Chain Governance Systems and Sustainable Capital Use – A Conceptual Approach

Due to pressures such as climate change, globalization, price volatility and scarcity of natural resources, our agri-food chain is urged to make a transition towards more sustainable production. How to organize such a transition, given the various stakeholders involved, and how to monitor progress still remain important challenges. This paper presents a new conceptual framework that follows an integrated chain approach to help address these challenges. First, it tackles the complex ecological and socio-economic challenges along the chain and its members (agriculture and food industries), and second, allows for decision support to chain members and policy. This framework combines two existing theoretical frameworks. The first framework is global chain value analysis (GCVA) of Gereffi (2005) which has its roots in institutional economics. GCVA categorizes five governance types of value chains (markets – modular – relational – captive – hierarchy) based on three variables: (i) the complexity of information and knowledge transfer required to sustain a particular transaction, (ii) the ability to regulate transactions, and (iii) the capabilities of actual and potential suppliers. The second framework, which was first formulated in ecological economics, extends the set of traditional economic resources to various forms of capital in the production system. These are natural (land, water, …), manufactured (buildings, machinery, ...), human (labour, skills,…), and social capital (networks,…). The economic system is fully embedded in the social system which in turn is embedded within the finite ecological system. Throughput of natural, social, human, and manufactured capital allows for the description of agri-food systems in terms of the maximal sustainable use of their stocks and flows. These two frameworks can be combined to perform an integrated system analysis of the agri-food chain, including the governance structures and the boundary conditions for the various types of capital. This paper describes this new conceptual framework illustrated by means of a case study of the agri-food chain in Flanders, Belgium