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A survey of value chain studies in Asia A survey of value chain studies in Asia

A survey of value chain studies in Asia - PowerPoint Presentation

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A survey of value chain studies in Asia - PPT Presentation

Dr DAM De Silva Supply chain is not synonymous with value chain because Value chains are concerned with what the market will pay for a good offered for sale The main objectives of value chain management are to ID: 183636

chain market fish chains market chain chains fish factors marketing local price supply chinese owned export increasing markets standards

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Slide1

A survey of value chain studies in Asia

Dr. D.A.M. De SilvaSlide2

“Supply chain” is not synonymous with “value chain”, because…

Value chains are concerned with what the market will pay for a good offered for sale

The main objectives of value chain management are to

maximize gross revenue

and

sustain

it over time

Supply chains are concerned with what it costs and how long it takes to present the good for sale

The main objectives of supply chain management are to reduce the number of links and to reduce friction (bottlenecks, costs incurred, time to market), but

Need a

good supply chain

to build a

value chainSlide3

Source: Michael Porter (1985)Slide4

Production

(From: Farm or water bodies)

Distribution

(Transport and logistics)

Marketing

(

To: Final consumer

)

VALUE CHAIN: Creating value chain for fish and fishery productsSlide5

Production

Year round production; multi regional and international

Fresh, cut

Service oriented customers

Fisher or shipper controlled;

cost driven

Differentiated produce

Branding and private labels

Streamlined Distribution,Acct-oriented

marketing,

Category

Management

Retailer controlled; revenue drivenSlide6

Food fish value chains in Asia

fishermen

Importers

Retailers

fishermen

Processors

Retail Chain

Export

123fishermen

Export

Processors

Export

Wholesaler

Retailers

ImportersSlide7

4

Processor

Wholesaler

Retailer

5

Processor

Export

Re-Export

WholesalerRetailerSlide8

Fishers (100%)

60% Dealer

Dry dish value chain - Bangladesh

Middlemen (25%)

Middlemen (15%)

Dealer (80%)

Dry fish producers (20%)

5%

10%5%Slide9

Dry fish producers (20%)

Low income (16%)

Wholesaler (16%)

City wholesaler (14.%)

Retailer (14.5%)

Feed

IndustryImports

Middle income (3.5%)Middlemen (3%)Retailer (3%)Entrepreneurs (0.5%)Supermarket (0.4%)Export

(0.6%)Consumers

Source:(

Shamsuddoha

, 2007)Slide10

Value chain analysis –

Hilsa

marketing, Bangladesh

Hilsa

(

Tenualosa

ilisha) – national fishMost important single species, economically and emotionally30% of national fisheries prodcution88% marketed internally for domestic consumption12% exported to ethnic marketsFish marketing system are complex, traditional, and less competitiveSlide11
Slide12

Value chain analysis -

Hilsa

Primary market

Purchase price (PP) 0.88

Marketing costs (MC) 0.05

Sales price (SP) 1.02

Market margin (MM=SP-PP) 0.14 (8%)Marketing profit (MP=MM-MC)0.09

Secondary marketPurchase price (PP) 1.02Marketing costs (MC) 0.07Sales price (SP) 1.39Market margin (MM=SP-PP) 0.37 (23%)Market profit (Mp=MM-MC) 0.30 Retail marketPurchase price (PP) 1.39Marketing costs (MC) 0.04Sales price (SP) 1.61Market margin (MM=SP-PP) 0.22 (14%)

Market profit (Mp=MM-MC) 0.18 Slide13

Market margin and Marketing Profit –

Hilsa

marketing

Source: (Ahmed, 2005)Slide14

Vietnam’s seafood industry: A socially embedded division of state owned and local Chinese owned enterprises in regional value chains?

Seafood industry is the country's third largest exporter

Dominating position on the Japanese market and market of Mainland China has increased in importance

To illustrate how the structures of value chains are embedded in lead firms as well in the supplying firms in the value chain

State owned enterprises (SOEs) and the local Chinese dominated private seafood sector

Nature of the value chain as shaped by the institutional environments and the social actors, who give specific attributes to the different nodes of the chain in local, national, regional and global spaces

Shrimp Value chains are three types:1. Local Chinese Owned Pvt. Companies: i. Marginalized in HACCP standard procedure ii. Minor group of enterprises succeed to upgrade to HACCP2. State Owned Enterprises /SOE

***Overseas Chinese dominated shrimp value chains***Slide15

Shrimp value chain: SOE or Local Chinese owned

pvt

. Co.

Aquaculture

Traders

Processors

Retailers

Source:

Lindhal, 2005Slide16

Local Chinese Owned Pvt. Companies

vs

SOEs

Forward linkages with farmers

Provide feed, capital, antibiotics and other inputs to farmers

Price is higher (15%)

Use new technology; IT, market information, certificationNew processing plantsLong term supplier contractsUse ethnic networks to market productsStrong ties with diasporaSlide17

Shrimp value chains to Japanese market

Farmers

Traders

Trading houses in Hong Kong & Singapore

Processors in Japan

Processors

Retail chains in Japan or

Trading HousesRetailers

Source: Lindhal, 2005Slide18

Overseas Chinese dominated shrimp value chains

1.

Local Chinese Owned Pvt. Companies

Use regional relationships to enhance ;

market power, coordinating skills, market penetration, brand establishment, & entering into high value markets

2. Minor group of enterprises succeed to upgrade to HACCPUse relationship in Diaspora communities to clear branding strategies, contact variety of regional and global retailers, developed market linkages through ICTProducts to ethnic markets: low level of value addition and traditional tastes, flavours, methods...Slide19

Similarities of fish marketing systems in developing

vs

developed countries

Both have to face the same basic challenge of providing safe food of right type and quality, to right place to right people those who are willing and able to pay

Market composed of mixture of local and imported fish and fishery products

Complex panorama of actors, enterprises and institutions

Important role of supermarkets in fish and fishery product retailingPresence of hotel restaurant and institutional channels, and therefore some food service suppliersIncreasing role of regulations and standardsSlide20

Differences of fish marketing systems in developing

vs

developed countries

Vastly different scale at system and enterprise level

Percentage of product handled formally lower in less developed countries

Share of fresh versus processed or manufactured much higher in less developed countries than emerging or developed countries

Supermarket share is rising still and fast in less developed countries to detriment of smaller retailers and wholesale marketsSlide21

Challenges for developing country suppliers in general

Choosing between commodity and specialty markets

Retaining and expanding market access

Gaining and holding a position in lucrative value/supply chains

Penetrating, holding, expanding better markets

Raising productivity and competitiveness

Increasing value addedDealing effectively with emerging standardsSlide22

PESTLE analysis

Is a useful tool for understanding the “big picture” of the environment in which industry is operating and environmental understanding will bring the advantage of the opportunities and guide to minimize the threats

PESTLE components are;

P-Political

E – Economic

S – Social

T – TechnologicalL - LegalE - EnvironmentSlide23

Factors

Importance : Increasing >;

Unchanged =; Decreasing <

Political Factors

 

Low political interest among the general public and therefore little or no pressure on government

Low political pressure from fishermen and boat owners Low interest among politicians High interest among government to improve the situation on post harvest losses Frequent changes in policy due to rapid changes in politically elected authorities within the government affecting stability of practical resolutions Possibilities for fishermen- and vessel owner associations to influence future policy making and contributing to political decisions

International agreements e.g. IOTC=  >  =>  >  

  >    >Slide24

Factors

Importance : Increasing >;

Unchanged =; Decreasing <

Economical Factors

 

Low average catches affect fishermen’s incomes and availability of capital to invest in improvements

Low purchasing power among a large group of customers in the domestic marketUn equal income distribution and growing upper middle class Limited knowledge in financial accounting affects operation of small and medium sized fishermen’s businessesThe ongoing civil conflicts in Asia affects governmental expenditures and decreases the possible funding of development in the fisheries sector

The tsunami disaster had severe effect on the Indonesian, Sri Lankan, and Thailand fisheries sectors e.g. on development and capacity =  >  >  < 

 >    <Slide25

Factors

Importance : Increasing >;

Unchanged =; Decreasing <

Sociological Factors

 

Acceptance of low quality fish

Lack of awarenessFood safety and health problems due to low fish qualityThe attitude of fishermenLack of specialized education among fishermen

Religious sentiments affecting industrial practices < < >  > >  =Slide26

Factors

Importance : Increasing >;

Unchanged =; Decreasing <

Technological Factors

 

Lack of infrastructure (e.g. facility, machinery, tools, practices)

Inferior boat designInferior harbor designInsufficient availability of freezing facilitiesInadequate processing facilitiesSelectivity of fishing gear (i.e. gillnets)

Lack of technological improvements (e.g. freezers, insulating boxes etc.)Lack of proper hygienic practicesInadequate transport facilities<  > > >  > =

>  > =Slide27

Factors

Importance : Increasing >;

Unchanged =; Decreasing <

Legal Factors

 

Lack of regulations, monitoring and enforcement on:

Quality standards Food safety Hygiene standards

Fish handling Illegal inland fishing Regulations in foreign export markets (e.g. EU, USA and Japan)General trade agreements and tariff>  > > > 

> > >  =Slide28

Factors

Importance : Increasing >;

Unchanged =; Decreasing <

Environmental Factors

 

Insufficient availability of clean water

Tropical weather conditions and climate changePollution in harbor basin waterLack of adequate sewage managementOil spills in harborsHygienic conditions onboard boats and in harbors

Sustainability of fish stocksStock size (When stocks are large and catches good, post harvest losses tends to increase) >  >  > >  =>  

< = Slide29

Drivers and governors of change on the demand side…

Demographics

: growth rate; age distribution; ethnicity; race; geographic distribution; extent of travel; exposure to food-related information and retailer promotion

Consumer preferences

: price vs. quality/condition; convenience; year-round availability; variety; nutritional content; safety; greenness; fair trade; luxury goods

Buyer specifications

: volumes; presentation; labeling; private standards; certification; price point; service Technology: marketing information systems; category management methods; progress in supply chain management; transport and handling advances Slide30

Regulatory change

: official standards and associated certification; labeling (nutrition, COOL, allergens); market access; environmental protection; OSHA; labor rights; animal rights

Market access

: tariffs; quarantine restrictions; other non-tariff trade barriers (NTBs)

Factor costs in distribution and retailing

: energy; transport; labor

Economic growth trends: GDP; disposable income; levels and use of consumer credit; inequality of wealthSlide31

Drivers and governors of change on the supply side…

Product/market conditions

: effective demand; prices; competition

Procurement practices

: value chain integration; compliance with private standards; preferred supplier arrangements; new terms of sale

Factor prices and availability for production and shipping

: land; capital; labor; energy; transport Producer preferences: overall investment per crop area; price levels and their variability; production riskSlide32

Technology

: marketing information systems; supply chain management; quality assurance regimes; transport and handling technologies; post-harvest and production technologies

Regulatory change

: capacity to deal with market access requirements and standards; dealing with local and national restrictions on land use, inputs, labor contracting and treatment

Demographics

:

availability of seasonal labor; existence of a local market for seconds and an urban market for export-quality productSlide33

Conclusions and Implications

Different institutional contexts of end-markets are linked to different forms of coordination and control of value chains

Economically and socially important species and value chains are differ widely across Asia

Networks both local and regional enhance the value additionSlide34

Need to develop vision on: learning, investment, market access, sales, and exports

Make sure the policy environment as favorable as possible, but don’t assume that will be enough

Identify and support promising value chains with assistance at key point in the supply chain based on collaborative analysis of challenges, joint definition of priorities, and expert assistance from industry-experienced people

Take a cluster approach only as the starting point for value chains, not as an end in itself. Slide35

5. Concentrate on competitiveness and productivity

6. Look for and exploit multiple ways to add value once initial success has been attained with a single deal

7. Seek sustainability within value chains, not in the development programs or projects

8. Recognize that some keys to success require mainly public sector intervention, others only private, and some a mixture of the two

9. Seek private sector alliances at all stages of supply and value chainsSlide36

Thanks!