Farmer share and fair distribution in food chains from a consumer's perspective

Abstract

Discussions about fair revenue distribution in food supply chains gained importance in 2008 when European milk producers entered a strike against dairy processing companies (EU milk strike). A broad discussion in the media emerged, provoking civil society as well as politics to get involved in a debate over fair prices for farmers. During the milk strike, consumers in Germany were to a large extent sympathetic with the farmers, while food retailers were seen as the main cause of the problem. However, the question what fairness and a fair revenue distribution in food production meant remained unanswered. Hence, this study aims to analyze consumer perceptions of what a fair revenue distribution is in food chains and to determine what factors contribute to fairness perceptions of the farmers’ share. Through an online survey conducted in November 2012, German consumers were asked to estimate the distribution of the food dollar among different supply chain partners and to indicate what a fair distribution should look like. This paper contributes to the literature of the perceived unfair compensation of farmers and provides empirical examples of the concepts of distributive, procedural and interactional fairness. The findings of the survey showed that farmers are mainly perceived as being treated unfairly in supply chains and should get more compensation from a consumer's point of view. Food retailing should mainly lose shares in this context. A fair distribution of revenues is influenced by distributive considerations, process control and interactional fairness, revealing that non-monetary aspects are also influencing fairness perceptions of revenue distribution in food chains.