Costing in the agri-food sector is an enigmatic business, due to its unusual characteristics. Complex supply chains, a largely fragmented production base and a shortage of accounting expertise, all contribute to a lack of visibility of costs at various stages of the supply chain from the farm gate to the diner's plate. Producers also have to contend with the relative concentration of power with the large retailers; and with the vagaries of weather and disease. The peculiarities of this sector make it a fascinating arena to study, but may frustrate attempts to import management accounting practices which have proved successful in other sectors. Despite this, there does seem to be potential to improve both costing and pricing practices to achieve cost efficiencies and to enable participants to better understand their costs – insights which could help them negotiate more equitable contracts. One particular strategic planning tool with apparent potential for the agri-food sector, is Target Cost Management (TCM). Supply chains in other industries practice TCM effectively, including chains in fragmented industries and with smaller participants – that is, chains which seem to share the characteristics of supply chains in the agri-food sector. This report summarises the discussions of farmers, CIMA members and other stakeholders who attended a series of roundtables hosted by CIMA, in late 2008, about costing practices in the UK’s agri-food sector.
|Place of Publication
|Chartered Institute of Management Accountants
|Number of pages
|Published - Feb 2009