*3.5. Agri-Food Markets*

Starting from Ilbery and Kneafsey's [106,107] studies regarding specialty agri-food markets, the authors concluded that this results from interactions between producers, customers, and institutions. This embeddedness does not occur only by chance; the involvement of these three aspects sustains a market that cannot sustain itself with customers and producers alone. As such, the present work is dedicated to discussing the relevance and influence of the third aspect of this market: the institutions.

From the mentioned definitions of perfect markets, it is utterly clear that there is a significant variation in production models among agricultural markets. In the first case, large agricultural markets that produce commodities—such as sugar, soybeans, or corn are significantly closer to the definition of the perfect competition conditions. There is extreme homogeneity between products, mobility, volatile prices, a slight permeability of participating actors, and information about production, logistical, and stock conditions is known to any buyer or seller.

On the other hand, there is another relevant agricultural market. Local and regional products are part of agricultural product niches that do not fit into this market. Such niches are the definition of imperfectly competitive markets, full of details that need to be looked at in depth, with few participants with sunk costs and investments in specific capital through the terroir of each producing region. Therefore, the natural, evident, and unique path for these agricultural markets is to fit within the approach proposed by the NES.

Both economic and agrarian matters present a myriad of complex forms of approach, as seen previously. On the one hand, agrarian systems vary in their complexity, subject to environmental conditions, human influence, and cultural factors. The more complex the system, the more unique the resulting products, and the more complex the markets become. On the other hand, the distinction of how to classify the analysis is not a simple toolbox. However, the more subjective those analytic tools are, the more details can be perceived and, therefore, the more capable the tools are of in-depth analysis. Sociological tools, for example, allow for the examination of social actions through magnifying lenses, with more detailed visualization and understanding. This facilitates the extraction of information about the functioning and its causes, in addition to the results.

Agricultural practices developed over time; however, the development of these practices is asymmetrical in geographical and chronological terms. Thus, not only environmental conditions, but also historical events and cultural aspects, pushed specific regions towards specialization or diversification of technological advances, practices, production, changes, and the role of agriculture in each society. The reasons for such differences were previously discussed in this article. However, there are still some aspects of agricultural markets that require attention.

Thom [41] argued that adopting a taxonomy of systems is imperative for the proper analysis and development of a theory. Thus, the creation of a theory of agrarian systems by Mazoyer and Roudart [1] allowed for the deepening of the subject. Furthermore, the distinction of systems into the cultivated ecosystem and the productive social system supports their theory. These two components suggest that agrarian systems can only be altered if at least one of them is changed.

Both components are embedded. The cultivated ecosystem relates to a set of practices, land use intensity, and environmental relations, and varies as socio-political moments vary. For example, when times demanded more food production as the population grew more rapidly, there was a need to intensify the land use and apply techniques to extract more from the environment.

Productive social systems are no different. However, the need for the development of new tools and equipment, selection of animals and plants for growth of production, and the labor force dedicated to it also changed according to socio-political demand for more food. However, as the demand over time has changed chiefly in quantitative terms, the changes in these two components have also changed (cultivated ecosystem and the productive social system supports) in qualitative aspects. Nevertheless, the rise of a new

agrarian system does not imply the demise of the existing ones; different agrarian systems can coexist. However, there is a tendency for specific systems to prevail. This depends on the combination of forces capable of exerting political pressure. According to Gramsci [47], within the world's capitalist system, such pressure is exerted by the holders of economic power through cultural hegemony. Therefore, any type of change in agrarian systems depends on the ability to exert political pressure to change them, since the institutions have the tools capable of influencing this process [108].

Although there are differences in conception at the start of the Anthropocene, this work chose to consider the dawn of agriculture as the first agrarian system constituted. However, even in discussions of origins, scholars consider the relevance of all the socioecological complexity of agri-food systems [109]. The complexity of the systems hinges on the impossibility of reproducing terroir-related quality, regardless of intrinsic regional characteristics. Therefore, standardization of agri-food products over a wide geographic area, reducing human, cultural, and environmental factors, implies a reduction in complexity.

Globalization started a process that improved Fordism [3]. This process resulted in a struggle between local and global agri-food systems, and pushed smallholders and communities towards niche formation [110,111]. The process of globalization is a result of modern capitalism, and has goals of standardization and homogenization at its core. Thus, the agri-food products that prevail in the current capitalist system are commodities that are only possible in low-complexity agrarian systems. On the other hand, complex agrarian systems result in non-reproductive agri-food products in other locations, due to characteristics arising from cultural, human, and environmental elements. The GI represents the complexity of such products from complex systems. The materialization of terroir is institutionalized through the granting of intellectual property rights. Therefore, through its institutionalization in GI, terroir constitutes a niche market, deserving a more in-depth approach [112].

As shown in the discussion in the previous section, economics enables and is of great analytical use to the agri-food market. However, as Smith [55] initially observed, economics endorses a utilitarian worldview by maximizing land use. The theory provided in *The Wealth of Nations* by the same author converges with the capitalist-based world system in formation at that time, based on profit maximization. Smith understands that individuals act for their own benefit by devoting efforts and resources to it. The denial of secondary interest of societies is crucial to understanding the principles of classical economics; it is sustained by individuals, lacking intent for the collective good. The core of classical and neoclassical economics is based on rational choice theory—a thesis that conflicts with the foundations of complex agrarian systems embedded with human, natural, and cultural factors.

As Arnsperger and Varoufakis [73] previously noted, the three axioms of the theory are methodological individualism, methodological instrumentalism, and methodological equilibration. Thus, these theoretical foundations properly match the conditions of perfect competition. Commodity conditions such as atomization, homogeneity, mobility, permeability, free price flow, and transparency, due to their characteristics, are less easy to influence and, therefore, more suited to classical and neoclassical tools.

Although also utilitarian, political economy has as its object of study the geopolitical and globalization factors in transnational trade. Its development, along with globalization and the post-Fordist society, added a political variable after an era of mercantilism. As such, the conception of an accelerating mobility of capital along with worldwide urbanization also developed based on everlasting development that progressed to the capitalism of mass production and consumption.

From a rural perspective, this production and consumption philosophy is no different. However, there are inherent differences in the means of production between urban and rural living and production. For example, agri-food production is not a mechanical process like industrial production. Soil, climate, and pests, among others, influence and interfere with production. Nevertheless, capitalism has pushed agri-food production in

the same direction, aiming for standardization and homogenization of mass production. Moreover, Bonanno and Constance [3] point to the increase in the rationalization process, pushing massification and standardization as only being possible with the participation and influence of the state [47].

As addressed in the other perspectives, economic sociology also approaches the agrifood markets. Additionally, more complex agrarian systems are endowed with cultural, human, and environmental elements that influence the differentiation of their products. These elements provide characteristics capable of producing unique and irreproducible agri-foods in different areas. Thus, agri-food products of greater complexity reproduce this complexity in the markets in which they participate and, consequently, provide the conditions that keep them from perfect competition.

The best examples of these product markets arising from more complex agrarian systems that are so particular and require differentiated markets are the products labeled with GI. Such agri-food products are significantly different from commodities, since they are irreproducible in areas other than those for which they are registered, for cultural, human, and environmental reasons. However, due to the multiple factors derived from the three terroir builders, the markets for these differentiated products can only be adequately investigated through the lens of economic sociology.

Agri-food markets become more complex as their production systems add more elements and produce more complex foods. However, as previously discussed, these systems have developed asymmetrically around the world.

Some nations support more complex systems, enabling the development of a more significant number of products imbued with their local cultures, the exercise of human practices, and those influenced by the environment. Meanwhile, other nations maintain simpler agrarian systems aimed at producing agricultural commodities.

Given the market imperfections addressed by Granovetter and Hayek [17,31,76], it is clear that markets are not only formed by free trade relations between buyers and sellers. External influences are present, as are built-in institutions—formal or informal [83]. Such conformations sustained in the markets have built institutions with different purposes around the globe.

As discussed by Acemo ˘glu, the formation of institutions in the world is strongly influenced by colonization [84]. Thus, in countries where colonization was carried out in an exploratory manner, the construction of institutions was supported by similar agrarian and productive systems, as in Latin America and Africa. Thus, despite the existence of productive initiatives in more complex market niches, nations with this type of colonization mostly maintained commodity-producing systems. On the other hand, colonized nations with purposes of permanence developed similarly to those of their origin, industrialized, formed urban elites, and opened space for the construction of more complex markets in the food field. In addition to the form of colonization, regions where the dominant groups do not come from rural areas were able to implement formal institutions with greater capacity for the development of more complex agri-food markets.

Thus, countries colonized in an exploratory manner created agrarian elites that reproduce themselves in political power. Formal institutions, be they state structures or legal instruments, result from the political constructions into which they are inserted [18,34,94]. Thus, institutions represent the thinking and interests of dominant groups. In the case of nations that maintained exploratory agricultural systems and, consequently, less complex markets, their institutions became reflections of groups with greater power in the countryside.

Therefore, with the formation of agrarian elites resulting from exploratory colonization, structured groups that produce large-scale commodities are formed. On the one hand, such groups exert local power and political influence and, on the other hand, consolidate the common sense of the field's function according to the theory elaborated by Gramsci [47]. In the same vein, Michels states that the interests of those on top of organizations always come first, and oligarchies tend to sustain the elite's interests and suppress people's interests [113].

While consolidating the ideology and values of the dominant groups, institutions suppress the development of systems that could threaten their hegemony. Thus, the agrarian elites, upon establishing themselves as the dominant group in certain regions, build systems of political and ideological tools that make the development of other productive systems unfeasible. In these regions, by establishing the commodity production system as a model, they suppress the development of more complex agrarian systems and niche market products, such as products with GI.

The fact that institutions result from the embeddedness of the social actors involved allows for mutability in their construction. However, since institutions reflect the groups that influence them, in order for there to be transformations, it is necessary to change the groups that dominate the construction of these institutions. Thus, in order for new systems, products, and markets to flourish, it is necessary for new groups to become dominant over the construction of these institutions. In the same sense, Acemo ˘glu and Robinson argue that political institutions need to increase state capacity and distribution of power in a balanced way in order to be inclusive [86]. Therefore, modernization is achieved through inclusive and balanced institutions. Even more specifically, Allaire and Wolf point out the importance of hybridity in institutions in the qualification process of agri-food systems [114]; the authors' approach solidifies the importance of transforming institution-forming forces in order to objectify identity-based food systems.

In this way, the process of globalization consolidates the position of the nations concerning their commercial function in the world, allowing little or no mobility between them [102]. For this reason, Bonanno and Constance argue that global post-Fordism is a system that takes advantage of economic and social rigidity, seeing the labor market and local consumption as forces to be included or excluded according to their corporate interests [3]. Thus, the capitalist logic of serving the interests of hegemonic groups is maintained, to the detriment of the development of complex agri-food markets such as GI. This view of the disproportionate effects caused by globalization is endorsed by Friedland, who sees it as a phenomenon of heterogeneous effects and proportions across sectors, regions, and products, and proposes a neo-Fordist approach to cross-cutting commodities [115].

This concept paper indicates that the market (and especially the agri-food market) has different levels of embedded influences, via economic and agrarian analysis. Therefore, we can conclude that there is no such thing as an invisible hand. Economic issues and, more specifically, markets are always oriented by a power balance. This balance is a result of the embeddedness of social, political, and economic matters. The outcome of this struggle pushes the profits towards the most powerful actors in play. Furthermore, GI agri-food products arise from embedded agrarian systems resulting from terroir, as the fruition of the multiple hands acting towards creating and stabilizing a market.

Finally, institutions are built to consolidate the ideas of the ruling elites. If, in turn, these elites exercise power through domination over land, the tendency is for these institutions to be oriented towards perpetuating this form of power and maintaining the interests of dominant groups. Thus, the formation of these groups allows for divergent models of agri-food production: One, oligarchic and commoditized, where colonization was exploratory, and other, in productive niches where industrialization was able to emerge.

## **4. Conclusions**

The present work sought to discuss the embeddedness of institutions in agri-food markets, based on critical theory. According to agrarian complexity, as well as the consequent formation of the market, the present concept paper sought to approach the differences in the construction of institutions by the dominance of interest groups. Much study has been devoted to agricultural markets. This work sought to present contemporary approaches to the theme and contextualize them in terms of their formation, central ideas, and analytical skills associated with different agrarian complexities and their products. In no way does

this work aim to exhaust the debate; simply to present possible, viable, and assertive paths for the future discussion of these markets.

The first conclusion is that products such as GI, imbued with cultural values derived from environmental conditions and proper knowhow, are only possible in complex agrarian systems. In turn, such systems are reminiscent of practices in specific regions, carried over time by the cultural factors that allowed their current existence. Therefore, as the complexity of agrarian systems increases, the determining variables in the market for such products also increase. Thus, regions where less complex systems predominate tend to hinder the creation, maintenance, and perpetuation of such products, which may compromise their existence in the long run.

A clear conclusion is based on the principle of the formation of agrarian systems, with embedded relations with civilizations' cultural formation. Food and culture are part of the same matrix, and cannot be dissociated. Barham [55] and Allaire [4] suggest that the embeddedness perspective along with convention theory analysis can enlighten the discussion of origin-related food issues. Such a path could be a future avenue of research.

The second conclusion is that more or less complex agri-food markets develop due to the elite formation in each region. In regions where there is an agrarian elite sustained by the production of commodities, institutions tend to be built with their own interests in mind. Regions with industrialized economies tend to set the interest groups on this sector and open a window for dispute in the agri-food sector, allowing for the development of more complex products.

On the other hand, as a third conclusion, regions colonized through exploration, without goals of permanence, built institutions capable of maintaining this vision, as noted by Acemo ˘glu [84,86,87]. In commodity-oriented nations, these institutions are formed by agrarian elites who exercise power and influence over them. Furthermore, the theory developed by Wallerstein applies to the present case in terms of maintaining positions regarding their functions in the periphery and semi-periphery of the world.

The fourth conclusion is that the construction of institutions is carried out to promote the maintenance of dominant groups' interests through ideological means, as highlighted by Gramsci [47]. Thus, in agri-food markets, nations reproduce these interests according to the formation of dominant groups in each place: oligarchic elites where colonization was exploratory, and productive groups dedicated to niches in regions where industrialization was a driving force.

Finally, in response to the question presented at the beginning of this work as to what drives GI agri-food markets, it is clear that the construction of these markets does not result merely from productive capacity, from the number of individuals involved in agriculture, or from the diversity of the environment that influences the goods. The primordial and determining factor for the construction of these markets is the result of the social conformation and power struggle where dominant interests prevail, which exercise control through institutions, which is called hegemony. In other words, where agrarian elites from fundamentally exploratory colonizing processes predominate, they tend to perpetuate the dominance of low-complexity agrarian models, constraining more complex embedded systems such as those endowed with terroir, such as GI. Meanwhile, in regions where the dispute for power takes place in other fields, there is room for developing factors capable of producing agri-food products and more complex markets. For agri-food markets to be altered, it is necessary to break the hegemony of dominant interest groups over the structures that form institutions. New systems can be developed only by breaking the hegemony of these groups and expanding the base of influence.

**Funding:** This research received no external funding.

**Institutional Review Board Statement:** Not applicable.

**Informed Consent Statement:** Not applicable.

**Data Availability Statement:** Not applicable.

**Acknowledgments:** The author wishes to thank M.P.C. and R.J.S.D.M. for their support and assistance with the research.

**Conflicts of Interest:** The views and opinions expressed in this article are those of the author, and do not necessarily reflect the official position of the Brazilian Ministry of Agriculture, Livestock, and Food Supply.
