Sustainability Strategies and Contractual Arrangements in the Italian Pasta Supply Chain: An Analysis under the Neo Institutional Economics Lens

Abstract

Contracts represent key governance mechanisms along the supply chain to pursue collective sustainable strategies in line with new citizen-consumers’ preferences for sustainable products. Adopting an embedded multiple case study approach, this paper explores and analyzes 11 cases of contractual relationships between Italian semolina and pasta producers and farmers in order to investigate whether sustainability strategies affect the design of contracts and the related consequences. Findings reveal that different sustainability strategies correspond to different design and combinations of (both monetary and nonmonetary) contractual incentives aimed to centralize property and decision rights. What emerges is that stronger sustainability strategies entail a higher degree of buyers’ control over strategic investments (such as land and seeds) as well as wider provision of technical assistance and knowledge and innovation transfer toward farmers. Therefore, mutual gains seem at stake, even if socio-economic implications of the shift in decisional and control rights from farmers toward buyers shall be neglected, to ensure a better coherence with the farm to fork strategy and sustainable development goals.

The analytic hierarchy process as an innovative way to enable stakeholder engagement for sustainability reporting in the food industry

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Matching ecological transition and food security in the cereal sector: The role of farmers' preferences on production contracts

“…First, such a clause can be used to transfer liability of the environmental pollution from agribusiness firms to farmers (Huong et al, 2020). Second, producers are not particularly committed to more sustainable practices per se, so that they do not accept specific obligations, if not in exchange for incentives promoted by leading actors in the agri-food supply chains (Shi et al, 2020;Ciliberti et al, 2022). Looking outside, a decisive role certainly can be played on the one hand by the institutional environment, unable to provide sufficient incentives or disincentives (in terms of rewards and penalties) and on the other hand, by consumers and clients unwilling to pay more to compensate producers from extra costs due to the adoption of environmental-friendly practices.…”

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