Indifference analysis and multidimensional value chain compaction in agricultural production

Abstract

In a globalized world, geographically dispersed value chains exist. This research seeks to answer the question: Is it beneficial to consolidate value chains, both geographically and in terms of the number of participants in the entire chain, to reduce logistics and intermediation costs that do not contribute significant added value?

This research is a case study. It models the decision-making process of a landowning agricultural producer who compares the alternative of producing corn for sale as grain and raising cattle (steers) on pasture versus the option of producing corn to supplement feed, obtaining an animal destined for export. The study examines whether the grain-to-meat ratio improves the differential between added value and costs, viewed from the perspective of Stockholder Theory and Stakeholder Theory—with a local scope.

The results identify the following as differentiating variables: the price of steers based on their destination, their weight range, marketing costs, and the income from the sale of corn destined for export, net of commercial costs. Suggesting making the decision to convert grain into meat for both the producer who subscribes to the Stockholders perspective and the Stakeholders perspective.