From Public to Private Governance of Agri-food Supply Chains in Transition Countries : Some Theoretical and Empirical Lessons

by Johan F.M. SWINNEN and Anneleen VANDEPLAS

Presentation at Joint IAAE- 104th EAAE Seminar Agricultural Economics and Transition: „What was expected, what we observed, the lessons learned." Corvinus University of Budapest (CUB) Budapest, Hungary. September 6-8, 2007

The governance systems of agri-food supply chains are crucial factors in the organization of trade and production, and have major impacts on economic performance and development.2 The governance of food and agricultural commodity value chains in transition countries have undergone tremendous changes in the past decades. In particular, one can identify a dramatic shift from public (or state) governance to private governance of the agri-food systems. Companies and property rights have been privatized, markets liberalized, and economies integrated into global food systems.

Important lessons from these changes were (a) that the shift to a "market system" coincided with much more disruptions than anticipated, contributing to the output and productivity fall in the 1990s, and (b) that the growth of the "market system" was only partially based on (spot) "markets" but a variety of other institutional arrangements - often "hybrid organizations" in Oliver Williamson's (1985) framework - have emerged as the preferred governance structures in agri-food markets.

In this paper we discuss the importance of these changes in governance, their implications for efficiency and equity, and the effects in transition countries. The discussion in this paper draws on our empirical and theoretical work in this field.

http://ageconsearch.umn.edu/bitstream/8521/1/sp07sw01.pdf