The last two decades have witnessed increased food retail concentration, complexity of supplier relationships, and risk of supplier failure and food safety hazards. In light of these developments, national governments are raising legislative demands to increase trust and integrity in food supply chains. Specific supply chain governance and organization is paramount, especially in arid and semi-arid regions, for the control of unfavorable climatic conditions for food handling and for quality and safety assurance as the product moves from one stage to the next within the supply chain. Traditional agro-food supply chains tend to be organized in win-lose (or lose-lose) business relationships, that have inter-organizational mistrust, adversarial competitive environments, and inefficient supply chain coordination.
In Lebanon, studies analyzing the governance of agro-food supply chains in individual crops and the extent of supply chain integration are scant. Since 2015, Dr. Gumataw Abebe has attempted to address this topic through his research: The effect of governance mechanisms on food safety in the supply chain: Evidence from the Lebanese dairy sector. Abebe's research investigates the governance structures for coordination and regulation of transactions between the actors and the way in which the supply chain is structured. The market has changed from simple transactional purchases into reflecting on food safety and quality as paramount concerns.
Why does governance matter? Governance is the way in which economic transactions between actors (farm, assembling, processing, distribution, warehousing, retailer, and consumer) and the complex nature of relationships among them are managed. Understanding how this relationship is governed and how different food-supply chains respond to its issues, is important: it affects incentives and distribution of profits between the actors. Increased competition between different food supply chains in the (inter)national market has led to a need for greater cooperation between actors along a specific supply chain. Especially in countries, like Lebanon, the agro-food exports face strong competition in foreign markets.
Abebe, the Primary Investigator for research funded by the FAFS seed grant, has conducted two surveys of 106 dairy farms and 94 food manufacturers. The first research, which was carried out in collaboration with FAFS’ Drs. Mohamad Abiad and Ali Chalak characterizesthe governance regimes in the Lebanese dairy supply chain and analyses their effectiveness to detect food safety hazards. The second survey was carried out among 94 food manufacturers in Lebanon and addresses several questions including determinants of voluntary food safety management systems implementation; extent of food supply integration; effect of institutional pressures (regulatory and consumer demands) on the degree of supply chain integration and food safety performance. This study was part of the research project titled Exploring the adoption and implementation of Food Quality and Safety Management Systems in the Lebanese food supply chain with Dr. Ali Chalak and Ms. Rachel Bahn and Mr. Abed Yehya from the Food security program.
The project used a supply chain approach, as many current problems reside along the entire supply chain. A supply chain approach considers the differences in the perceptions and behaviors of the stakeholders, whereas, in institutional approaches, relationships, interests, and values of different actors tend to converge. The New Institutional Economics (NIE) is the main theoretical framework applied in this research to characterize economic exchanges and supply chain patterns and to analyze the effect of institutions (regulatory demands, industry practices, and social obligations and supply chain governance) – on the performance of agro-food supply chains, particularly in terms of food safety.
Characterizing the governance and organizational structure of different agro-food supply chains helps identify weak links and develop business models to determine effective strategies for product pricing, branding, and developing regional identity, elements essential for product differentiation in market competition. This characterization also helps develop food quality control systems and build trust among supply chain actors. On the other hand, identification of key bottlenecks and incentives for implementing market-based food safety management systems supports the introduction of voluntary standards and codes of practice and the creation of territorial brands for Lebanese agro-food products, giving the latter a competitive edge in the global market.
This topic covers a wide range of issues of interest to current and future study projects. The research team plans to expand this project on selected agro-food supply chains with the potential to create incremental value for various actors along the Mediterranean basin.
Gumtaw Kifle Abebe is Assistant Professor of Agribusiness Marketing and Management at the Faculty of Agricultural and Food Sciences. His research focuses on exploring the efficiency and effectiveness of agri-food supply chains in response to recent trends for food safety and food quality; food retail expansion patterns, its drivers and impact on food security in Lebanon and the region; and economics of agricultural technology adoption in arid and semi-arid regions.