Agriculture Reference
In-Depth Information
A metasystem is a state of collaboration that
helps address the second challenge faced by
US agricultural producers: foreign competition.
By design, metasystems add value to commodi-
ties and differentiate them from the output of
competitors. A metasystem is a special type of
supply chain. As noted earlier, a 'supply chain' is
an integrated vertical system across different
functions in the process required to create and
deliver a product to the consumer. Most metasys-
tems focus on quality management. Caswell
et al
.
(1998) say that food quality metasystems are
strategies that affect any quality attribute involv-
ing food safety, nutrition, value, packaging or
process. The authors reported that 'metasystems
are implemented through metastandards, which
most often define a process to be undertaken by a
company to assure quality on an on-going basis'.
Thus, a metasystem is an organized attempt to
create and document quality differences in pro-
ducts. All firms in a metasystem willingly collab-
orate in this effort.
There are many benefits to participation in
a metasystem. For example, Caswell
et al
. (1998)
state:
sophisticated production skills or the need for
specialized equipment or capital. The inability of
certain producers to gain entry to supply chains
for these reasons would be a continuation of the
forces that have prompted producers to exit from
agriculture historically.
Why would a producer have to exit from agricul-
ture if he or she cannot join a supply chain? The
answer is that as more supply chains develop in
the future, the fewer participants there will be in
traditional spot markets, thus those markets will
erode and eventually disappear. In other words,
spot markets are becoming thinner, which means
they may be less likely to generate the competi-
tive market prices needed to attract participants.
How the Production Sector
Can Survive
In the long run, the survival of most US agricul-
tural producers may depend on their willingness
to be a contract supplier to an agribusiness that
is successfully meeting consumers' demands for
specific product attributes. More specifically, for
the US production agriculture sector to survive
in a future that will be full of new foreign com-
petitors that have lower production costs, US
producers will have to voluntarily blend with
agribusiness in a 'metasystem' aimed at improv-
ing the profits of each participant by improving
the competitiveness of the US agri-food firm ver-
sus foreign competitors. This strategy does not
guarantee the survival of any particular firm or
industry, but it is the only approach that ade-
quately addresses the challenges faced by US
agricultural producers and, thus, it offers a
chance for prosperity.
The first challenge is the current state of
conflict between producers and the agribusiness
firms with which they deal. As long as agricul-
tural producers view agribusiness as part of the
problem, rather than as part of the solution, the
conflict will continue and more producers will
be forced to exit agriculture. On the other hand,
if producers follow the old cliché, 'if you can't
beat 'em, join 'em', and replace the conflict with
collaboration, they immediately raise their
chances of survival. This is possible because
market structures based on truly voluntary par-
ticipation will be more successful in the long run
because they eliminate internal conflict.
in addition to affecting operation of the
value chain, food quality metasystems are likely
to confer significant marketing advantages on
companies in selling to final consumers. These
advantages come from selling a higher quality
product and reliably being able to certify
that quality to consumers who are willing to
pay more. These advantages may enter the
company's profit performance through a
higher price or lower transaction costs.
This ability to differentiate products based on
higher quality attributes is a key weapon in the
current conflict between US firms and the grow-
ing number of foreign competitors. As US pro-
ducers lose the race to be the lowest-cost supplier
of commodities, their salvation rests in being
identified as the supplier of high-quality com-
modities as inputs to US agribusiness firms that
create high-quality consumer products.
Metasystems are the future for the US food
industry. For example, Fouayzi
et al
. (2006)
found that over 90% of fresh-cut produce firms
have adopted a quality management system
because, among other reasons, it facilitates trade
between firms. With such a system, long-term
contracts are more likely between firms within a
supply chain, and transaction costs are reduced.
