Sustainable Agribusiness in the AI Era

Value-Chain Exercise Sample

This sample shows the practical work in Sustainable Agribusiness in the AI Era. Chapter 13 asks readers to map a real chain, calculate the producer’s share and examine who sets the terms at each link.

Draw the chain and count the rupee

Objective. Map one chain your organization sells into, compute the share of the final price reaching the producer, and classify the governance of every link.

Time required. Four hours, with your purchase records, your sales records, and one hour of a field officer’s time.

Steps. Draw every stage from producer to final buyer, with a count of actors at each. Write the tonnage in and out of each stage. Write the price at every handover and compute the producer’s share of the final price. Classify each link on the five governance types, naming the evidence for your classification. Then mark the link where the specification originates, because that is the link whose owner decides what everybody upstream of it has to become, and it is rarely the link holding the goods at the moment the specification is written.

Deliverable. One map carrying actors, tonnages, losses, and prices; one line giving the producer’s share as a percentage with the date it was computed; and one paragraph naming the link you would change first and the party who would have to fund the change.

Discussion questions

1. Draw the chain for one product your organization buys or sells, and compute the producer’s share of the final price. Then state what the absolute producer price is in each channel available, and say which of the two numbers should drive the channel decision.

2. Classify each link in that chain on the five governance types, and name the evidence behind each classification. Where two links have different types, say what happens at the boundary between them.

3. Identify the codified specification in your chain that determines who is inside it. Estimate how many of your current suppliers would be excluded if that specification tightened by one requirement, and say who would fund the fix.

4. Your firm is considering functional upgrading into a stage a buyer currently performs. Write the break-even volume, the fixed cost it must cover in a bad season, and the resale value of the asset if your largest buyer leaves.

5. Take one buyer specification you currently receive and mark each clause as law, as scheme requirement, or as commercial preference. Report how much of it turned out to be negotiable.

6. A vendor proposes a matching platform that will connect your producers directly to buyers. Design the holdout that would let you know in two seasons whether it beat your existing traders, and state what you would measure.

7. Your chain’s compliance requirement costs a producer more in year one than the producer gains in year one. Using the financing instruments Chapter 8 sets out, name three ways that gap could be closed, say who bears the risk under each, and state which one you would propose to your board.

From analysis to a decision

The chapter combines chain governance with an upgrading map. Together they help readers assess entry requirements, the cost of taking on a new function and who carries the risk.