Risk Assessment and Mitigation Strategies : Suppliers and Retailers in the Swedish Organic Food Market
Background: Consumer interest and demand for healthy and ecologically produced local food has led to a high market demand that local production cannot meet. Product attributes of perishability and short life cycles ensure that even local supply chains are challenging to manage. This increases potential for risks occurrence in an Organic Food Supply Chain (OFSC) especially with unreliable supply of products. Small and established food retailers import organic food products from across the world. Custom delays, high transport charges, commodity costs and regulatory requirements are associated with food imports. This renders OFSCs complex and vulnerable to disruptions or breakdowns that require appropriate strategies to identify and mitigate risks.
Purpose: To gain an overall insight of risks mitigation in OFSCs. The purpose of this thesis is to assess risks affecting suppliers and retailers of organic food and propose risk mitigation strategies to prevent or minimise supply chain breakdowns.
Method: This qualitative study utilizes a case study strategy involving seven case firms and seven research respondents. Data is collected through semi-structured interviews and documentary secondary data. The analysis of the empirical findings is conducted by cross analysing empirical findings of respective case firms and then emerging patterns are formulated into a general framework.
Conclusions: Low conversion rates of farms for organic production, high costs of investments and regulatory requirements have contributed to prevailing production risks that partly cause low organic output. Other risks identified that could disrupt the food chain under study include sourcing, warehousing, demand, price, financial and institutional risks. Mitigation strategies proposed include production procedures, CAP, supply chain flexibility, supply chain visibility, certification, diversification of retail channels, brand image building, horizontal & vertical cooperation and buyer-supplier relations.
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