Market orientation and performance of agro-food value chains in developing and emerging markets : the case of maize, teff, and beans seed supply chains in Ethiopia

High quality seed is the basis for the sustainable increase of agricultural production and reduction of poverty. However, there is a substantial gap between the production of and farmers demand for seeds in Ethiopia. Yet, we do not sufficiently understand the mismatch between supply and demand for seed. One important reason is the lack of or the limited systematic studies on market orientation (MO) and performance in complex chains (seed supply systems) in D&E markets.

The thesis argues that lessons on how to adapt MO to seed supply value chain functions can be draw from value chain actors and farmer customers in D&E market contexts. In doing so, the thesis identifies from a structural and end customer perspective, the strengths and weakness of different agricultural seed supply chains and functions for potential improvements. This will ensure the development of a more market-oriented seed supply chains that can respond to the expressed and latent needs of their customers. This will in turn boost agricultural production and productivity, enhanced food security, and reduction of poverty among large segments of a growing population.

Effective seed systems enhance customer satisfaction and superior performance for firms. However, effectiveness and efficiency will come from the extent to which the functions are performed in a market-oriented way across the different stages of a seed value chain. MO contributes to effective seed systems, but measures for the MO of functions do not exist. Measuring the MO of seed systems is also difficult because measures of MO may not be comparable across functions and different perspectives. In doing so the thesis contributes to the literature gap on measuring supply systems by using the theoretical framework of MO from the perspectives of all channel actors and the end customers. More specifically, empirical evidence on how MO is applicable to and increases performance for seed supply systems in D&E markets is absent. The general aim of this thesis is to deepen the understanding of the implementation of MO in agricultural seed supply chains in D&E economies, taking Ethiopian seed supply chains as a case.

To achieve the general objective of the study, this thesis explored four lines of empirical research: (1) How do end customers evaluate the performance of the Ethiopian seed supply systems? (2) What is the influence of market channel functions on customer satisfaction with supply chains? (3) What is the degree of MO of the Ethiopian seed supply chains? and (4) How does MO influence the proficiency of supply chains?

To answer question 1, Chapter 3 offered a detailed understanding of the criteria that farmers use to evaluate the performance of the Ethiopian maize and teff seed supply systems. The chapter revealed that in the Ethiopian seed system context the customer performance measures are categorized into seven major themes for maize and eight for teff. For farmer customers, the key evaluation criteria are that the seed supply systems deliver seed (1) of the right variety, (2) at the right quality, (3) easily available, (4) in the right quantity, (5) at an affordable price, (6) with adequate supporting services, (7) with limited production uncertainty, and specific to teff, (8) with an appreciation of cultural heritage.

Chapter 4 presented the results of a quantitative study with 170 end customers for deeper understanding and analysis of the influence of market channel functions proficiency on the customer satisfaction with supply chains for maize, teff, and beans in three regions of Ethiopia. Six key functions that contribute to customer satisfaction were identified, which together can be grouped as (a) the R&D, (b) the multiplication, (c) the quality control and certification, (d) the distribution, (e) the pricing, and (f) the marketing service function. The results show that the seed multiplication function followed by distribution, R&D, price, marketing service, and quality control and certification functions predominately contribute to the end customer overall satisfaction of seed offers. The chapter further revealed the dominant value chain constellations in Ethiopian seed supply chains. It identified 43 unique value chain constellations, in the data: 16 for maize, 18 for teff and 9 for beans. The chapter presented an inventory of which value chain constellations have emerged/survived and analyzed why in terms of (a) overall perceived satisfaction with these constellations and (b) perceived proficiency with the marketing functions performed by the actors involved.

Chapter 5 focused on how MO is best measured in the Ethiopian seed supply system context building on insights from MO theory. The chapter adapted the specific MO components (information generation, information dissemination, and responsiveness) at the level of each market channel function performed within seed supply systems. It explored MO of supply chains (maize, teff, and beans) from four perspectives: (1) the organization performing a function, (2) customers, (3) suppliers, and (4) the final customers. This chapter revealed that in the Ethiopian seed supply chain context the degree of MO differs between functions, crops, and perspectives.

Chapter 6 examined the MO- proficiency relationship in the Ethiopian seed supply chains context. The study confirms that MO has a positive influence on the proficiency of seed supply value chain functions. However, the strength of the relationship differs between the various functions, crops, and perspectives. Thus, MO of seed supply chains is very important for superior performance of firms and a strong basis for the livelihood of farmer customers.

Finally, Chapter 7 synthesizes the results of the preceding chapters, draws main conclusions, and discuss the implications for theory, seed supply chains, policy makers and development partners. In general, this thesis shows that understanding customer satisfaction criteria and implementation of MO across value chain functions can indeed improve the performance of the different seed supply chains. The goal of development organizations and policy makers is to increase food security and livelihood by increasing agricultural productivity. In doing so, the thesis shows ways on how this goal can be achieved: improving proficiency of market channel functions and increasing the MO of supply chain actors.