horticultural economics & management newsletteror horticultural business strategy are invited...

or horticultural business strategy are invited for the 16th International Symposium on Horticultural Economics and Management. Contributions will be welcomed from academics, researchers, executives, consultants, government officers, graduate students and growers. All papers will be subject to a blind peer review and the papers that are accepted will be published in a special edition of ACTA HORTICULTURAE

The Commission on Horticultural Economics and Management in conjunction with the Commission on Research Training and Extension are pleased to announce that a concurrent and joint symposium will be held at:

Pang Suan Kaew hotel, Chiang Mai, Thailand

December 7-11, 2008 The major theme of the Horticultural Economics Symposium will be Sustainability in Horticulture. Accordingly, research papers, posters and case studies on topics, associated with the sustainability of horticulture, within the broad fields of horticultural economics, horticultural management, horticultural marketing

The symposium will address: Among the critical issues that the symposium will address are:

What is the impact of sustainability for ornamental and production horticulture?

How might this impact be addressed?

To deal effectively with issues of sustainability, what will be the relevant skill set for horticultural economists in the next decade?

How can we craft and deliver a persuasive business case for sustainable horticultural activity? Continued Page 2

Number 6, October 2007

Horticultural Economics & Management Newsletter

Please forward all correspondence to:

Peter P. Oppenheim Chairman Commission of Economics and Management

Deakin Business School, Deakin University, 336 Glenferrie Road, Melbourne, Victoria, Australia 3144

Email: [email protected]

Inside this issue:

XVI International Symposium on Hort. Econ & Mgt. Linking Farmers to Markets Fruit Industry Supply Chain Optimization The Role of Age and Ethnicity in Gardening A Comprehensive Model of Customer Loyalty Socio-Economic Impact of Vegetable Production Food Quality and Safety Standards International Journal of Wine Business Research Challenges for the Dutch Pot Plant Sector Peeling Tomato Paste Subsidies Chinese Agricultural Transition

XVIth International Symposium on Horticultural Economics and Management

http://www.muresk.curtin.edu.au/conference/ishsem for further information.

13456781214 15 16


Horticultural Economics & Management

While this symposium seeks to address various issues and approaches associated with sustainability and the task of implementing sustainability in horticulture, we will also welcome papers that discuss recent advances more generally in any of the following topics.

Horticultural marketing Packaging and branding

Strategic management in horticulture Labour in Horticulture

Horticultural market information systems Transport and logistics

International competitive advantage Export market development

Horticultural Economics Supply chain management

Consumer market research Environmental valuation

Quality management systems Horticultural business management

Research methodology Advances in Horticultural Economics

Advances in Horticultural Management Advances in Horticultural Marketing

Call for papers

An abstract of no more than 500 words should be submitted electronically to the Conference Convener by February 28, 2008. Abstracts must include the title of the paper, the authors name (s) and institution( s) along with telephone, fax and email address. Please indicate whether you wish the paper to be submitted for oral presentation or a poster.

Electronic copies of the final paper must be received by the Proceedings Editor no later than May 31, 2008.

Papers will be submitted to a double blind review with authors advised of acceptance by July 30, 2008.

Authors will then be required to provide final copies of their paper by September 30, 2008. Late papers will

NOT be accepted for publication in the conference proceedings.

Submitted papers must be no longer than EIGHT A4 pages including all tables and references. Full details on the required format and submission of papers is available from the ISHS website: http://www.ishs.org/wri/pap1.htm

The Conference convener: The Proceedings Editor: Assoc. Professor Peter Batt Assoc. Professor Peter Oppenheim Email: [email protected] Email: [email protected]

http://www.muresk.curtin.edu.au/conference/ishsem

To register your interest in this symposium please complete and return the form on page 13.

Assoc. Professor Peter Batt opening the International Symposium on Supply Chain Management in Hanoi — September 2007.

CONTRIBUTE TO OUR NEWSLETTER

To ensure that this newsletter is distributed twice in each year it is essential that members send items of interest to me at regular intervals. Items of interest could include:

Copies of papers or abstracts, Web sites of interest, Opportunities for collaboration, News of individuals, Requests of any nature, Employment opportunities, Details of work in progress, Forthcoming conferences, Photographs of interest etc. etc.

Please send all contributions to: [email protected] as soon as possible and no later than March 1st., 2008

NUMBER 6, OCTOBER 2007

LINKING FARMERS TO MARKETS

A new paper by Andrew W. Shepherd of FAO examines experiences of linking farmers to markets, in order to reach some tentative conclusions regarding success factors. It mainly considers examples of linkages promoted by outside organizations such as NGOs. Issues discussed include the choice of markets, the capacity of the linking organizations, and the relationship between the private sector, NGOs and farmers. Linking farmers to new markets invariably involves farmers organizing into formal or informal groups. Experiences with group organization are reviewed, as is the question of finance. Problems faced by farmers in maintaining linkages are examined and sustainability and scaling-up of linkage activities considered. A check-list of issues to address when planning market linkages is provided as an annex. The paper also considers the enabling environment that governments must provide if linking farmers to markets is to prove successful.

The paper is aimed at staff of NGOs, both those working at the policy level and in the field; at donor organizations and the projects they support; and at ministry of agriculture policymakers and extension services. It should also be useful for private sector companies seeking to develop linkages with small farmers. It can be downloaded at http://www.fao.org/ag/ags/subjects/en/agmarket/linkages/linking_producers.html

FRUIT INDUSTRY SUPPLY CHAIN OPTIMIZATION A. M. Blanco1*, G. L. Masini 2, N. Petracci1 and J. A. Bandoni 1

(1) Planta Piloto de Ingeniería Química - PLAPIQUI (UNS-CONICET)

Camino La Carrindanga, Km. 7, (8000) Bahía Blanca, Argentina

Fax: +54 291 486 1700, [email protected] Departamento de Ingeniería Mecánica, Facultad de Ingeniería

Universidad Nacional del Comahue, Neuquén, Argentina

(*) corresponding author

Although Supply Chain optimization is a mature field, very few contributions on Fruit Industry Supply Chain (FISC) modeling with management purposes have appeared in the open literature. According to the authors’ knowledge, only three contributions on the whole FISC system, have been presented so far: Masini et al. (2003), Ortmann (2005) and Masini et al. (2007).

In Masini et al. (2003) a preliminary planning model of a typical large company operating in the Argentinean pip fruit (apples and pears) supply chain was firstly described. Recently, that model was extended in Masini et al. (2007) to address the company’s tactical planning problem. The resulting LP multi-period model is based on a realistic description of the network topology and spans a one-year horizon with a weekly resolution in order to comprehend the whole fruit season with the required detail. The model contemplates farms, packaging plants, cold storage facilities, concentrated juice plants, milling plants and cider plants along with clients and third party raw material and services suppliers. For givenprocessing and storage capacities and estimations of own fruit production and quality per variety, the model returns the amounts of packed fruit, concentrated juice and cider that should be allocated in the different markets to maximize the total profit of the business along with the required third party resources (raw material, storage and transportation) to optimally operate the system. The model was conceived as a decision support tool to aid in the negotiation instance of the FISC business when sales commitments and third party resources purchase have to be decided.

In Ortmann (2005) the South African fresh fruit export supply chain was described in detail and models to optimize the fruit business with emphasis in foreign markets were proposed. The resulting single period LP models, based on graph theoretic descriptions of the system, were designed to maximize the fruit flow and to minimize the transportation costs. They do not consider for example local markets, derivative industries such as juice production or peripheral costs such as fruit production and packaging. Since the study was mainly aimed to analyze the export fruit supply chain infrastructure, the models were designed to identify bottlenecks within the network rather than to provide a planning tool for the system’s managers.

The above-described contributions address the tactical/strategic levels of the decision-making in centralized FISCs. Such models are not appropriate as operational decision support tools, which should be able to capture the real dynamic behavior of the system to effectively aid in the operational instance of the FISC. In fact, FISCs possess unique features with respect to classic supply chains from an operative point of view.

Classic chains are “pull systems” driven by the orders that the customers place to retailers, which propagates backwards through distribution-centers, warehouses and plants to finally reach the raw material suppliers. In such systems product availability (adequate inventory) is the key factor to achieve good customer satisfaction. Unlike classic chains, FISCs are a sort of “push systems”, driven by the fresh fruit produced in farms each season, which determines the spectrum of final products. Customer demand does not disturb the system in the classical sense, since most of the (estimated) final production (packed fruit, juice and cider) is allocated before the season (Masini et al., 2007). Therefore the operational planning of the FISC should seek to satisfy as close as possible the already established product delivery commitments rather than to respond to “on-line” customer demand.

According to the authors knowledge no operations optimization models for FISCs management have been proposed so far. Current work is addressing the operational planning of a typical FISC in order to explicitly consider the unique operational features of such systems. In particular, a Model Predictive Control (MPC) based scheme is being explored. MPC is a model based control strategy that shows attractive features for multivariable, highly interacting, nonlinear, uncertain systems. It was originally devised for chemical process control and later extended to many other areas due to intrinsic advantages regarding more classic control strategies. This methodology naturally allows addressing the meaningful uncertainty in the quality and quantity of the raw material (fresh fruit from farms) and the possibility of supply chain disruption episodes.

References

Masini G. L., N. Petracci and A. Bandoni (2003); Supply Chain Planning in the Fruit Industry; Presented at FOCAPO 2003; Coral Springs Miami (USA).

Masini G. L., A. M. Blanco, N. Petracci and A. Bandoni (2007); Supply Chain Tactical Optimization in the Fruit Industry; submitted to the WILEY-VCH book "Supply Chain Optimization", L. Papageorgiou and M. Georgiadis, editors.

Ortmann F. G. (2005), Modeling the South African Fresh Fruit Export Supply Chain, MSc Thesis.


Jennifer H. Dennis, Departments of Horticulture & Landscape Architecture and Agric. Economics,

Purdue University, IN 47907

Bridget K. Behe, Department of Horticulture, Michigan State University, MI 48824

(accepted for publication in HortScience)

Abstract

In September 2004, an Internet study was conducted to evaluate and determine differences in gardening participation, purchases, and levels of satisfaction and regret by ethnic background. Consumers were asked to identify their participation in seven gardening activities and about the purchase of 12 gardening product categories. The sample was stratified by income and age. The number of differences in garden-related activity participation and purchases decreased as income level increased across ethnic and age groups. At every income level, persons of Caucasian descent had a higher satisfaction average score and factor score, and higher regret mean score and factor score. This indicated that Caucasians did experience greater satisfaction and less regret than persons of other ethnic backgrounds, regardless of income. For marketers, this shows a heterogeneous market at lower-income levels and a more homogeneous market at upper-income levels. Ethnicity and age could be used as a basis for market segmentation, and differences are indeed present.

Evaluating the Role of Age and Ethnicity on Gardening

Purchases and Satisfaction


NEW BOOK

Will, Margret and Doris Guenther (2007): Food Quality and Safety Standards as required by EU Law and the Private Industry – With special reference to the MEDA countries' exports of fresh and processed fruit & vegetables, herbs & spices – A Practitioners’ Reference Book; 2nd revised and up-dated edition; Editor: GTZ, Eschborn; CDRom

About this reference book: This 2 d, fully revised and updated edition of the reference book gives stakeholders in the food chain the information they need to keep up with recent developments in international food standards and in food quality and safety assurance systems geared to public health and consumer protection. (See page 8 for further details)

Professor Tran Duc Vien

Welcoming participants to the International Symposium on Supply Chain Management in Hanoi September 2007.

Spreng, Richard A., Thomas J., Page, Jr., and Bridget K. Behe. 2007.

13th Academy of Marketing Science World Marketing Congress. Verona, Italy

Customer loyalty has been an enduring topic of interest to both academics and business practitioners. Research has sought to understand what loyalty is and how to create it based on customer satisfaction, customer value, and retention. It appears that none of these, by themselves, provide a complete view of why customers are loyal, yet we believe that together they do. This tri-partite view has been suggested before but has not been explored as a model of loyalty. We integrate these three factors into a cohesive loyalty model.

A survey concerning the purchase of plants and gardening supplies was developed to determine the effect of each construct on repurchase intentions and word-of-mouth. A total of 581 usable responses were obtained. The data were analyzed using LISREL 8.71 (Joreskog and Sorbom, 2004). The basic model fit the data well (C2 = 49.50, p = 0.066, 36 df). All paths were significant except the path from reward to word-of-mouth. A series of nested models was compared to the modified baseline model excluding the non-significant path from reward to word-of-mouth. The only additional path to be significant was the direct effect of service quality on word-of-mouth, which also resulted in a non-significant path from value to word-of-mouth. The final model included the direct effect of service quality on word-of-mouth but dropped the non-significant paths from reward and value to word-of-mouth. This model fit well as indicated by the fit statistics C2= 46.13, (p = .1443, 37 df) and all paths were significant.

The results indicate that the customer’s perception of service quality affects their emotional response to the transaction and the perceived value derived from it. Service quality greatly influenced emotion and value, but had little impact on reward. Service quality also had a substantial direct effect on word-of-mouth. If a customer is extremely satisfied (dissatisfied), then s/he is likely to be motivated to say good (bad) things about the transaction to others. Each of the components of the tripartite strategy had a significant impact on repurchase intentions. The results show that perceived value and emotion play a greater role in determining loyalty than customer reward programs indicating that reward strategies may be the least effective in creating repurchase intentions, whereas engendering a positive emotional response may be the most effective strategy. In retrospect, the fact that service quality’s effect on reward is relatively small is not surprising in that the consumer likely perceives that s/he will be rewarded whether or not s/he is satisfied. Word-of-mouth, on the other hand, appears to be determined largely by the perception of the transaction itself, and to a much smaller extent by the emotional response to the transaction.

A Comprehensive Model of Customer Loyalty.


INTERESTED IN VALUE CHAINS? then visit this Web Site:

“Value Chains for Broad Based Development”, http://www.value-links.de/

International Symposium Announcement

The socio-economic impact of modern vegetable production

technology in tropical AsiaLotus Pang Suan Kaew Hotel, Chiang Mai, Thailand

February 3-6, 2008

Currently there is much discussion among decision makers and the international development community about

the potential for vegetable farming to improve smallholder farmers income, to reduce rural poverty and to

improve health and wellbeing through improved diet and nutrition. While significant gains in productivity have

been achieved through the introduction of improved vegetable production technologies, without the required

strategy and policy framework and the greater participation of public-private partnerships in both the upstream

and downstream marketing and distribution of inputs and outputs, the full potential of the vegetable production

sector is unlikely to be achieved.

For this inaugural symposium, a number of distinguished speakers have been invited to provide an overview of

the various issues constraining vegetable production and marketing in Asia. In a holistic systems based

approach, speakers will discuss the opportunities and the constraints to the introduction of improved seed

technology, production technology and post-harvest technology. Various case studies from Indonesia, India,

Thailand, the Philippines and Vietnam will be used to illustrate the socio-economic impact of modern vegetable

production technology in Asia. Various models of public-private partnerships in research and development,

extension and training and the downstream marketing of fresh vegetables will be discussed. From the many

presentations and experiences, the outcomes will be translated into key success factors.

To provide researchers and the international development community with an opportunity to share their

experiences, a limited number of competitive papers will be accommodated. Papers should focus on the

socio-economic impact on smallholder farmers arising from the successful introduction and implementation of

improved production technologies rather than the technology itself. Papers are expected to address a number of

the issues described below;

Plant breeding Market linkages

Seed technology Training and extension

Production technology Research and development

Greenhouse technology Health and nutrition

Irrigation Supply chain management

Integrated pest management Environmental sustainability

Post-harvest technology Worker welfare

Contributions highlighting partnerships between the public-private sector will be particularly welcome.

For more information visit the conference website:

http://www.muresk.curtin.edu.au/conference/ishsvtc



.

A DATE FOR YOUR DIARY INTERNATIONAL SOCIETY FOR HORTICULTURAL SCIENCE COMMISSION ECONOMICS AND MANAGEMENT. XVITH INTERNATIONAL SYMPOSIUM, DECEMBER 2008


Professor David Hughes addressing participants at the International Symposium on Supply Chain Management in Hanoi

A Site to Remember


REGISTRATION of INTEREST

Name ……………………………………………….…………………………… Position ……………………………………………………………………..…….. Institution ……………………………………………………………………………. Address …………………………………………………………………………….

…………………………………………………………………………….. Email ……………………………………………..…………………….………... Please fax your completed registration of Interest form to (61) 8 9266 4422 or post to:

Assoc. Professor Peter J. Batt HorticultureCurtin University of Technology GPO Box U1987 PERTH 6845 WESTERN AUSTRALIA


Consumption of fruit

ISAFRUIT is a European integrated research project that focuses on 'Increasing fruit consumption through a trans-disciplinary approach delivering high quality produce from environmentally friendly, sustainable production methods'. The project rests on seven pillars. As the coordinator, LEI is responsible for 'Consumer driven and responsive supply chains'.

Source: LEI Newsletter, Vol 2


Eight challenges for the Dutch pot plant sector; FloriLog-Regie: Factfinding and SWOT analysis 1

In 2005, the ornamental plant sector set up the Foundation FloriLog, through which they are able to make agreements with each other regarding logistics within ornamental plant cultivation. Auctions, trading and transporters work together on the future logistics of ornamental plant production.

One of the activities of the foundation is the FloriLog-regie project. Under the motto: 'from logistical intermediary to manager within a sustainable international service network', FloriLog-regie provides insight into the internationalisation taking place within the pot plant sector and the manner in which the Netherlands will need to respond to this in logistical terms and in a sustainable way. Given the continuing trend of internationalisation and the fact that one of the Netherlands' strengths lies in the commercial and logistical management of ornamental plant cultivation flows, there are opportunities to be found in the expansion of that management role in order to further reinforce competitiveness.

The activities of LEI (Agricultural Economics Research Institute) in this project are focused on the formulation of an internationalisation strategy and accompanying agendas for the Dutch pot plant network. On the basis of the collated 'facts and trends', LEI has formulated eight challenges for the Dutch pot plant cluster, namely:

1. compelling demand-driven chains to make choices regarding their role and activities;

2. sales to independent retailers: smarter chain organisation required;

3. better positioning of daily trade within foreign retail sector in the market;

4. creation of good starting position within distant growth markets;

5. winning market share within saturated markets;

6. structural integration of international product flows;

7. improvement of logistical planning within the chain;

8. a good balance between individual interests and cluster interests; collaboration remains essential.

These challenges have been discussed once with a select group of representatives from the pot plant sector (September 2006). This group has also already given thought to collective strategic options for the Dutch pot plant network. This information cannot be found in this report, but will be further elaborated as this project progresses (up until the end of 2008).

1. CONTRIBUTED BY Professor Nico de Groot, Head of the Department, LEI (AERI)


Peeling tomato paste subsidies The impact of a revision of the CMO for processing tomatoes on European

Horticulture1

The Common Market Organisation (CMO) for processed fruit and vegetable products is currently evaluated by the European Commission. The evaluation may lead to a reform of the CMO. Within the framework of the evaluation and the possible reform by the European Union, the Dutch Ministry of Agriculture, Nature Management and Food Quality called upon LEI to evaluate the CMO for processing tomatoes. Currently, the production of processing tomatoes is subsidized with a 34.50 euro subsidy per tonne. The Ministry of Agriculture is interested in the impact the reform of the production subsidy may have on production and trade patterns of fresh and processing tomatoes as well as other fruits and vegetables. The CMO for processing tomatoes is laid down in EC Regulation nr 2201/96. In 2001 the regulation was adapted for the last time.

The processing tomato supply chain is a large sector in the Mediterranean countries and to a lesser extent in new member economies such as Poland and Hungary. The European tomato processing industry processed more than 11,000,000 tonnes of raw tomatoes in 2004. Italy is by far the most important producer of processed tomatoes in Europe with a 53% share of European production followed by Spain (22%) and Portugal and Greece (10% each). The production of processing tomatoes still grows fast, notably in Spain and Italy. Processing tomatoes are produced on relatively large farms specialized in extensive production of arable crops and vegetables.

The CMO for processing tomatoes goes back to 1978 and has been reformed in 2001. Under the 1978 regime, growers were subsidized through the processing industry. From 2001 onwards, growers are subsidized directly. The subsidies involved in the support of the processing tomato supply chain are substantial: a budget of 300 million euro amounting to 50% of producer turnover. Both the 1978 and the 2001 subsidy schemes are associated with substantial overproduction. Actual expenses in 2005/06 and 2006/07 (380 and 360 million euro respectively) exceed the EU budget by far. The 2001 subsidy regime spurred concentration at the processing level except for Italy.

This report analyses two possible reforms of the processing tomato supply chain: (I) the abolishment of the production subsidy for processing tomatoes; and (II) the abolishment of the production subsidy plus the introduction of a compensating area payment. The area payments are assumed to prescribe the allocation of some land to processing tomatoes in order to prevent unfair competition with growers of other vegetables, fruits and arable crops. Scenario I comes to the following conclusions:

- the reduction in the production subsidy is likely to be passed through into higher input prices for tomato processors. Input prices may rise with almost fifty percent. Grower prices will decrease to some extent (0-2%);

- production of European processing tomatoes will fall by 15% in Greece, Portugal and Spain and by 36.5% in export-oriented Italy given the price elasticities chosen. The fall in production may be compensated by the current growth in the demand for processing tomatoes;

- mediterranean farmers will switch from processing tomatoes and other extensively produced crops towards fruits and fruit vegetables. Note that this result contrasts and complements the agronomic perspective posited above;

- in North-European markets, Mediterranean fruit exporters crowd out domestic producers and other exporters. As a result, North European growers switch from fruit to vegetables production. This also holds for the Netherlands.

If the abolishment of the production subsidy is compensated by area payments, the above results change into the following results:

- grower prices fall substantially. Area payments create a divergence between land and output developments in the Mediterranean. Demand for and - as a result - supply of processing tomatoes fall more sharply than land allocated to processing tomatoes. The area allocated to processing tomatoes decreases by 10-15%; production of processing tomatoes diminishes by 12-20%. Growers of processing tomatoes produce more extensively and thereby reduce capital and labour input. Grower prices fall with production costs due to sharp price competition;

- mediterranean growers switch to vegetables in the open (and probably also to arable crops). They also switch to some extent to fruits and fruit vegetables. North European production is hardly influenced.

1. CONTRIBUTED BY Professor Nico de Groot, Head of the Department, LEI (AERI)

Chinese Agricultural Transition: Trade, Social and Environmental Impacts

The transition of China’s agriculture has global implications. Due to the size of China’s economy changes in its agricultural trade affect the rest of the world. The size of China also makes changes in poverty and environmental pressure of global interest. LEI participates in the EU-financed project 'Chinese Agricultural Transition: Trade, Social and Environmental Impacts' that started in January and will run for three years.

The project consists of four main sets of activities:

studying major drivers of China’s agricultural transition and their expected development over the period 2000-2030 and likely government responses to social and environmental pressures; accounting for the impact of changes in China on international markets while taking a closer look at China-EU trade over the period 2000-2030, by establishing a linkage between the Chinagro model, a spatially explicit equilibrium model that comprehensively depicts China’s farm sector in 2,433 counties, the GTAP model of world trade, and FEA-27, a model of EU-agriculture for 27 members states;tracing impacts at household level by linking geo-referenced household surveys to a population census of China and a detailed geographical data set, relying on a suitable adaptation of poverty mapping methodology; using agro-ecological assessment tools to quantify the environmental pressures resulting from intensified livestock industry as well as from intensified horticulture production.

The project has a strong emphasis on quantitative analyses through model-based assessments. Although allowing counterfactual analyses these model-based assessments are not able to deal with individual products in detail. Therefore, parallel to the modeling work, commodity-specific assessments will be done, i.e. to study in more detail barriers to trade (at EU or Chinese side) for a limited set of products. One aspect of these assessments will be to compare producers for the Chinese domestic market with producers for international trade. This is expected to yield insight into the ease with which China’s export of (horticultural) products can expand.

Contact: Marijke Kuiper

[email protected]

Higher farm incomes, lower in fisheries

Every year in December LEI publishes its first estimates of the development of incomes in Dutch agriculture and fisheries in the past year. The income of agriculture and horticulture as a whole in 2006 was considerably higher than the year before due to an increase in the prices of many products. Exceptions to the overall picture are the broiler sector, in which average incomes even fell into the negative zone, and farms with a lot of starch potatoes, which had to face sharply declining incomes. For the cutter fisheries, which is the main sector in the Dutch fishing industry, the trend of falling revenues continued in 2006. The high and still rising costs of energy in particular put a heavy burden on the financial results.

SOURCE: LEI Newsletter Vol. 2


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