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Competitive advantage and processor demand for local and imported food ingredients: analysis from an urban dairy market in West Africa

Ryan Vroegindewey (Michigan State University, East Lansing, Michigan, USA)
Robert B. Richardson (Michigan State University, East Lansing, Michigan, USA)
Kimberly Chung (Michigan State University, East Lansing, Michigan, USA)
Veronique Theriault (Michigan State University, East Lansing, Michigan, USA)
David L. Ortega (Michigan State University, East Lansing, Michigan, USA)

Journal of Agribusiness in Developing and Emerging Economies

ISSN: 2044-0839

Article publication date: 18 February 2021

Issue publication date: 30 March 2021

239

Abstract

Purpose

In Mali, dairy processors mostly use imported powdered milk rather than local fresh milk, constraining the development of a domestic milk sector. We investigate factors motivating a firm's choice of milk input, to identify measures that can encourage demand for fresh milk.

Design/methodology/approach

We utilize case study data from nine firms that use fresh and powdered milk to varying degrees, and which are representative of dairy processing in Bamako. To model firm motivations, we assess how each input contributes to or detracts from firm competitive advantage, through its influence on cost and differentiation.

Findings

Firms using fresh milk pay a higher input price, incur higher transaction costs and face additional challenges in production and distribution. Firms distinguish themselves from competitors through four potential sources of differentiation: novel product types, quality enhancements, quality-signaling and unique packaging. However, fresh milk firms are less likely to exploit each source of differentiation.

Research limitations/implications

Competitive advantage is a useful framework for understanding firm behavior in developing markets and can be applied in other contexts to strengthen external validity.

Originality/value

The extant economics literature on African dairy development has been surprisingly silent on the threat of import competition. This research is one of the first to investigate this issue in the under-studied middle segment of food value chains.

Keywords

Acknowledgements

The authors gratefully acknowledge the time and cooperation of the case study participants to make this research possible, as well as the assistance that we received during data collection from Assitan Traore and from the PRePoSAM team.Funding: USAID/Mali funded this study under the project titled “Projet de recherche sur les politiques de sécurité alimentaire au Mali” (PRePoSAM), awarded under the Food Security Innovation Lab’s Cooperative Agreement Number AID-688-A-16-00001.

Citation

Vroegindewey, R., Richardson, R.B., Chung, K., Theriault, V. and Ortega, D.L. (2021), "Competitive advantage and processor demand for local and imported food ingredients: analysis from an urban dairy market in West Africa", Journal of Agribusiness in Developing and Emerging Economies, Vol. 11 No. 2, pp. 140-159. https://doi.org/10.1108/JADEE-06-2020-0133

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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