) purchases citrus fruit from producers and/or pre-harvest contractors and sells it to wholesalers /retailers/exporters. Occasionally, the commission agents work as a wholesaler and sell directly to retailers or exporters. In some cases, citrus growers and contractors may use commission agents as a selling agent to sell in the local and far distant markets. Commission agents usually do not take the title or possession of the commodity (citrus fruit) and act as a link between buyer and seller and facilitate the whole transaction and receive a fixed amount as a commission for their services.

infrastructure and transportation systems, domestic as well as international supply chain of citrus industry will be better established towards becoming more efficient and reducing the

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The exports of citrus fruit from the country are only 8–12% of the total production; therefore, there lies a great opportunity and potential in the export of citrus fruit. By developing the quality management practices, improving supply chains, establishing certification scheme and reducing post-harvest losses, the exports can be increased particularly in the European

The challenges that Pakistan citrus industry is facing include, but not limited to, agro-ecological climate with extreme summer temperatures, frost in winter and water scarcity/shortage.

Inefficient production, irrigation methods, post-harvest losses, low grade fruit, poor disease control, lack of fertilizers/manures in the soil and inefficient supply chains are the other major challenges in citrus value chains. To overcome these challenges, citrus grower association (private entity owned by growers) is working closely with government departments and institutions to provide required inputs and expertise to growers that can raise the quantity

The lack of skilled and trained labour for fruit picking poses another marketing constraint, which in turn affects the quality of picked fruit. Even the lack of seasonal or temporary labour for fruit picking is also a challenge. The efforts are being made by extension workers, medium and large citrus growers to provide necessary training and accommodation facilities to the labour. This will not only decrease the fruit damage during picking but also ensure the avail-

Good agricultural practices (GAPs) and sanitary phytosanitary (SPS) measures are required for markets such as Europe, the USA and Oceania. However, efforts are being made, both publically and privately, to uplift the quality of citrus fruit in order to get required certifica-

The agro-food value chain system in Pakistan is very diverse and nearly all citrus value chains are dominated by citrus growers, pre-harvest contractors and exporters of citrus fruit with the involvement of other value chain members like commission agents, wholesalers, and retailers. It was found that citrus value chains can be classified into two major types : unprocessed citrus value chain for local markets and processed citrus value chains for export and juice extraction. In Pakistan, the majority of citrus orchards are less than a hectare; however, the average size of citrus orchard is almost 20 hectare. In the past, mostly citrus growers sold their fruit or orchard to pre-harvest contractors and only a small number of the growers were involved in direct marketing of their produce in the markets. In recent times, due to the availability of market information, citrus growers are becoming more market oriented and shifting away from the customary practice of selling the orchard production before harvesting and

countries, Middle East, South East Asia, China and Central Asia markets.

overall waste.

and quality of fruit.

tion for export.

**5. Conclusion**

ability of the labour when required.

Nearly all the commission agents provide credit to citrus growers and contractors with the condition that they would sell their fruit to them. Usually, contractors do not receive any payments until the end of contracting period. At the end of contracting season, contractor is paid based on the agreement between the parties.

#### **ii)** Wholesalers

Wholesalers buy fruit in large quantities from commission agents and pre-harvest contractors or directly from the citrus growers. Contrary to commission agents, wholesalers take the possession of the commodity and perform different value-added functions like grading, sorting, washing, cleaning before selling to the local market, inter-provincial wholesalers, retailers and consumers. Usually, wholesalers extend credit to pre-harvest contractors who purchase fruit for them from the citrus growers. In that case, the preharvest contractors work as a commission agent for that particular wholesaler.

#### **iii)** Retailers

In Pakistan, citrus fruit is a table fruit and consumed fresh. It is primarily sold by fruit shops, stallholders and street hawkers (using animal driven carts). The fruit shops are situated mostly in consumer markets, near residential areas, along roadsides. It is very convenient to buy fruit from these shops at reasonable prices; however, a large quantity of citrus fruit is also sold by street hawkers on bicycles or animal-driven carts all around in the cities and country side. Though they sell only a small amount of fruit, yet they are necessary part of the whole citrus value chain in delivering the product to end consumers. These retailers also known as '*Phariwala*' buy fruit directly from small-sized pre-harvest contractors.

### **4. Opportunities and challenges for Pakistan citrus industry**

Citrus growers are becoming more market oriented; therefore, by increasing the marketled opportunities like crop management, improving quality of the fruit, adding more value through processing will develop and expand Pakistan citrus industry. With newly developed infrastructure and transportation systems, domestic as well as international supply chain of citrus industry will be better established towards becoming more efficient and reducing the overall waste.

The exports of citrus fruit from the country are only 8–12% of the total production; therefore, there lies a great opportunity and potential in the export of citrus fruit. By developing the quality management practices, improving supply chains, establishing certification scheme and reducing post-harvest losses, the exports can be increased particularly in the European countries, Middle East, South East Asia, China and Central Asia markets.

The challenges that Pakistan citrus industry is facing include, but not limited to, agro-ecological climate with extreme summer temperatures, frost in winter and water scarcity/shortage.

Inefficient production, irrigation methods, post-harvest losses, low grade fruit, poor disease control, lack of fertilizers/manures in the soil and inefficient supply chains are the other major challenges in citrus value chains. To overcome these challenges, citrus grower association (private entity owned by growers) is working closely with government departments and institutions to provide required inputs and expertise to growers that can raise the quantity and quality of fruit.

The lack of skilled and trained labour for fruit picking poses another marketing constraint, which in turn affects the quality of picked fruit. Even the lack of seasonal or temporary labour for fruit picking is also a challenge. The efforts are being made by extension workers, medium and large citrus growers to provide necessary training and accommodation facilities to the labour. This will not only decrease the fruit damage during picking but also ensure the availability of the labour when required.

Good agricultural practices (GAPs) and sanitary phytosanitary (SPS) measures are required for markets such as Europe, the USA and Oceania. However, efforts are being made, both publically and privately, to uplift the quality of citrus fruit in order to get required certification for export.

### **5. Conclusion**

*3.2.3. Descriptions of the other players involved in Pakistan citrus value chains*

tractor is paid based on the agreement between the parties.

The commission agent ('Arhti' in local language) purchases citrus fruit from producers and/or pre-harvest contractors and sells it to wholesalers /retailers/exporters. Occasionally, the commission agents work as a wholesaler and sell directly to retailers or exporters. In some cases, citrus growers and contractors may use commission agents as a selling agent to sell in the local and far distant markets. Commission agents usually do not take the title or possession of the commodity (citrus fruit) and act as a link between buyer and seller and facilitate the whole transaction and receive a fixed amount as a commission for their

Nearly all the commission agents provide credit to citrus growers and contractors with the condition that they would sell their fruit to them. Usually, contractors do not receive any payments until the end of contracting period. At the end of contracting season, con-

Wholesalers buy fruit in large quantities from commission agents and pre-harvest contractors or directly from the citrus growers. Contrary to commission agents, wholesalers take the possession of the commodity and perform different value-added functions like grading, sorting, washing, cleaning before selling to the local market, inter-provincial wholesalers, retailers and consumers. Usually, wholesalers extend credit to pre-harvest contractors who purchase fruit for them from the citrus growers. In that case, the pre-

In Pakistan, citrus fruit is a table fruit and consumed fresh. It is primarily sold by fruit shops, stallholders and street hawkers (using animal driven carts). The fruit shops are situated mostly in consumer markets, near residential areas, along roadsides. It is very convenient to buy fruit from these shops at reasonable prices; however, a large quantity of citrus fruit is also sold by street hawkers on bicycles or animal-driven carts all around in the cities and country side. Though they sell only a small amount of fruit, yet they are necessary part of the whole citrus value chain in delivering the product to end consumers. These retailers also known as '*Phariwala*' buy fruit directly from small-sized

harvest contractors work as a commission agent for that particular wholesaler.

**4. Opportunities and challenges for Pakistan citrus industry**

Citrus growers are becoming more market oriented; therefore, by increasing the marketled opportunities like crop management, improving quality of the fruit, adding more value through processing will develop and expand Pakistan citrus industry. With newly developed

**i)** Commission agents

52 Agricultural Value Chain

services.

**ii)** Wholesalers

**iii)** Retailers

pre-harvest contractors.

The agro-food value chain system in Pakistan is very diverse and nearly all citrus value chains are dominated by citrus growers, pre-harvest contractors and exporters of citrus fruit with the involvement of other value chain members like commission agents, wholesalers, and retailers. It was found that citrus value chains can be classified into two major types : unprocessed citrus value chain for local markets and processed citrus value chains for export and juice extraction. In Pakistan, the majority of citrus orchards are less than a hectare; however, the average size of citrus orchard is almost 20 hectare. In the past, mostly citrus growers sold their fruit or orchard to pre-harvest contractors and only a small number of the growers were involved in direct marketing of their produce in the markets. In recent times, due to the availability of market information, citrus growers are becoming more market oriented and shifting away from the customary practice of selling the orchard production before harvesting and are directly marketing their produce in national as well as in international markets. There are few challenges and opportunities that can be addressed prudently to make Pakistan citrus industry more flourishing and prosperous. The biggest opportunity lies in the export horizon, which if tapped can be a good source of export revenue.

**Commodity/Country 2013–2014**

Source: [17]

**Author details**

**References**

Muhammad Imran Siddique\* and Elena Garnevska

Massey University, Palmerston North, New Zealand

Pakistan-2014-15. Islamabad. 2015

\*Address all correspondence to: m.i.siddique@massey.ac.nz

[1] Ministry of Finance. Pakistan Economic Survey 2013-14. Islamabad. 2014

[2] Ministry of Finance. Pakistan Economic Survey 2015-16. Islamabad. 2016

[3] Ministry of National Food Security and Research. Agricultural-Statistics-of-

**Quantity '000' tonnes**

Poland 0.00 –– Qatar 1.77 79,950 Reunion 0.18 7321 Romania 0.07 4538 Russian Federation 72.00 436,2011 Saudi Arabia 12.63 421,972 Seychelles 0.08 5388 Singapore 2.11 87,588 Sri Lanka 4.65 157,871 Sweden 0.05 2571 Tajikistan 0.04 1172 Ukraine 21.70 1,256,946 United Arab Emirates 67.78 2,234,566 United Kingdom 1.99 86,283 Uzbekistan 0.07 2931 Viet Nam 0.34 14,533

**Value**

**Thousand rupees**

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55


### **Appendix A: Export of citrus (KINO) fruit, country wise**


### **Author details**

are directly marketing their produce in national as well as in international markets. There are few challenges and opportunities that can be addressed prudently to make Pakistan citrus industry more flourishing and prosperous. The biggest opportunity lies in the export horizon,

**Value**

**Thousand rupees**

which if tapped can be a good source of export revenue.

**Commodity/Country 2013–2014**

54 Agricultural Value Chain

**Appendix A: Export of citrus (KINO) fruit, country wise**

**Quantity '000' tonnes**

**Kino, fresh 353.72 15,665,315** Afghanistan 112.87 4,514,597 Angola 0.09 3593 Armenia 0.00 –– Azerbaijan 0.00 121 Bahrain 1.64 57,762 Bangladesh 1.87 70,369 Cambodia or Kampuchea 0.27 10,368 Canada 0.73 39,012 Georgia 1.80 121,427 Hong Kong (S.A. Re. Chi) 0.19 6587 Indonesia 17.34 864,293 Iran (Islamic Republic.) 0.00 – Iraq 0.00 – Italy 0.00 – Kazakhstan 0.35 14153 Kuwait 12.16 464,032 Lithuania 0.42 29,000 Malaysia 1.01 52,365 Maldives 0.00 – Mauritius 1.45 75,519 Netherlands 0.05 2174 Norway 0.08 3419 Oman 5.79 179,048 Philippines 10.15 431,834

Muhammad Imran Siddique\* and Elena Garnevska \*Address all correspondence to: m.i.siddique@massey.ac.nz Massey University, Palmerston North, New Zealand

### **References**


[4] Spiegel-Roy P, Goldschmidt EE. Biology of Citrus. Cambridge University Press; Cambridge, UK. 1996

**Section 2**

**AVC of Fisheries**


**Section 2**
