Total Factor Productivity: a framework for Measuring Agri-food supply chain performance towards sustainability

Sustainable agricultural commodities should be favored in international
trade negotiations to meet the growing demand for food in a context of environmental
conservation, population growth, and globalization. There is a need for a metric
that allows for the differentiation of traded agricultural commodities according to
how sustainably they were produced. In this context, this paper develops two single
metrics, based on a Total Factor Productivity indexing approach, for benchmarking
products in terms of their sustainability performance. Both metrics are adjusted to
internalize the social and environmental externalities of food production, and to
account for the sustainability effects of stages along agri-food supply chains. Key aspects
such as data availability, the selection of variables, and the selection of sustainability
standards and targets are discussed.