Informal and formal mechanisms of coordination in hybrid food value chains

14 Pages·2011·0.18 MB·English

Journal of Agriculture, Food Systems, and Community Development
ISSN: 2152-0801 online
www.AgDevJournal.com

Informal and formal mechanisms of coordination in hybrid food value chains

J. Dara Blooma, * and C. Clare Hinrichsb

Submitted 22 February 2011 / Accepted 3 May 2011 / Published online 17 August 2011
Citation: Bloom, J. D., & Hinrichs, C. C. (2011). Informal and formal mechanisms of coordination in hybrid food value chains. Journal
of Agriculture, Food Systems, and Community Development, 1(4), 143–156. http://dx.doi.org/10.5304/jafscd.2011.014.016
Copyright © 2011 by New Leaf Associates, Inc.
Abstract ventional, wholesale produce distributors located in
The challenges of meeting growing consumer de- rural, urban, and exurban regions of Pennsylvania.
mand for local food, especially from larger, institu- Theories of local and social embeddedness inform
tional buyers, has sparked many to look beyond the analysis of how participants negotiate and coor-
direct marketing to alternative models of produce dinate their interactions through informal mechan-
aggregation and distribution. Value chains that isms, such as their social relationships, and formal
incorporate conventional food system infrastruc- mechanisms, such as contracts and labels. Case
ture are one such model for local food system study findings reveal distinctions between the rural
development, but little research has studied their and exurban cases on the one hand, where partici-
functioning and outcomes. Arrangements where pants combined both personal and market-based
conventional produce distributors handle local mechanisms to coordinate their relationships, and
food can be viewed as “hybrid” food value chains, the urban case, where the sale of specialty products
since they include both local and global resources, to a niche market both fostered and inhibited the
and combine conventional food system infrastruc- use of more formal mechanisms of coordination.
ture with the more alternative goal of building local In all cases, commercial conventions tended to take
food systems. This qualitative study examines three precedence over social relationships, despite the
hybrid food value chains that revolve around con- role that personal trust may have played. These
findings suggest that when value chains incorporate
a Department of Agricultural Economics and Rural Sociology, conventionally oriented businesses, they would
Armsby Building, Pennsylvania State University, University benefit from more deliberate commitment to non-
Park, PA 16801 USA economic goals in order to establish successful
b Department of Agricultural Economics and Rural Sociology, mechanisms of interorganizational coordination.
Armsby Building, Pennsylvania State University, University
Park, PA 16801 USA; [email protected] Keywords
* Corresponding author: J. Dara Bloom; [phone]; case study, embeddedness, food distributor, food
[email protected] value chain, local food, Pennsylvania
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Journal of Agriculture, Food Systems, and Community Development
ISSN: 2152-0801 online
www.AgDevJournal.com
Introduction model of short food supply chains that operate
Many efforts to change the food system now regionally and focus on value-added products,
sound the mantra of “cutting out the middleman.” including those that are differentiated on the basis
Direct marketing relationships between producers of local provenance. By also emphasizing “values-
and consumers are said to counter the faceless based” relationships between supply chain partici-
anonymity of conventional marketplaces and allow pants and incorporating an ethical element of
producers to retain higher profits (Hinrichs, 2000; commitment to fairness, value chains are believed
Kirwan, 2006). However, direct marketing to address the power imbalances that exist in the
approaches may not have the capacity, both in conventional food system (Stevenson & Pirog,
terms of the volume of available produce in a given 2008). In doing so, they ideally improve outcomes
area, as well as the needed infrastructure, to meet for producers, thereby contributing to rural devel-
the growing demand for local, sustainable food opment, while also improving the availability of
(Friedmann, 2007). This is especially true in the quality products for consumers.
case of schools and other institutions, which strug-
gle with the additional burdens of constrained As local food system development faces the chal-
budgets and finding consistent volume, supply, and lenges of supplying larger buyers whose needs are
quality, as well as coordinating pick-up, delivery, not met through direct marketing, more conven-
and processing of fresh produce (Hinrichs & tional food distribution suppliers have stepped in
Schafft, 2008). to source and supply local food (Izumi, Wright, &
Hamm, 2010). We refer to arrangements where
In cases where direct marketing relationships are conventional food distributors handle local food as
challenged by these constraints, local food system “hybrid” food value chains, since they include both
development may benefit from short food supply local and global resources, and combine conven-
chains that utilize local, but conventional food tional food system infrastructure with the alterna-
system infrastructure. However, when the market- tive goal of building local food systems. How do
ing of local produce extends beyond direct rela- participants in such hybrid food value chains coor-
tionships, challenges can arise from the need to dinate their interactions and exchanges? To what
coordinate production and demand, as well as to extent do hybrid food value chains exhibit the
regulate quality (Barham, 2002; Wolf, Hueth, & qualities that proponents of alternative food net-
Ligon, 2001). The way that supply chains are coor- works attribute to local embeddedness, or do these
dinated and regulated has implications for the value chains tend instead to reproduce the power
balance of power between producers and market- dynamics of the conventional food system?
ing intermediaries. In the conventional food sys-
tem, producers tend to be at a disadvantage in This paper uses three case studies to explore how
marketing relationships, where they effectively lose hybrid food value chains involving small to mid-
ownership over the products they raise and the size produce growers and wholesale produce dis-
prices they receive (Hendrickson & Heffernan, tributors are coordinated through both informal
2002; Hinrichs & Welsh, 2003; Stevenson & Pirog, mechanisms that are related to local embedded-
2008). In contrast, local and alternative food sys- ness, such as social relationships, and more formal
tem supporters believe they can resist these trends mechanisms, such as contracts and labels. These
when markets are more “embedded” in local social case studies, located in rural, urban and exurban
and environmental contexts (Murdoch, Marsden, & regions of Pennsylvania, examine food chains that
Banks, 2000). Embeddedness highlights aspects of were not formed with the explicit intent of mar-
the local context, such as social relationships, that keting local produce, and therefore can be consid-
can modify and sometimes mitigate the workings ered part of a food system that predates the most
of a strict, profit-oriented, economic logic, which recent alternative food movement trends. Because
can disadvantage smaller scale farmers when they of their hybrid nature, it is important to evaluate
enter market relationships. Value chains are one whether their embeddedness in a local context
144 Volume 1, Issue 4 / Spring-Summer 2011
Journal of Agriculture, Food Systems, and Community Development
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affects how these value chains are coordinated, nisms, while smaller scale producers of specialty
including what influence their embeddedness has foods will “dip in and out” of conventional and
on producers’ capacity to negotiate prices in order alternative resource streams and markets (Ilbery &
to ensure adequate returns. Although local food Maye, 2005; Whatmore & Thorne, 1997). These
systems are commonly seen as engines for rural producers’ operations are referred to as “hybrid”
development because they invigorate local market because they utilize both conventional and alterna-
opportunities for producers, our case studies sug- tive resources and markets, and balance economic
gest the possibility that some reproduction of con- and non-economic values and goals (Ilbery &
ventional food system power dynamics in the local Maye, 2005; Trabalizi, 2007).
context may undermine this benefit (Marsden,
Murdoch, & Morgan, 1999; Tregear, Arfini, In addition to the notion of hybrid enterprises,
Belletti, & Marescotti, 2007). While social relation- another type of interaction between the conven-
ships and personal trust played a role in these case tional and alternative food systems is the appro-
studies, ultimately commercial conventions tended priation of alternative food movement terms and
to dominate. At the same time, in hybrid food claims by market and government actors. For
value chains where producers could secure higher example, many believe that the organic federal
profit margins and negotiating power by marketing standards and the promotion of organic products
a specialized product that was identified as “local,” by mainstream retailers undermine the organic
participants faced challenges in finding appropriate movement’s goals and holistic orientation by intro-
mechanisms to coordinate chain relationships. In ducing industrialized practices and values
addition, when marketing a niche product, the (Guthman, 2004; Jackson, Russell, & Ward, 2007;
question of how to “scale up” local food systems Jaffee & Howard, 2009; Sonnino & Marsden,
and make local produce more widely available to 2006). Some researchers and activists clearly see
consumers of all income levels remained unad- this type of “hybridization” as a threat to alterna-
dressed (Friedmann, 2007). tive food networks, and measure the “alternative-
ness” of agri-food initiatives by their ability to
We begin by describing how hybrid food value resist co-optation (Allen, FitzSimmons, Goodman,
chains have been conceptualized, and note a gap in & Warner, 2003; Sage, 2003; Sonnino & Marsden,
the literature on the role of conventional food sys- 2006; Watts, Ilbery, & Maye, 2005). Hybridity has
tem infrastructure in local food system develop- thus been seen alternately as a necessary, possibly
ment. Notions of local and social embeddedness pragmatic feature of some alternative food net-
help to conceptualize how food chain participants works, or as evidence of co-optation.
balance their economic and non-economic priori-
ties by coordination through informal and formal Very little research or attention has been paid to
mechanisms. the actual operation of local food systems that
combine conventional infrastructure with local
Background and Relevant Literature products, and which were not established with the
The concept of hybridity arose from a critique of explicit intention of participating in the current
the implied dichotomy between “alternative” and local food trend (Bloom & Hinrichs, 2011; Izumi
“conventional” food systems. Hybridity recognizes et al., 2010). These types of hybrid arrangements
that, in their attempts to reassert control over the are influenced by the globalizing trend in the pro-
food system, producers and consumers may draw duce industry and therefore source products inter-
from some resources and practices stylized as nationally to ensure year round availability and low
“conventional” and others as “alternative” (Ilbery prices. At the same time, researchers contend that
& Maye, 2005; Maye, Kneafsey, & Holloway, even while such businesses are intricately tied into
2007). For example, alternative food networks, global networks, they are never fully disentangled
such as Fair Trade, tend to utilize conventional from the influences of their local environment and
food system infrastructure and operating mecha- social context (Gille, 2006; Oosterveer, 2006). For
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example, Murdoch et al. (2000) contend that, “We value chain coordination, are balanced with more
can question how the local sociomaterial resources formalized mechanisms of food chain coordina-
of a particular place come to be incorporated into tion, specifically contracts and labels. In the con-
networks or chains dominated by industrial and ventional food system contracts are usually
commercial modes of evaluation,” (Murdoch et al., described in the context of increasingly concen-
p. 122). This interaction between global processes trated and vertically integrated supply chains
and local context is highlighted in theories of “local (Hendrickson & Heffernan, 2002). Hinrichs and
embeddedness,” where a wide range of social, cul- Welsh (2003) and Hendrickson and James (2005)
tural, and environmental factors is believed to illustrate how the use of contracts in livestock sup-
influence local economic relationships. Local ply chains limits producers’ decision-making abili-
embeddedness draws upon theories of social ties with regard to his or her operation; this
embeddedness, which describe how economic includes decisions that impact environmental
transactions are mediated by social factors sustainability as well as marketing choices. In other
(Granovetter, 1985). These social factors can act as situations, however, contracts may be used by
informal mechanisms that coordinate food chain downstream actors, such as brokers and proces-
relationships, since personal relationships generate sors, as a way to mitigate producers’ risks and share
trust and discourage opportunism in economic information about expectations and standards
contexts (Granovetter, 1985; Raub & Weesie, (Wolf et al., 2001).
1990). Many local food practitioners and advocates
support localizing the food system precisely In considering formal coordinating mechanisms
because they believe that social relationships at the such as contracts, it is important to note also the
local level can take precedence over purely com- role of informal agreements that rely more upon
mercial interests, and thereby improve outcomes reputation and the promise of repeated transac-
for local producers (Lyson, 2005). tions rather than any legal enforceability (Raub &
Weesie, 1990; Stevenson & Pirog, 2008; Wolf et al.,
However, researchers also warn that these local, 2001). In this way, informal agreements represent a
socialized relationships should not automatically be blend of formal and informal mechanisms of coor-
assumed to be socially just, simply because they are dination, relying in part upon social embeddedness
local (DuPuis & Goodman, 2005). DuPuis and and in part upon interorganizational dynamics.
Goodman suggest that it is important to consider Stevenson and Pirog (2008) discuss this delicate
the role of local politics and power dynamics: “We balance between social and commercial pressures
have to move away from the idea that food systems in their description of value chains when they con-
become just by virtue of making them local and sider the implications of informal agreements for
toward a conversation about how to make local typically disadvantaged food chain members. They
food systems more just” (DuPuis & Goodman, suggest that despite the role of socially embedded
2005, p. 364). Hinrichs (2003) suggests a more personal trust, more formalized procedural mecha-
nuanced approach to studying local food systems nisms may be more important in coordinating suc-
that takes into account some of the complexities of cessful food value chains, since such procedural
local context and states, “While these quite positive mechanisms establish process-based trust. Process-
aspects of social embeddedness can and do flow based trust can be thought of as, “Trust in the
from local contexts, local social interactions are not fairness, stability, and predictability of the proce-
absent of intolerance and unequal power relations” dures and agreements among strategic partners;
(Hinrichs, 2003, p. 35). and that policies are consistent and stable over
time, and do not change with new management or
If we resist the assumption that positive benefits personnel” (Stevenson & Pirog, 2008, p. 125). By
automatically result from localizing food chains, it suggesting that trust should be interorganizational,
is also important to consider how local and social Stevenson and Pirog imply that strong food value
embeddedness, as potential informal modes of chains cannot rely solely on personal relationships,
146 Volume 1, Issue 4 / Spring-Summer 2011
Journal of Agriculture, Food Systems, and Community Development
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which are subject to change when key individuals quality and can provide the basis for differentiation
leave organizations. This idea of trust differs from of the entire value chain around promotion of the
common thinking about many local food initia- quality of being “local.”
tives, where personal trust through direct market
relations is often seen as both a goal and a central Taking these theories and concepts into considera-
benefit. tion, we now turn to three case studies of whole-
sale produce distributors to explore the role of
Another formal mechanism that helps to coordi- informal and formal mechanisms in coordinating
nate food value chains and regulate quality is the hybrid food value chains.
use of labels and brands. Labels communicate
quality attributes (such as organic or sustainably Research Methods
produced) and therefore can be important mecha- This research uses qualitative methods to develop
nisms, beyond personal interactions, for coordi- three case studies that explore how hybrid food
nating and communicating quality. This type of value chains in Pennsylvania draw on formal and
communication is especially important when food informal mechanisms of coordination. The three
supply chains extend beyond direct producer- cases were originally identified during the course of
consumer relationships (Stevenson & Pirog, 2008). a research project that examined Farm to School
However, the use of labels to differentiate products (FTS) programs in the state of Pennsylvania, where
is only feasible when the labels are recognizable school food service directors were asked about
and meaningful to consumers. This has to do with their purchasing habits in terms of whatever pro-
consumer awareness of the quality issues that the ducers and sources they might consider to be
label represents, indicating the need for both a “local” (Hinrichs & Schafft, 2008). Although FTS
strong consumer movement as well as clearly iden- programs are often conceptualized as direct mar-
tifiable issues. An engaged and informed consumer keting initiatives that link producers with school
base can therefore also be an important element of cafeterias, we identified three school districts that
local embeddedness, since issues related to the purchased local produce through wholesale pro-
local food system must resonate with local buyers duce distributors (Healthy Farms and Healthy
before they will make an effort to support local Schools Act, 2006). These three distributors
producers or businesses. sourced produce both directly from local produc-
ers and globally through conventional channels,
In the retail environment of the conventional food and therefore can be considered hybrid enterprises.
system, “Private label products enhance control by Their involvement in meeting their local commu-
retailers who can impose stringent standards on nities’ produce needs draws attention to their
(often captive) suppliers” (Busch, 2007, p. 449). In potential role in building local food systems. These
more localized food value chains, however, labels distributors provided points of entry for explora-
can be used to shift power and ownership away tion of three hybrid food value chains. In examin-
from retailers and back towards producers. With ing the contexts of the chains that formed around
the growing popularity of local and regionally pro- these three distributors, we classify one as rural,
duced food, producers are increasingly using labels one as urban and one as exurban,1 based on partici-
or brands that identify their operation by name pants’ perceptions and census data.
(Stevenson & Pirog, 2008). Stevenson and Pirog
(2008) indicate that, “An important mechanism for
farmer or rancher empowerment is their retention 1 A generally accepted definition of the term “exurban” is hard
of control of the food product throughout the to find, since many researchers use different parameters to
value chain, either through actual ownership or characterize areas that do not fit neatly into urban/rural
categorizations. We find the following definition useful:
maintenance of a farmer- or rancher-based brand
“Exurbs, it is argued, lie somewhere beyond the suburbs. At
through to the consumer,” (Stevenson & Pirog,
the urban-rural periphery, outer suburbs bleed into small-town
2008, p. 130). In this way, labels help to regulate communities with an agricultural heritage. Not yet full-fledged
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The boundaries of each case were determined by that captured relevant theoretical themes, but also
asking the distributor for the names of those pro- allowed unanticipated themes and issues to emerge.
ducers and buyers with whom he had an economic In applying qualitative methods, anomalies and
relationship and considered to be “local.” Using inconsistencies are important to consider, since
this designation, participants in each case were learning from unexpected findings and considering
located within a ten to sixty mile radius from the alternate theoretical explanations are important
distributor anchoring that case. In one case, during ways that qualitative researchers scrutinize the
the course of the initial interview with the dis- bases of their analysis and address validity concerns
tributor, it emerged that an outside organization (Creswell, 2007).
played an important role facilitating the relation-
ships between the distributor and producers, and In these cases, the three distributors had been
therefore the scope of the study was expanded to involved in the wholesale produce business ranging
include this nonprofit actor. For each value chain, from 10 to 50 years. These businesses can be con-
this study included three local producers,2 one dis- sidered part of the conventional food system infra-
tributor and three local buyers, for a total of 21 structure in part because they were not established
study participants overall. Interviews were semis- specifically in response to the growing consumer
tructured and included a series of both fixed and movement around local food and sustainability. In
open-ended questions (see a summary of the sur- addition, although they purchased some produce
vey questions in the appendix), thus allowing for directly from local farms and served a purely
comparison across participants while also provid- regional market, they were also very connected to
ing an opportunity for participants to introduce global, conventional supply chains, with the major-
topics that they may have felt were relevant or ity of their purchases imported from out of state or
overlooked by the researcher (Creswell, 2007). In internationally and coming through conventional
general, interview questions focused on the prac- brokers or produce markets. We use the fact that
tices and motivations of participation in the hybrid the distributors handled both local and imported
food value chain that involved the buying and produce as selection criteria to classify them as
selling of local produce by the wholesale produce participating in hybrid food value chains. However,
distributor. Interview questions aimed to probe the the question of how their handling of local pro-
specific case study contexts and to explore themes duce was incorporated into their conventional
identified in prior literature. Initial and follow-up operations is a subject of investigation.
interviews were conducted with each distributor; all
other study participants were interviewed once. In terms of the sample, in 2007 the smallest dis-
Attempts were made to conduct all interviews in tributor was in the exurban region and had gross
person, although time constraints for one producer sales between US$1 and US$4 million, followed by
necessitated a phone interview. Length of inter- the rural distributor with gross sales between US$5
views ranged from 20 minutes to two hours, with and US$9 million, and finally the urban distributor,
the average about 45 minutes. All interviews were who grossed between US$10 and US$14 million.
digitally recorded and transcribed verbatim. Tran- The producers in the exurban region had an
scriptions were analyzed using a coding approach average size of 16 acres, compared to 225 acres for
the rural producers and one or two hydroponic

greenhouses for the two producers in the urban
suburbs, but no longer wholly rural in nature, these exurban
region, respectively. The buyers in all three cases
areas are reportedly undergoing rapid change in population,
land use and economic function” (Berube, Singer, Wilson, & included one school district and two restaurants,
Frey, 2006). As a result, exurbs tend to include both blue collar except in the rural case, which included one farm
workers and suburbanites seeking a more rural lifestyle (Davis, stand, one restaurant, and one school district.
Nelson & Dueker, 1994).
Buyer characteristics that stand out include the
2 Although attempts were made to interview three producers
large size and tourist attraction designation of the
for each case, we were ultimately only able to identify and
reach two producers in the urban value chain. restaurant in the rural case, and the fact that both
148 Volume 1, Issue 4 / Spring-Summer 2011
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restaurants in the urban case are high end. The to maintain their commercial relationships through
influence of local embeddedness on how distribu- the development of reputations. However, these
tors balance informal and formal mechanisms to personal relationships were ultimately secondary to
coordinate these hybrid food value chains is commercial priorities, and therefore restricted pro-
considered in the next section. ducers’ abilities to set prices that reflected their
costs, or to negotiate product quality standards
Findings with the distributor.
Our case study findings highlight how local
embeddedness contributes to the way that hybrid The role of social embeddedness was clear in the
food value chains are coordinated and regulated. rural hybrid food value chain. In this case, the dis-
The analysis reveals distinctions between the rural tributor had business relationships with the father
and exurban cases on the one hand, where partici- of one producer and the grandfather of another;
pants combined both personal and market-based when asked how he began purchasing from this set
mechanisms to coordinate their relationships, and of local producers, the distributor said, “We all go
the urban case, where the sale of specialty products drinking Friday nights and meet in the bar.” He
to a niche market both fostered and inhibited the implied that these social relationships engendered
use of more formal mechanisms of coordination. trust, which led these producers to drop off their
In the rural and exurban hybrid food value chains, product before they knew the price that they would
local produce was treated as an undifferentiated receive. While this may indicate a level of social
commodity, in part due to local consumer percep- embeddedness for this localized hybrid value chain,
tions and priorities about food. The relationships this practice was also feasible because prices were
between the producers and distributors in these nearly exclusively determined by the going prices in
two chains tended to be both personal and depend- nearby produce markets. Therefore, the benefits of
ent on commodity market standards and prices, personal relationships were not coupled with for-
but without any formalized agreements or labels. malized mechanisms that might enhance process-
In the urban hybrid food value chain, high con- based and interorganizational trust, as described
sumer demand for local produce created a niche earlier, but rather remained subject to the potential
for specialty products that allowed this chain to volatilities of commodity markets. Although there
resist some of the common power dynamics in the were strong social connections between the pro-
conventional food system. This value chain, how- ducers and the distributor in the rural hybrid food
ever, still faced challenges in establishing formal value chain, the producers ran full-time commercial
coordination mechanisms and in its ability to bring farms that tended to sell only around one percent
local produce to a more diversified consumer base. of their entire sales to the distributor. Therefore
their relationship with the distributor was contin-
Personal and Market-Based Relationships gent on their having a surplus of products beyond
In both the rural and exurban hybrid food value what they sold to their primary broker. This was
chains, the logic of the conventional food system also related to the fact that the distributor said he
tended to be reproduced on the local scale. In both was only interested in local products when produc-
these cases, distributors relied on produce industry ers’ prices were comparable to the same non-local
standards to determine both the price and specifi- product, which typically only occurred at the height
cations for local produce. Therefore, trust between of the season. As a result, neither the producers
producers and the distributors was derived from a nor the distributor was interested in labels that
combination of personal and market-based mecha- would identify the farm by name, or in any kind of
nisms and not from any interorganizational trust, formal agreement to regulate their economic rela-
as suggested by Stevenson and Pirog (2008) in their tionship.
description of value chains. The personal relation-
ships between producers and distributors in these The exurban distributor also reflected this combi-
cases may have fostered a level of trust that helped nation of informal and formal coordinating mech-
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anisms in determining pricing, and stated that he their willingness to place value on the quality of
was honest when sharing information about being “local.” Both the rural and exurban dis-
market prices with producers. He said, “I think tributors were concerned with standardizing their
they trust me. I’m going to tell them the truth, I’m products’ prices and quality characteristics in order
not going to say, if peppers are fifteen, I’m not to diminish the differences between local and non-
going to say, oh they’re at ten, I’m going to tell local produce. In the exurban hybrid food value
them the truth. And if they want, I’ll show them chain, this was partly due to the lack of demand for
the sheet, you know?” Although he said that pro- local products, which the producers and the dis-
ducers trusted him, he was also ready to dispel any tributor believed was due to the high proportion of
doubts that they may have had by offering hard elderly residents and the low socio-economic status
evidence in the form of a produce sheet listing cur- of their area’s population. In the rural hybrid food
rent market prices. Again, in this case commercial value chain, both the distributor and the buyers
conventions therefore took precedence over social indicated that consumers identified their region
relationships, despite the role that personal trust with their agricultural heritage, which in turn led
might have played. This could also be seen in how them to feel that the appropriate sources of local
the distributor in the exurban hybrid food value produce were farm stands and produce auctions.
chain described his relationship with producers in As a result, buyers in this hybrid value chain pri-
terms of quality standards. He said: marily used the distributor during the winter
months or to supplement regional specialties, such
For example, they’d come in with a as sweet corn, around the edges of the local season.
zucchini that looked like a baseball bat, Since consumer demand for local produce through
and they’d tell me that’s what people want. the distributor was low in both of these cases,
And I’d say, no, that’s not what people more formalized coordinating mechanisms, such as
want. I deliver 12 months a year, they want interorganizational agreements or farm-based
the smaller one. And if they got belligerent labels, had little value for the distributors or other
about it, I would just say, don’t bother me participants.
anymore. That’s enough. I get what I want
to get, you know, for my customers.…I Specialty Products and Niche Demand
know what they want more than you do! Consumer demand for local products in the urban
You know how to grow it; I know how to hybrid food value chain allowed all chain partici-
sell it. pants to differentiate their businesses around the
promotion of local food. Consumers in the urban
Here, the distributor played an important role as region appeared to be more connected to a
the intermediary between producers and the final national “buy local” trend than in either the rural
buyer by coordinating quality between supply and or exurban regions. In this chain, specialty prod-
demand. However, from the perspective of the ucts, such as hydroponic lettuce and micro-greens,
producer, he also did so in a way that exhibited were destined for a niche market of high-end
complete control of the relationship between him- restaurants. As a result, selling differentiated prod-
self and the producer, leaving no room for nego- ucts allowed producers the freedom and power to
tiation. Producers who did not take the informa- set their prices based on their costs. In this food
tion without questioning it, or tried to assert their value chain, while there was the potential for con-
knowledge of consumer preferences, were denied a tracts to coordinate supply and demand, the
business relationship, therefore illustrating the implementation of such formal mechanisms faced
potential instability of these informal marketing challenges. In addition, labels served an important
relationships. function, although a lack of interorganizational
trust may have impeded their usefulness. Finally,
Another aspect of local embeddedness to consider because of the nature of the specialty products
is consumers’ perceptions, which coincide with studied in this hybrid value chain, using conven-
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Journal of Agriculture, Food Systems, and Community Development
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tional infrastructure may not have contributed to the value of “being local” with a commercial
scaling up the local food system in this region in imperative to make a profit in order to stay in
order to reach a wider consumer base. business. However, the distributor also made it
clear that while he was willing to accept producers’
To begin, hybrid food value chain participants in prices for specialty products, he relied on com-
the urban area recognized the value that being modity pricing for more generic products, or when
“local” gave their products. The producers, dis- he sold to buyers with price constraints, such as the
tributor and restaurants all differentiated their school district.
businesses based on the fact that they grew, sold,
and served local products. Because of this interest Despite the incorporation of non-economic values
in local produce, the power dynamics in this value into quality definitions for the urban hybrid food
chain appear to have been shifted slightly in favor value chain, this chain experienced challenges in
of the producers, who set their own prices and coordination and regulation in the area of contracts
were able to negotiate with the distributor irre- and labels. Although the distributor maintained
spective of the going prices in the conventional consistent relationships with the two producers
produce markets for the products that they sold. interviewed for the purposes of this case study,
For example, one producer described how he when he reflected on his ability to expand his local
received steady prices throughout the season and sourcing he exhibited obvious frustration. This was
calculated these prices based on his costs: because the popularity of local produce in the
urban region facilitated producers’ ability to sell
In the last year we’ve held all of our prices their products through multiple profitable chan-
steady — they haven’t changed. Now, nels, leaving the distributor to struggle to maintain
what I’ll do at the end of the summer is go consistent relationships with producers. As a result,
to [the Distributor] and I’ll try to get an he believed that developing contracts would be the
increase, because my costs have increased, best way to receive steady produce at reasonable
especially because, minimum wage is going prices. He reflected on his need for contracts with
up again, and once minimum wage goes local producers, and his hope that an actor from
up, it just bumps everything else up. So the statewide nonprofit would be able to facilitate
once a year I like to go to those guys and them, as follows:
say, I need an increase.
So that’s why I hope that [Nonprofit
This producer found that he could earn more sell- Actor] will be able to contract and say all
ing wholesale to the distributor, where he charged right, if you want [Distributor] to
by the pound, than he could selling directly to con- guarantee you 60 cases of peppers a week,
sumers, where he charged per head of lettuce. In you’ve got to be within X amount of
this case, such a dynamic challenges the common dollars of the Produce Yards, whatever the
belief that direct marketing provides higher profit market is bearing at that point. So that was
margins, which is interesting to note since this the issue I ran into over the summer, I
small scale farmer was not benefitting from called some of these farmers up and said
economies of scale, but rather from participating in this is what I need, and here’s the price,
a value chain that rewarded him for the quality of and I’m selling it to my customers cheaper
being local. The other producer in the urban hybrid than what you want to sell it to me!
food value chain said that his product “isn’t really a
commodity” because it could be marketed as a The distributor in the urban context described
local item. By incorporating this non-economic himself as “irritated” by the fact that local produc-
value into his judgment of quality, the producer ers desired the flexibility to choose their markets
was able to subvert the more commercial logic of depending on where they could get a better price at
the conventional produce industry. He combined any given moment, as well as by the high prices
Volume 1, Issue 4 / Spring-Summer 2011 151
Journal of Agriculture, Food Systems, and Community Development
ISSN: 2152-0801 online
www.AgDevJournal.com
that they demanded. The distributor was unable to mean that this type of local hybrid food value chain
develop contracts with local growers, and the would have a limited contribution toward scaling
nonprofit actor was uninterested in mediating this up the local food system (Friedmann, 2007). This,
aspect of the coordination of the hybrid food value in turn, would keep it from influencing the local
chain. She said, “That’s between him and the economy in terms of rural development or making
farmer. That’s not something that I’ve worked on; local produce more accessible to more types of
any contract that [the Distributor] has with a consumers to address food security concerns.
farmer is strictly his business. I do not think [the
nonprofit] should be involved with that.” Here the Conclusion
nonprofit actor drew a line of how involved she In this study, the small sample size and focus on one
believed that she and her organization should be; particular state (Pennsylvania) restricts our ability to
she suggested that facilitating the relationships generalize the results to other instances of hybrid
between the distributor and producers should be food value chains. However, the examination of
limited to initiating, and not maintaining, these informal and formal coordinating mechanisms
relationships. linked to aspects of local embeddedness reveals
suggestive patterns and themes that could offer
Another coordinating mechanism that created a insights and guidance for considering how hybrid
challenge for the urban hybrid food value chain food value chains might operate in other places.
was farm-based labels. Both of the producers in This study found that local food systems that
this particular hybrid food value chain used labels, combine conventional infrastructure with local
which allowed them to communicate the non-eco- production and consumption tended to prioritize
nomic value of their spatial proximity to consum- market-based considerations despite their local
ers. As described earlier, Stevenson and Pirog embeddedness. This finding challenges some of the
(2008) suggest that farm-based labels can help shift assumptions about the role of embeddedness in
power towards producers by allowing them more local food systems, namely that the social and cul-
control over the product and a price premium. tural context will strongly modify or mitigate some
However, in the urban hybrid food value chain, of the economic logic in market relationships that
producers suggested that their farm-based labels tends to disadvantage small to mid-size producers.
did not provide them the level of control they This study found that the participants in the urban
desired. While these labels helped them secure a hybrid food value chain were better able to resist a
price premium, the producers also saw risks if the purely market-based logic, as producers had greater
product was not handled properly by the distribu- negotiating and price-setting power. However, as a
tor, since the end consumer’s judgment, through result, this value chain ran the risk of being re-
the label, reflected on the producers’ operations. stricted to niche production, which then inhibited its
Therefore, despite the use of a formal coordination contribution to improving food security. In contrast,
mechanism, a lack of interorganizational trust in the rural and exurban cases, local food was
inhibited producers from experiencing the full treated more as a commodity with little to no
benefits that using labels might provide. Although differentiation, and as a result the distributors had
the producers in the urban hybrid food value chain little motivation to actively source or promote local
benefited economically from being able to promote produce. In these two cases, the type of mid-size
specialized product attributes, chain participants family farms that researchers suggest should be
still struggled to find appropriate mechanisms for particularly well positioned to participate in value
coordinating and regulating quality. chains seemed locked into the mentality and oper-
ating mechanisms of the mainstream food system.
Finally, the specialty producers’ small scale and the This was true even where social considerations
limited nature of the outlets for their products mediated economic relationships, suggesting that
(which included high-end restaurants but excluded social and local embeddedness may not be sufficient
larger buyers, such as the school district), may factors to foster successful hybrid food value chains.
152 Volume 1, Issue 4 / Spring-Summer 2011