Alliances and Sustainability in Agricultural Small and Medium Enterprises

The role and effects of small agricultural enterprises on sustainable development processes in rural areas has been studied both in developing countries (Ruben, Slingerland & Nijhoff 2006; Latouche 2007) and in developed ones (McCullough, Pingali & Stamoulis 2008; Tasch 2009). Agricultural enterprises in developed countries have found to face several problems that drive them towards a more intense, and often less sustainable, way of growing crops. Maybe the most relevant of these problems is that these enterprises have to face in the modern markets is derived from the increased centrality the modern big food retailers have in the food supply chain. These distributors not only demand a stable and large supply of fresh, raw and processed material but they ask producers to be able to esensure year-round availability in order to stipulate contract with them (Reardon, Timmer & Berdegue 2008). As small farmers cannot assure distributors on their ability to supply a large and continuous stream of products by themselves they end up selling their crops to raw commodities' brokers (Dolan & Humphrey 2002) that will further sell them down the value chain to distributors or to industrial processors as well (Maloni & Brown 2006). In this way farmers become only small players that have to operate in a more complex supply chain where they have a really small negotiation power (King & Phumpiu 1996). Sporlerder (1992) hold that agricultural small and medium enterprises have tried to address this endemic weakness recurring to cooperation initiatives as a way to reduce risks while trying, at the same time, to increase their negotiation power in dealing with the other tiers of the value chain. The preferred partner for these initiatives have been other agricultural enterprises (Farrell & Tozer 1996) but they have often involved even players in other stages of the value chain (Holmlund & Fulton 1999). On the other hand the effect these alliances have on the sustainability of agricultural practices have not been so obvious. In this paper we try to deepen our understanding of the impact on sustainability each different models of alliances by small and medium agricultural enterprises have using the Bioeconomy model of sustainability (Passet 1996; Lethonen 2004), In particular we use the bioeconomy model to evaluate how the different agricultural alliances models are able to help these entrepreneurs to manage their farms according to the hierarchical order of economical, environmental and social dimensions developed in the model and how they can help them to develop a set of competences and capabilities useful to create and sustain a competitive advantage trough these alliances without dire effects on the other sustainability spheres. In particular we open the paper discussing the differences between the Triple Bottom Line model of sustainability (Elkington 1992, 1997) and the one proposed by Passet (1996). Later we focus on the various impacts agricultural practices can have on sustainable development processes both in the environmental sustainability sphere and in the social sustainability one. We follow on presenting the various model of alliances agricultural enterprises and we classify them in six different classes of alliances and agreements according to the kind of players participating in them and how they can be used to change the existing structure of the value chain itself. In this paper we use the lens of market-driven management (Shapiro 1988; Day 1994; Slater & Narver 1999; Sciarelli, 2008) to build a theoretical frameworks to assess how the various alliances model can help sustainable development processes. In the end we adopt the multiple case study method to investigate what kinds of capabilities are used in five successful Italian farmers’ alliances chosen according to a theoretical replication model (Glaser & Strouss 1967; Yin, 1998) so to use the broadest set of experiences in this first empirical test of the previously defined framework.