Supply Chain Risk Management – Agri-Food Implications

Issues related to “good” governance of multiple risks (natural, technological, market, institutional, political, international) in various supply and distribution chains are among the most topical and posing serious challenges to sustainable development. This paper presents a holistic framework for analyzing the system of risk governance in agri-food supply and distribution chains, and give insights on major challenges and opportunities related to sustainable food security. Most risks management studies and practices in the agri-food chains predominately focus on technical methods and capability to perceive, prevent, mitigate, and recover from diverse risks. In mainstream economic publications risks are usually studied as “another commodity” regulated by market supply and demand, and farmers and agribusiness agents “willingness to pay” for an insurance contract modelled. At the same time, risk management analysis largely ignore significant “human nature” (individual, agency, state) based risks (due to bounded rationality, opportunism, conflicting interests, bad management), and large risks related to food distribution and access, and critical factors for managerial choice (institutional environment, transaction costs), and diversity of alternative (market, private, collective, public, hybrid) modes of risk governance. We incorporate interdisciplinary New Institutional Economics (combining Economics, Organization, Law, Sociology, Behavioural and Political Sciences) and present a comprehensive framework for analyzing risk governance in agri-food supply and distribution chains. First, we specify diverse (natural, technical, behavioural, economic, institutional, policy, international) type of agri-food risks, and (market, private, public, hybrid, international) modes of their management. Second, we define efficiency of risk management and identify (personal, institutional, dimensional, technological, natural, transnational) factors of governance choice. Third, we present stages in analysis of risk governance and for improvement of public (state, international) intervention in risk management. Finally, we identify major opportunities and challenges for risk governance in agri-food supply and distribution chains at the current stage of development.