You are a member of the executive committee of Springtime Coop (SC), a
farmers' cooperative in Camelot, a large developing country in Asia. Until
15 years ago, the economy of Camelot was tightly regulated, and movement
within the country was restricted. Because the farmland of Camelot is
productive, it was well treated by the central government. The region
was not rich, but schools and public facilities were relatively well maintained.
A change of government triggered an opening of the Camelot economy, and
rapid economic and industrial development in the major cities. However,
SC is located in a region (Springtime) that has not benefited from these
changes. Incomes are now low by national standards, and many young people
are chosing to move to the cities rather than continue in agriculture,
which is the only source of livelihood in the Springtime district. The
quality of education is now poor, and the local infrastructure, including
the main road that leads from Springtime to the nearest railroad station,
is beginning to deteriorate.
The executive committee of SC is exploring two possible ways of securing
the future of the community. One is to pursue high-volume agriculture,
using genetically modified crops and special pesticides and herbicides.
Under current conditions, the introduction of these techniques could increase
the total yield of the land by 100%. Some other regions have received
technical assistance and free seed and equipment from the government to
convert to this new form of agriculture.
Another possibility is to pursue organic farming. The market for organic
produce is increasing worldwide, and organic products bring high prices
compared to other products. The Camelot government has a "Green Tag"
scheme for organic products, which requires that produce have no trace
of pesticides or herbicides when they are sent to the market. The Minister
of Agriculture has suggested to SC that Springtime might be made a special
"Green Tag Zone", to help boost the image of the label.
The executive committee is split between these two approaches. Those who
support the "industrial" approach argue that the benefits offered
by the government are certain, and that the increases in productivity
are also well established, so the total benefits to the community can
be known in advance. Those who support the "organic" approach
argue that the cost of chemical fertilizers has been increasing, and that
the same will be true for genetically modified seed. They also point out
that most organic produce is exported, and direct overseas sales would
give SC and its farmers income in hard currency. The world demand for
organic produce is expected to rise, and some expect prices to double
or even triple in the next five years.
Springtime was recently visited by Alan Anderson, president of a large
restaurant chain in North America. SC members were impressed by his knowledge
of agriculture, and his discriminating eye for quality produce. The restaurant
chain, Fruits & Nuts, Inc. (F&N) has now asked to set up a meeting
with SC, to discuss the possibility of supplying F&N restaurants with
organic produce. Both factions on the executive committee of SC agree,
for separate reasons, that SC should keep its options open (i.e. avoid
a long-term commitment to this single customer) if possible.
Currently, the Springtime region produces (for example) about 3 million
kilos of potatoes, 100,000 kilos of aubergine and 200,000 kilos of carrots
per year. The region has only one pest, a destructive beetle that farmers
have learned to control using ashes from the tulbo tree, which grows in
the region and is used as a cooking and heating fuel in local homes.
At a special meeting before the arrival of the Fruits & Nuts negotiation
team, the Executive Committee has given the following information to your
negotiating team to prepare for the negotiation: You have authority to
negotiate on behalf of the Springtime Cooperative. Springtime has received
an approach from "McBucket's Chicken and Casino", a large fast-food
restaurant chain. McBucket's plans to add vegetables to their menu, and
they have contacted SC about a supply contract. Every vegetable served
at McBucket's must be exactly the same size, weight, shape and color.
This requires that they be grown from genetically modified seed, with
heavy use of chemical fertilizers, pesticides and herbicides. During preliminary
talks, McBucket's has suggested that it could commit to purchase a minimum
annual dollar value of produce (the amount offered was equal to the full
current average income of SC farmers), with the price of individual lots
of produce to be fixed by an appraiser proposed by McBucket's and approved
by SC. Their negotiator also expressed a wish to use Springtime in its
advertising, saying, "It will be good for your community. It will
make you famous." The McBucket offer expires on Sunday evening, so
you must decide whether to make a final commitment to F&N at this
negotation. Most of the land of Springtime has been saturated with pesticides
and herbicides, which will be detectable in the soil for two more years.
However, it is certain that crops can be grown on this land in a way that
will pass the "Green Tag" certification scheme offered by the
government of Camelot. The biggest problem for SC farmers is erratic weather,
which causes a serious crop failure roughly once every decade. It is important
to stabilize the income of the community. The price of organic produce
is expected to rise sharply in the future. The Executive Committee may
reject a plan that does not permit SC farmers to benefit from increases
in the value of organic crops. The specific type and quantity of produce
to be sold under the agreement is not an issue in this negotiation. The
minimum quality of produce to be sold under the agreement is open for
negotiation, but only if it is raised by F&N.
Sample research links:
Report on a scheme in China that is similar to "Green Tag"