Understanding food value chain and network dynamics

Specific Challenge

Food chains play a key role in the EU economy and society: ensuring food and nutrition security, contributing to local and global economies, providing jobs and having a significant impact on the environment. The proper functioning and sustainability of food chains depend on the viability of each link. Therefore there is a need to understand metrics and dynamics at each level, especially within and across the food value chains, and their capacity to foster the sustainability and resilience of the food system. Economic theories on the interaction of chain partners and the implications for private and social welfare have existed for some time, backed-up by case-studies (predominantly qualitative). However, the challenge remains of providing quantitative and model-based underpinning of economic behaviour in the food chain. The use of unfair contractual practices within the chain and its detrimental effect on the chain's economic sustainability need to be better understood so that we can identify and analyse such practices and quantify their impact. Information asymmetries can undermine proper price-setting and bargaining power, thus generally eroding agricultural revenue margins and farmers' willingness/capacity to invest and add value. The resilience, adaptive capacity and sustainability of food chains need to be analysed in a dynamic setting, whereby the strategic behaviour of chain agents and their interaction can be captured and their economic, social and environmental impacts assessed.

Scope

A holistic approach supported by new advances in theory, modelling and data gathering is needed to capture and understand the dynamics and interactions in food systems (from providers of farm inputs to consumers). The work will seek to capture drivers that influence chains' sustainability and their performance. An analysis is needed to map a wide range of (short and local food chains included as well as global value chains) food value chains across the EU and various sectors to give a thorough insight in upstream and downstream chain flows and interactions between chains. Special attention is required with respect to chain organisation, price transmission, information exchange, the behaviour of chain members, cost structure (including freight), organisation of logistics, institutional and organisational arrangements, marketing standards, balance of power, unfair trading practices, and the distribution of risk and added value along the entire food chain. Internal and external drivers influencing these factors should also be investigated. Proposals should map policies and regulatory requirements targeted at different chain levels (including consumption and internal market), so that interactions between them can be identified and their impact on chain performance in terms of resilience, integrity and sustainability can be understood. Changes in (global and local) demand, emerging dietary and consumption patterns, and how they impact on the organisation, adaptability and sustainability of food chains and vice versa is to be addressed. A foresight exercise should contribute to the formulation of potential future scenarios. The above-mentioned aspects should be analysed in a dynamic framework and contrasted with static conditions, in order to assess and improve resilience and sustainability. Finally, research should unravel the link between the complexity and diversity of the food systems and their efficiency, resilience and sustainability.

The Commission considers that proposals requesting a contribution from the EU of up to EUR 6 million would allow this specific challenge to be addressed appropriately. Nonetheless, this does not preclude the submission and selection of proposals requesting other amounts.

Expected Impact

The project results are expected to:

• provide an assessment of all dimensions of the sustainability of food chains and their contribution to jobs and growth, both territorially and at EU level;
• improve capacity to model the sustainability and resilience of food chains;
• enhance capacity to assess the functioning of value chains, upstream and downstream chain flows, and price transmission along the chain;
• improve knowledge on food chains and their underlying drivers;
• increase capacity to map the occurrence of unfair practices in the food chain and develop approaches to assess their (economic, environmental, social etc.) impact;
• clarify the development of added value and profit margins in food value chains and how these are distributed at each level;
• increase understanding of how consumers' demand and consumption patterns affect the organisation of food chains (and vice versa), and their sustainability and resilience; and
• improve the capacity of relevant policies and food chain stakeholders to improve food chain sustainability and resilience.