CHAPTER-2-COMMODITY-CHAIN-ANALYSIS.pdf..

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1. CHAPTER 2 –COMMODITY
SYSTEM ANALYSIS/SUPPLY
CHAIN ANALYSIS
Ms. Rizzi Angelica T. Dagos
Introduction to Agricultural Commodity Systems
BS Agriculture, 2
nd
Semester AY 2023-2024

2. Outline of Discussion
a.Input sub-system
b.Production sub-system
c.Processing sub-system
d.Marketing sub-system
e.Support sub-system

3. VALUE CHAIN VS. SUPPLY CHAIN
Value Chain is the process in which businesses receive
raw materials, add value to them through production,
manufacturing, and other processes to create a finished
product, and then sell the finished product to consumers
chain is a set of interrelated activities a company uses to
create acompetitive advantage–factors that allow a
company to produce goods or services better or more
cheaply than its rivals
Supply chain represents the steps it takes to get the
product or service to the customer, often dealing
withoriginal equipment manufacturer (OEM)and
aftermarket parts.
involves all parties in fulfilling a customer request and
leading to customer satisfaction

4. VALUE CHAIN (Business Management Perspective)
Pioneered by American academic Michael Porter in his 1985 book
Competitive Advantage: Creating and Sustaining Superior Performance
He used the idea to show how companies add value to their raw materials
to produce products that are eventually sold to the public
Steps in the value chain process:
Inbound
logistics
Operations
Outbound
logistics
Marketing
and sales
Service
Receiving,
warehousing,
and inventory
control
Value-creating
activities/
transformation
of products
Activities
required to get
a finished
product to a
customer
Activities
associated
with getting a
buyer to
purchase a
product
Activities that
maintain and
enhance a
product’s
value, such as
customer
support and
warranty
service

5. SUPPLY CHAIN (Operational
Management Perspective)
Comprises the flow of all information, products, materials, and funds
between different stages of creating and selling a product to the end user
Every step in the process –including creating a good or service,
manufacturing it, transporting it to a place of sale, and selling it –is part of a
company’s supply chain
Primary concerns of supply chain management are the costs of materials
and effective product delivery
Proper supply chain management can reduce consumer costs and
increase profits for the manufacturer

6. Comprises the flow of all information, products, materials, and funds
between different stages of creating and selling a product to the end
user
Every step in the process –including creating a good or service,
manufacturing it, transporting it to a place of sale, and selling it –is
part of a company’s supply chain
Primary concerns of supply chain management are the costs of
materials and effective product delivery
Proper supply chain management can reduce consumer costs and
increase profits for the manufacturer

7. COMMODITY CHAIN ANALYSIS
Used to refer to the overall group of economic agents (or
the relevant activities of those agents) that contribute
directly to the determination of a final product.
Encompasses the complete sequence of operations –
raw material acquisition, or intermediate product, finishes
downstream, after several stages of transformation or
increases in value, at one or several final products at the
level of the consumer
“Chain of Production” –used to mean the group of
agents that contribute directly to the production, then to
the transformation and delivery to the final market of a
single agriculture, or livestock product
Source: Food and Agriculture Organization of the United Nations, 2005

8. CONSTRUCTING THE COMMODITY
CHAIN
The concept of economic agent
❖“agent”
➢used to describe an economic actor –basic unit in the economy who
undertakes an activity and makes decisions autonomously
➢Could consist of a physical person (farmer, trader or consumer) or a legal
entity (a business, an authority, a development organization)
➢Agent represents a kind of economic “territory”, enclosed by a frontier
Source: Food and Agriculture Organization of the United Nations, 2005

9. Transfer from the production unit to the
consumption unit
Source: Food and Agriculture Organization of the United Nations, 2005

10. Source: Food and Agriculture Organization of the United Nations, 2005

11. Source: Food and Agriculture Organization of the United Nations, 2005

12. How to use commodity chain analysis
Source: Food and Agriculture Organization of the United Nations, 2005

13. Types of analysis
Source: Food and Agriculture Organization of the United Nations, 2005

14. VALUE CHAIN
EXAMPLE
(TUNA)

15. SUPPLY CHAIN
EXAMPLE
(CACAO
BEANS)

16. THE INPUT and PRODUCTION SUB-
SYSTEMS (RESEARCH PAPER ONLY)
Activity: Reporting
(A) Inputs used
❖Seed
❖Fertilizer
❖Pesticide
❖Others (please specify)
Groups (8): Rice, Onion, Cashew, Peanut, Garlic,
Poultry, Swine, Cattle
(B) Farming Practices

17. EXPECTED OUTPUTS
Oral (Recorded) Reporting –March 12
(class hours)
Written Report –March 11, 5pm