Massey Documents by Type

Permanent URI for this communityhttps://mro.massey.ac.nz/handle/10179/294

Browse

Subject: search.filters.subject.Vertical integration

Search Results

Now showing 1 - 3 of 3
  • Thumbnail Image
    Item
    Implicit contracts as a method of vertical co-ordination in the New Zealand meat industry : a thesis submitted in partial fulfilment of the requirements for the degree of Master of Agricultual Economics
    (Massey University, 1994) Wylaars, M. Jozefa
    A framework is developed using Williamson's seminal discussion of contractual arrangements and governance choice. The New Zealand Meat industry is the subject of this study in that contractual arrangements exist along-side more conventional trading relationships. The main body of the paper is devoted to; the review of other empirical studies of vertical co-ordination and; the collection and primary analysis of data. Primary results show the form and extent of vertical co-ordination in a small non-random sample. While the neo-classical contract to supply stock is used, many producers and processors operate and co-ordinate with a relational, implicit contract in which the producer deals almost exclusively with one company and develops a long term and 'important relationship' with an agent. Several regressions on measures of co-ordination, included in the appendices, while far from robust, show interesting patterns related to the transaction cost hypothesis.
  • Thumbnail Image
    Item
    Vertical co-ordination in the New Zealand lamb supply chain : implications for breeders, finishers and processors : a thesis presented in partial fulfilment of the requirements for the degree of Master in Applied Science, Institute of Food, Nutrition and Human Health, Massey University
    (Massey University, 1999) Montes de Oca Munguía, Oscar Efrain
    In 1998, the New Zealand sheep industry exported approximately 347,100 tonnes of sheepmeat to international markets. In 1996, the total number of sheep in the country was 47.3 million head with 9.5 million hectares dedicated to sheep and beef cattle enterprises. Traditionally, sheepmeat has been directed towards commodity markets, but a more recent strategy has been to target premium markets for specialised lamb cuts. Vertical co-ordination among participants in the New Zealand lamb meat supply chain (breeders, finishers, processors, marketers and retailers) is necessary to compete in premium markets overseas. New Zealand's seasonal pastoral systems are characterised by their heavy dependence on external variation (i.e. weather, market prices). Seasonal pasture production determines a well-defined lamb supply pattern and affects the price that farmers receive for their produce. Adequate price setting for vertically co-ordinated participants is therefore necessary in order to achieve a consistent supply of sheepmeat for international markets. Long-term contracts between New Zealand producers and processors would be a feasible vertical co-ordination mechanism. However, contracts can only be established if participants agree on product specifications and price. Farmers therefore need to know their cost of production on a $/kg lamb meat basis in order to be able to negotiate a price for their sheep. The aim of the research was to appraise the importance of vertical co-ordination through forward contracting for the New Zealand lamb industry and to assess measures to control the risk exposure of lamb producers and processors. The research also aimed to provide processors, finishers and breeders with a better understanding of producers' risk-return profiles. The source of physical and financial information was the New Zealand Sheep and Beef Cattle Farm Survey for the 1995-96 season. The software Stockpol® was used to simulate the biological performance of sheep enterprises on different pastoral production systems. Activity-Based Costing (ABC) was then applied to determine cost of lamb production for participants in the supply chain. A discrete stochastic programming (DSP) model was also developed to evaluate the impact of variation in lamb production cost for participants under alternative conditions for business and financial risk. Risk was considered by simulating different weather conditions and by varying biological production and financial parameters. The average cost of production of a kilogram of lamb meat at the farm gate for all farm classes was estimated at NZ$ 2.88. This break-even point is the market price at which direct and overhead expenses, including the cost of capital, are covered. The average price received by farmers for lamb meat during the 1995-96 season analysed was NZ$ 1.97/kg. This price was NZ$2.33 /kg in 1997 and the estimate price for 1998 is NZ$ 2.13 /kg. This cost of production varied for the farm case studies according to their financial structure, biological efficiency parameters (lambing percentage, wool production lamb growth rates) and wool and lamb purchase prices. The simulation results showed that pasture production and utilisation (influenced mainly by weather conditions and farm management skills) has a big impact on the cost of lamb production. The modelling exercise suggested that a mix of contractual arrangements for the premium produce of the farm and spot market bargaining power for the remainder would be the optimum alternative for farm managers. The use of ABC for farm planning purposes can be considered as a means to control both 'risk exposure' and 'risk impacts'. The assessment of cost of production under possible scenarios of DM production could be used to evaluate innovative contractual arrangements between producers and processors. The study showed that supply chain synchronisation in the New Zealand lamb industry is necessary for targeting premium markets, and that a deep knowledge of participants' risk-return profiles is essential for building trust between participants in the supply chain. Traditionally, New Zealand farmers have worked in an adversarial environment, while new market requirements for their products require the opposite. Title: Vertical co-ordination in the New Zealand lamb supply chain: implications for breeders, finishers and processors. Author: Oscar Efraín Montes de Oca Munguía. Year: 1999. Degree: MApplSc (Agricultural Systems and Management).
  • Thumbnail Image
    Item
    The successful integration of smallholders in vertical coordination arrangements : experiences of the KASCOL model in Zambia : a thesis presented in partial fulfilment of the requirements for the degree of Master of AgriCommerce at Massey University, Manawatu, New Zealand
    (Massey University, 2011) Mungandi, Sepiso
    Agribusiness firms have been increasingly engaging in closer vertical coordination arrangements in order to better meet their customer‟s changing needs. On the other hand, as the fight against poverty in developing countries continues, policy makers seek ways in which they can reduce this poverty. One such way has been to integrate smallholders in vertical coordination arrangements. However, reports show that this has been with little success. Therefore, the purpose of this study was to examine a successful experience of smallholder inclusion in a vertical coordination chain, in order to determine the reasons underpinning such a success. The case under investigation was the Kaleya Smallholders Company Limited, a model operating within the Zambian sugar industry. The research design was qualitative in nature, with 20 in-depth interviews being conducted with representatives of the four main stakeholder groups to the model: Kaleya Smallholders Trust; Kaleya Smallholders Company Ltd; Zambia Sugar Company; and the smallholders. The results show that the model, which had been in existence for 30 years, was able to increase the smallholders‟ participation over time. The variables explaining the success of this model are classified as follows: (1) the context that created an enabling environment for profit and healthy interdependency; (2) the governance structure that allowed balance of power relationships; (3) the managerial skills, which were instrumental in operational efficiencies; and (4) the growth of social capital. The conclusion is that, although context, governance structures and managerial competence were necessary factors for the sustainability of the model, the variables related to social capital were determinant for the long-term successful integration of the smallholders. The results obtained in this study cannot be generalised to other contexts, due to the nature of the research design, but they have led to some useful implications, among them being: the need for managers to not only correctly establish their governance and management, but also to correctly establish their social capital; and the need for the government to become involved in the initial stages of developmental projects involving smallholders, in order to help reduce the power imbalance between smallholders and firms.