The Role of Trust, Knowledge Diffusion and Contracts in Sunflower Production Chains in Brazil

Abstract

The replacement of animal protein by plant protein is a trend in human nutrition and sunflower appears as a promising raw material. Dealing with innovation in the food industry requires attention not only to the product development process, but to the whole production chain related to it. Within this context and in face of the potential participation of Brazil in the business of sunflower protein food ingredients, this study aims to describe and analyze the operational dynamics of sunflower production chains in Brazil. To deal with this issue, we adopted the multiple-case study approach based on three production chains of sunflower oil in Brazil. Transaction cost economics and social network are the theoretical background for the analysis. Our findings suggest an environment with high transaction costs in the operation of the production chains of sunflower oil in Brazil. The processing company is the chain coordinator agent, being responsible to attract the farmers to the business of sunflower, using the strategies of crop promotion and verticalization. Crop promotion is in some degree the pattern of chain operation for all cases. It refers to a set of actions generally coordinated by the processing company aiming to encourage and assist farmers in the growing of sunflower. Moreover, it serves as a trust building and supervision strategy. Regional features influence the chain operation in terms of crop promotion applied by the processing company and the role of agents from farm supply retail stores (FSRS). The strategies of crop promotion and verticalization have not been sufficient to easily guarantee the provision of sunflower to the processing companies. Our findings show that if investments in the production of sunflower protein food ingredients are to be made in Brazil, it is necessary to consider the complex institutional arrangements in which the sunflower production chains operate, seeking to guarantee the necessary provision of raw material for the processing company.