1. Characteristics of the value chain of agricultural products:
Agricultural value chain studies use the term “value chain” or “supply chain” to describe the value chain of agricultural products. FAO (2010) defines: “The value chain of agricultural products includes the set of actors and activities that bring an agricultural product from production to the end consumer, whereby the value of the product is increased. in each intermediate stage. A value chain can be a vertical link or a network of independent actors in the stages of processing, packaging, storage, transport, and distribution.
Thus, the concept of the value chain of agricultural products also has the characteristics of the general concept of the value chain, which is the description of a series of activities to bring a product from production to final consumption. Activities in the value chain of agricultural products include production, collection, processing, wholesale, and retail, as well as supporting functions such as supply of inputs, financial services, logistics, and packaging, and marketing The value chain is influenced by the characteristics of agricultural products. Agricultural products have specific characteristics such as seasonal, perishable, inconsistent quality, and food hygiene and safety issues. Characteristics problems in the organization, operations, and performance of the chain, thereby affecting the characteristics of the chain.
Big retailers such as supermarkets increasingly dominate the value chain of agricultural products. Supermarkets play an increasingly important role in the retail of agricultural products because the tastes of agricultural consumers have changed towards shopping at retailers to meet convenience requirements. clean, ensuring food hygiene and safety. Supermarkets have become increasingly highly centralized: The 15 largest supermarkets account for more than 30% of the global supermarket retail market share. On a large scale, supermarkets increasingly dominate and control the value chain of agricultural products. This makes supermarkets increasingly play a dominant role in the value chain of agricultural products. Supermarkets govern what to produce, how it is produced, and by whom. This influence affects the structure, organization and operation of the value chain of agricultural products.
High concentration in input supply and food processing. In the food processing sector, there is also a high concentration of concentration, with the top 50 processors accounting for 30% of the market share of packaged foods. Some multinational companies such as Nestlé, Kraft Foods, Unilever increasingly expand their operations globally and dominate the market of some packaged food products. In the input materials industry, there is also a high concentration in the supply of seeds, pesticides, veterinary drugs, biotechnology and genetics: the top 10 largest companies control from 54% to 80%. market share in each sector. The high concentration of input supply and the purchase of output also affects the structure, organization and operation of the value chain of agricultural products, especially in developing countries.
Standards are becoming increasingly important in the value chain of agricultural products. Along with the process of globalization and international economic integration, countries increasingly use standards such as food hygiene and safety, quality standards as a technical barrier to protect domestic agriculture. In addition, businesses also use their own standards in product purchasing. These standards become a barrier to producer participation in the value chains, especially small-scale production in developing countries.
2. Logistics issues in the agricultural sector:
Logistics plays the role of connecting all stages in the value chain of goods in general and becomes more and more important in the value chain of agricultural products, because ensuring product quality to end consumers depends on the combination. fluently between the stitches, the links in the chain.
In the form of value chain management / association, it is possible to divide the value chain into 5 types of value chains (Gereffi et al., 2005).
– Modular: is a type of chain management based on the relationship between the leading business and the suppliers. The relationship between the actors in this form is characterized by the complementary nature of each other’s core competencies. In this model, standards and information are used as a coordination mechanism.
– Constraint (captive): In this model, the leading business imposes regulations in which other businesses in the chain operate. These firms specify product and manufacturing processes for suppliers and supervise suppliers to comply with these standards.
– Vertical Unification (hierachical): This governance model is characterized by vertical integration (transactions that take place within an enterprise). The vertical unified production network governance mechanism is the manager’s control over subordinates, or from headquarters to subsidiaries and branches.
In Vietnam’s agricultural sector, (i) is still popular at present, but in recent years, the State is very encouraging activities to sign contracts, to produce under contracts to ensure output. for agricultural products, ensuring the uniformity of product quality to end-users. Therefore, investment in logistics is extremely important to ensure quality and delivery conditions. If it is impossible to improve damage, loss, quality loss during storage, transportation or delivery on schedule, Vietnamese agricultural products are not only difficult to join the whole production chain. demand but also at risk of losing their home field due to competitive pressure from professional foreign agricultural and food suppliers, which have turned to Vietnam market as a fertile land for investment.
However, agriculture and logistics enterprises have yet to find a close link. Transactions between the two parties are still mostly done in the form of contractual leasing, but there is no linkage to support each other on prices, helping each other improve the quality of products and services. In addition, many small manufacturing and logistics companies can only do small, seasonal business, are not eligible to create opportunities for development cooperation.Due to the small scale, the operation of the chain is also lacking. activities of high value such as fruit and vegetable processing, packaging, labeling, goods transshipment, store shelf arrangement … Agricultural production, distribution of agricultural products, Restaurant chains and supermarkets need to work more closely with cold chain service providers, focusing on value, quality and transparency across the chain. In order for agricultural products to ensure quality in storage and transportation, businesses need to consider when choosing between low-cost logistics services and high-value and continuous logistics services.