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Abstract
The aim of this paper is identify the main specific risks of agri-food supply chain
(AFSC) based in their particularities. The spececifique characteristics of the AFSC that
differentiate them from conventional supply chain networks and they become more
complex with a direct impact on their source of risks. From a literature review, this
paper proposes a framework composed of four risk categories: (i) internal to the firm
(process, control, production, human and financial risks); (ii) internal to the AFSC
(demand, supply, market risks); (iii) external to the AFSC (environmental, climatic and
institutional risks) and product risks (product quality, safety food).
Introduction
In an increasingly competitive environment, the supply chain management has been one
of the key strategies adopted by companies to increase competitiveness. However, to
cope with a number of unpredictable events that strongly affect the supply chain
corporations should develop plans to manage the risks that can impact on supply chain
performance as a whole or individual firms within the sector (Faisal et al., 2006; Tomas
and Alcantara, 2013). Thus, the knowledge of the types and nature of risks that affect
the supply chains and their sources (Chopra and Sohi, 2004) is of paramount importance
to develop management strategies for mitigating risks while ensuring continuous
operation of the chain (Giunipero e Eltantawy, 2003; Kayis e Karningsih, 2012).
The spececifique characteristics of the agrifood supply chains (AFSCs) differentiate
them from conventional supply chain networks and they become more complex with a
direct impact on their source of risks. Moreover, the AFSCs may vary in size, structure,
design, and product type and such characteristics may place the AFSCs at different
levels of risk and vulnerability.
In this context, Leat and Revoredo-Giha (2013) highlight the importance of
considering the effect of systemic risks on the performance of an agrifood supply chain.
The authors report that farmers face risks in the production of agricultural raw material
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that can affect the chain as a whole because of variations in quality, quantity, and
money prices for a variety of products will impact on the AFSC.
There is a lack of information on risk management in agrifood supply chain, mainly
with respect to the influence of such chains characteristics on the risks. Thus, this paper
aims to provide a literature review to identify the major risks of agrifood supply chains
associated with their characteristics.
Table 1- Main characteristics and specificities of the agrifood supply chain and its consequences.
Characteristics Consequences Authors
Seasonal availability of raw Zuin and Queiroz (2006); Aramyan et
Dependence upon materials al. (2007); Moreira (2009); Batalha and
natural resources in Long-term return on investiment Silva (2011); Boehlje et al. (2011);
agricultural production Prices fluctuation due to crop Sporleder e Boland (2012); Carrer et al.
regime and off season (2013)
Raw material and final product
perishability
Marked periods of crop and off
season
Risk of contamination
Variation in quality of raw material Harwood et al.(1999); Ziggers and
and final product Trienekens (1999); Zuin and Queiroz
Biological nature of
Special needs in transport and (2006); Aramyan et al. (2007); Batalha
products
storage and Silva (2011); Sporleder and
The perishability of goods Boland (2012); Carrer et al. (2013)
Information asymmetry in relation
to product quality attributes
Concern about food safety
Importance of the sensory
characteristics of the product
Consumer concern with the Ziggers and Trienekens (1999); Zuin
methods of production and Queiroz (2006); Batalha and Silva
Seasonality of consumption (2011)
Influences of consumer
Seasonality of production
preferences and behavior
Prices fluctuation due to the
demand
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The internal market of the AFSCs is also more complex than the markets of the other
supply chains. Given the seasonality of production of raw material and lack of
flexibility of these production systems, the offer of agro-industrial products are seasonal
with a gap between supply and demand (Harwood et al., 1999; Taylor, 2006;Sporleder
and Boland, 2012;Vlajic et al., 2012).
Methodology
In our attempt to map the agrifood supply chain specific risks, we utilize a four-step
approach: (1) literature review for recognize the characteristics of agrifood supply
chain; (2) categorizing the AFSCs according to their characteristics; (3) identifying the
key risks in each category, and (4) proposing the framework for AFSC risks analysis.
First, it was conducted a systematic review of the literature by following the steps
proposed by Denyer and Tranfield (2009). This review aimed to identify how the issue
agrifood supply chain risks has been treated in the literature (definitions, identified
risks, classification, etc.) and answer the following question: What are the main risks
which affect the agrifood supply chains?
Based on the information found in the literature, the main characteristics of AFSC
were investigated. It was noted that the agrifood supply chain can have a very large
diversity of forms and designs. The goal of this section was to propose a classification
for the diverse AFSCs.
In section 3 we seek to identify the specific risks to the agrifood supply chain. These
risks were studied taking into account the features previously found in Section 2.
Finally, a model to analyze particular risks of AFSCs was proposed.
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Table 2 - main risks facing businesses individually.
Type Risks Risk Source Authors
Fluctuation in the 7; 5; 2; 6;
Excess demand or supply shortage of supplies on the market.
price of inputs 3
Fluctuation in Oversupply or lack of demand that cause the marked periods 7; 9; 5; 1;
Market risk
legislation systems.
Import restrictions Changes in trade relations with foreign countries. 6; 3
risk
End of
Government Government decrees. 2; 6; 11
incentives
Lack of quality of workforce and incompatibility,
9; 1; 2; 6;
Operational obsolescence or uncertainty as to the technology employed.
production
3
Risk of
7; 9; 5; 1;
Climate Unpredictability of climate change.
6; 10
Impossibility of complete control over production in large 7; 9; 5; 1;
Biological
open areas. 2; 6; 3
Great dependence on external sources for financing the
Changes in interest 7; 5; 1; 2;
activity associated with the unfavourable macroeconomic
rates 6; 3
changes.
Financial risk
With respect to the wide range of risks described in Table 2 we give emphasis to
market risk and production risk. While market risk is common to all assets likewise
negatively affects on AFSCs performance is steeper. On the other hand producers find it
difficult to deal with production risks, which may lead to significant production losses
(Kimura, 1998; Flaten et al., 2005; Spoleder and Boland, 2012).
Although the literature on this subject is limited, focusing mainly on agricultural
production risks, it is worth noting that they can impact agrifood supply chains as a
whole, either directly or indirectly. Leat and Revoredo-Giha (2013) corroborate this
statement and report that the risks faced by individual firms and supply chains are
interrelated. For example, production risks faced by growers may compromise the
quality of the end products sold to retail establishments or jeopardize the supply of raw
4
materials to the other players in the supply chain. On the other hand, market risks in
retail sector can become in demand risks for other productive agents. Hence, all the
above mentioned aspects should be taken into account when dealing with risks in agri-
food supply chain risks.
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Figure 1 – Framework of mapping agri-food supply chain risks.
Conclusion
Companies are increasingly seeking ways to build effective relationships with other
firms of their supply chains in order to achieve competitive advantages. However, with
this type of partnership companies become more vulnerable to risks inherents to SC. In
this context, to an efficient risk management is essential to know the risks that impact
the different supply chains. Thus, this paper aims to provide a literature review to
identify the major risks of agrifood supply chains associated with their characteristics.
The agrifood supply chains have some characteristics that differentiate them from
other chains and such characteristics exert direct influence on their dynamic operation;
as a consequence the agri-food supply chains become more complex and exposed to
risks that are non-existent in other chains. Drawing from a systematic review of the
literature this paper classifies the AFSCs according to their main characteristics and
proposes a model for the classification of risks inherent in these chains. In this context,
the risks were classified into four categories: (i) risks internal to the firm; (ii) risks
internal to the agrifood supply chain; (iii) risks external to the agrifood supply chain;
and (iv) product risk.
Finally, the data from this study suggests that the proposed model allows us to better
understand the risks that can impact on agrifood supply chains and can be considered
the first stage for effective supply chain risk management. Therefore, the model
proposed in this paper was formulated explicitly with an eye to future empirical
research to be more favorably reviewed.
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