Implementation time: 1st March, 2021 – 28th February, 2023
Funding agency: The British Academy
Project leader: Prof. Cartwright and Edward (DMU), Dr. Pham Van Hoi and Dr. Ngo Trung Thanh (CARES – VNUA)
A globalized economy leads to highly complex and integrated supply networks. For instance, the rice that a consumer picks up at their local supermarket in Leicester may have been grown on a relatively small farm in Vietnam and passed through countless intermediaries on its long journey to the UK. It is of fundamental important to understand how the structure of such networks impact on economic and social outcomes. Moreover, climate change, migration and urbanisation are having, and will continue to have, profound implications for life in rural communities.
In our project we shall study in depth the food supply network in Vietnam. In particular we shall map, characterize and study in detail the network of inter-connections with a particular focus on small, rural farmers. Alongside that we shall investigate decision making in rural households with a particularly focus on social norms and behavioural heuristics. We will also harness new technology to remotely monitor the quality of crop produced, to be supplemented with data on weather patterns. This three pronged data collection exercise – network structure, behavioural factors and agriculture and weather data – will give us an unprecedented insight into the food supply chain in a developing country. That in turn will allow us to map out the likely implications of climate change and similar shocks (e.g. war, terrorism, political instability) on society and the economy.
Specifically, in our project we shall look at how the structure of the network influences the following fundamental outcomes:
(a) Food security: We shall study the resilience of the food supply chain and provide positive guidance on how to make the supply chain more resilient to shocks such as ‘extreme weather’. This is important at a macro level, in making sure there are no national or global shortages of food, and a micro level, in making sure individual farmers and local communities can survive and recover from shocks.
(b) Economic inequality and poverty: We shall explore how the supply network influences bargaining power. Questioning, for instance, whether intermediaries are able to exploit rural farmers, and whether particular social norms or structural factors make this more likely. For instance, is their a ‘power relationship’ in which traders can renege on deals (e.g. trading price). Our analysis can help inform positive policies to tackle inequality and also increase the resilience of the supply network to shocks. We shall also explore the consequences that globalization is having on the economic and social fabric of rural farming communities. For instance, looking at the aspirations of the young, migration and division of labour within the household.
(c) Macro efficiency of the supply chain: At a basic level we need to question whether a highly decentralized food network produces the goods that consumers want. It is well known that behavioural ‘bias’ can result in over and under-shooting of supply as farmers react to ‘last year’s prices’. We shall explore how the supply network influences such feedback loops and question if certain types of network are more efficient. Moreover, we shall explore if behavioural interventions, e.g. community guidance to farmers, can help avoid feedback loops.
2. Policy impact
In addressing the issues noted above our project speaks to fundamental applied issues of global importance, not least, the consequences of climate change and ways to address poverty and inequality in developing countries. Indeed, a key aim of our project is to study and propose policy interventions that can be implemented at a local level to support rural communities. Small scale farmers are particularly vulnerable to weather shocks and to fluctuations in market prices. The comprehensive data that we shall collect will put us in a unique position to model interventions that can protect the income of the poor and increase resilience to shock. We broadly envisage two types of intervention:
(1) Structural interventions that impact on the supply network. For instance, a rural community may be too reliant on a small group of traders that have effectively assumed monopoly power. Interventions can encourage farmers to widen the set of traders. Crucially, our enhanced understanding the trading network will allow us to pinpoint exactly where in the network we observe ‘choke points’ that need to be removed. Removing choke points will not only increase the bargaining power of farmers but also make the supply chain more resilient to shock.
(2) Behavioural interventions that impact on farmer choice. For instance, farmers are often over-reliant on last years market prices to inform this years choice of crop. That can lead to wild swings in overall crop production leading to macro inefficiency and low income for farmers. Behavioural interventions, such as information and guidance, aimed at enabling a more informed choice of crop can increase efficiency and protect farmers from the vagaries of the market. Again our data will allow us to propose interventions that are specifically targeted at the areas of maximum impact.
In proposing either structural or behavioural interventions we have to recognise, understand and be sensitive to the cultural and social norms within communities. For example, communities may be ‘loyal’ to specific traders or trust the intuition handed down through the generations. In studying behavioural factors will shall, therefore, pay particular attention to norms and the role they are playing in decision making. We will also recognise the fast changing environment within communities. For example, the effect that climate change, migration and globalization are already having on traditional customs and norms.