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Agricultural research has made important contributions to poverty reduction and
food security over the last 40 years (Thornton et al. 2017). Research has also identified investment in R&D as an important driver of growth in agricultural production
efficiency (Alston 2010, 2018; Fuglie et al. 2017). Regardless, European Union’s
Research and Innovation Programme “Horizon 2020” (European Commission
2011) and United Nations’ “The 2030 Agenda for Sustainable Development”
including the 17 sustainable development goals (SDG) (Griggs et al. 2013; United
Nations 2015; European Commission 2016) call attention to the need for more
research and innovation on food security and sustainable agriculture.
At the firm level, many agri-companies often struggle with low profitability. In
order to be able to produce, distribute and sell more food, they need to achieve profit
goals. The majority of agri-companies have focused on their role as producer at the
beginning of the food value chain and, consequently, have focused on becoming
more effective and being able to produce more with the same, or less, resources.
However, the issue of profitability remains an issue for agri-companies (Dobermann
and Nelson 2013; Ulvenblad et al. 2016), and they face increasing demands from
governments, local authorities, other companies in the agri-value chain and end
customers regarding quality and sustainability issues.
The focus on efficiency, economies of scale and growth has been an effective
approach for the agri-sector (Alston 2018). Over time, many of the small cooperatives and networking firms in the agri-sector have either joined or become large
multinational companies through mergers and acquisitions. Though this trend has
led to cost-effective production and distribution systems, has it also built barriers for
sustainable business model innovation in the agri-value chain?
In recent times, small agri-companies have often been reduced to a subcontractor
role without any real influence (Ulvenblad et al. 2016). It is known that power asymmetry combined with low-quality business relationships can lead to suboptimization and a reduced ability to identify and meet end-consumer needs (Benton and
Maloni 2005; Schulze-Ehlers et al. 2014). Large companies mainly look for standardized products that suppliers produced at low cost, and innovations developed by
smaller companies along the food chain making products better but different can be
difficult to integrate into big companies’ business plans and delivery systems.
These are important issues, because of the increased worldwide competition,
advanced technological developments and large-scale production existing in the
agri-sector, and with a resulting general trend towards fewer and larger farms
(OECD 2016), it remains to be seen whether the global goals of sustainable agricultural development can be met.
The agri-sector is different from other industries for several reasons: food from
living things, animals and plants, must meet specific welfare, health and safety
requirements. Furthermore, production and often distribution are generally connected to a specific geographic area, where nature and climate may have important
influence and establish constraints to production and distribution. OECD (2019)
highlights the need for more responsive agricultural innovation systems, since climate change and weather-related production shocks are expected to increase the
challenge of improving productivity, sustainability and resilience on farms.
P.-O. Ulvenblad
Agricultural research has made important contributions to poverty reduction and
food security over the last 40 years (Thornton et al. 2017). Research has also identified investment in R&D as an important driver of growth in agricultural production
efficiency (Alston 2010, 2018; Fuglie et al. 2017). Regardless, European Union’s
Research and Innovation Programme “Horizon 2020” (European Commission
2011) and United Nations’ “The 2030 Agenda for Sustainable Development”
including the 17 sustainable development goals (SDG) (Griggs et al. 2013; United
Nations 2015; European Commission 2016) call attention to the need for more
research and innovation on food security and sustainable agriculture.
At the firm level, many agri-companies often struggle with low profitability. In
order to be able to produce, distribute and sell more food, they need to achieve profit
goals. The majority of agri-companies have focused on their role as producer at the
beginning of the food value chain and, consequently, have focused on becoming
more effective and being able to produce more with the same, or less, resources.
However, the issue of profitability remains an issue for agri-companies (Dobermann
and Nelson 2013; Ulvenblad et al. 2016), and they face increasing demands from
governments, local authorities, other companies in the agri-value chain and end
customers regarding quality and sustainability issues.
The focus on efficiency, economies of scale and growth has been an effective
approach for the agri-sector (Alston 2018). Over time, many of the small cooperatives and networking firms in the agri-sector have either joined or become large
multinational companies through mergers and acquisitions. Though this trend has
led to cost-effective production and distribution systems, has it also built barriers for
sustainable business model innovation in the agri-value chain?
In recent times, small agri-companies have often been reduced to a subcontractor
role without any real influence (Ulvenblad et al. 2016). It is known that power asymmetry combined with low-quality business relationships can lead to suboptimization and a reduced ability to identify and meet end-consumer needs (Benton and
Maloni 2005; Schulze-Ehlers et al. 2014). Large companies mainly look for standardized products that suppliers produced at low cost, and innovations developed by
smaller companies along the food chain making products better but different can be
difficult to integrate into big companies’ business plans and delivery systems.
These are important issues, because of the increased worldwide competition,
advanced technological developments and large-scale production existing in the
agri-sector, and with a resulting general trend towards fewer and larger farms
(OECD 2016), it remains to be seen whether the global goals of sustainable agricultural development can be met.
The agri-sector is different from other industries for several reasons: food from
living things, animals and plants, must meet specific welfare, health and safety
requirements. Furthermore, production and often distribution are generally connected to a specific geographic area, where nature and climate may have important
influence and establish constraints to production and distribution. OECD (2019)
highlights the need for more responsive agricultural innovation systems, since climate change and weather-related production shocks are expected to increase the
challenge of improving productivity, sustainability and resilience on farms.
P.-O. Ulvenblad