Summary of case studies undertaken by the JRC

Transcription

1 Summary of case studies undertaken by the JRC (Food quality assurance and certification schemes managed within an integrated supply chain) Stephan Hubertus Gay, DG JRC / IPTS & Govert Gijsbers, Innovation Policy Group TNO Conference on Food Quality Certification Adding Value to Farm Produce 5/6 February 2007, Brussels 1

2 Presentation Overview 1. Background 2. Introduction to cases studies 3. Food Quality Assurance Schemes characteristics 4. Food Quality Assurance Schemes performance 5. Conclusions and Recommendations 2

3 Presentation Overview 1. Background 2. Introduction to cases studies 3. Food Quality Assurance Schemes characteristics 4. Food Quality Assurance Schemes performance 5. Conclusions and Recommendations 3

4 Background The European Parliament initiated the research DG Agriculture and Rural Development asked the DG JRC/IPTS to carry out a project on Quality assurance and certification schemes managed within an integrated supply-chain The mission of the IPTS is to provide customer-driven support to the EU policy making process by researching science-based responses to policy challenges that have both a socio-economic and a scientific or technological dimension. 4

5 Organisation of the project Studies on food quality assurance schemes 2005 Stakeholder consultation Food supply chain dynamics and quality certification, Nov Review of existing studies and methodologies, Feb Inventory of Food Quality Schemes, Nov Economic analysis of the valueadding process along the food supply chain (9 case studies), Nov Preliminary Report Background Paper Final Report 2007 Workshops, 2005 (Brussels, Stockholm, Prague, Seville) Hearing, May 2006 (Brussels) Conference organised by DG AGRI, Feb (Brussels) Project website:

6 Objectives of the economic analysis To assess the benefits and costs of Food Quality Assurance Schemes (FQAS) for farmers, processors, retailers and consumers; To analyse the effects of FQAS on European farmers with special focus on small-scale farmers; To analyse the contribution of FQAS to the development of rural areas. 6

7 Structure of the analysis carried out Nine case studies limitations for conclusions Economic analysis along the integrated supply chain Link to Common Agricultural Policy (CAP) and Rural Development Success and failure as well as advantages and disadvantages of FQAS Conclusions and recommendations 7

8 Food Quality Assurance Schemes Schemes provide assurance that products or processes fulfil defined quality requirements Participation is voluntary The first Quality Schemes were created in Europe in the early 20th century and have been rapidly increasing in the 1990s, including the present EU food quality systems since

9 Presentation Overview 1. Background 2. Introduction to cases studies 3. Food Quality Assurance Schemes characteristics 4. Food Quality Assurance Schemes performance 5. Conclusions and Recommendations 9

10 Economic analysis along the integrated supply chain of case studies Focus on all stakeholders within the chain Description of the supply chain and the FQAS Analysis of benefits and costs Assessment of FQAS links to Common Agricultural Policy and Rural Development 10

11 FQAS Introduction to the case studies Product Country Logo Baena (PDO) olive oil Spain Boerenkaas cheese the NL Comté (PDO) cheese France Dehesa de Extremadura (PDO) cured ham Spain EurepGAP Label Rouge Neuland Parmigiano Reggiano (PDO) fruit & vegetables chicken pork cheese EU France Germany Italy Red Tractor / Assured Produce potatoes the UK 11

12 Baena (Olive Oil) Many small-scale producers (11 000) 2.3% of Spanish olive oil production Only extra virgin olive oil may be sold as PDO Competition with other olive PDO oils from the same region, and competition with non-pdo extra virgin olive oils throughout the chain Distinctive packaging (0.5 L bottles) adds most value Not all possible produce is marketed as PDO 12

13 Boerenkaas (Cheese) Small market share (2% of Gouda type cheese consumption) On-farm processing; use of raw milk: variability of production quality; ripening mostly by wholesalers Applied quality labels are not well known to consumers Application for TSG status to replace Govt. Quality label KB label: joint initiative of producers and wholesalers Producers want to pull out, wholesalers insist on compliance Competition with specialty factory cheeses Boerenkaas a weak brand name / limited promotion advertising 13

14 Comté (Cheese) First French PDO cheese (4% of French cheese market) Well established scheme organisation (AOC: 1952, PDO: 1996) CIGC: Appellation Defence Committee for Comté created by Government decree Production plan limits production to support price Constant demand in recent years Investment in advertising, export strategy and niche product creation as growth strategies 14

15 Dehesa de Extremadura (Cured Ham) Three qualities depending on feeding regime Considerable market share in the high-end quality segment ( bellota ) Link to specific eco-system ( dehesa ) Competition with other PDO and private brands Iberian ham a stronger brand than Dehesa de Extremadura 15

16 EurepGAP producers certified worldwide Formalised benchmarking with other schemes Developed and supported by European retailers Standard for some products (e.g. fresh produce) Harmonisation (one standard for Europe) Not visible for the final consumer 16

17 Label Rouge (Chicken) Publicly supported label to promote safety and quality Considerable market share (31% of chicken consumption) but declining due to competition from private brands producers Organised through 29 Quality Groups within Label Rouge (chicken) which compete Dominant position of Integrated Poultry Production Companies (IPPC) 17

18 Neuland (Pork) 200 producers /shareholders Niche market (market share < 0.1% of German pork) Specific focus on animal welfare Chain integration, producer driven (restrictions on distance between producers and slaughterhouses) Only small-scale to medium-scale participants Exclusive outlets: no sales in supermarkets etc. Limited geographical coverage Clear price premium 18

19 Parmigiano Reggiano (Cheese) Longstanding organisational tradition (since 1957 and 1996 as PDO) Strong brand in the market Main competitor Grana Padano (also PDO) Effectively managed by the Consorzio International marketing (growth potential) High consumer reputation New products introduced: grated and pre-packed cheese 19

20 Red Tractor / Assured Produce (Potatoes) Covers entire UK fresh potato market at supermarket level Joint stakeholder organisation (producers, retailers) Integral chain management from plough to farmgate; from there BRC (British Retailer Consortium) standard takes over Prerequisite for market access Business-to-business (Assured Produce), but visible for consumers (Red Tractor) Basic standard to which few retailers add their own additional requirements Benchmarking against EurepGAP 20

21 Presentation Overview 1. Background 2. Introduction to cases studies 3. Food Quality Assurance Schemes characteristics 4. Food Quality Assurance Schemes performance 5. Conclusions and Recommendations 21

22 FQAS Size and market share Wide variety in size: Large FQAS: Red Tractor / Assured Produce potatoes (71% of total UK potato area) Label Rouge chicken (31 % of market) Parmigiano-Reggiano (38% of grana cheese market) Comté (27% of French hard cheese market) Others are tiny niche products: Neuland pork Boerenkaas cheese Baena olive oil 22

23 FQAS objectives Wide variety of objectives Most FQAS pursue more than one objective; e.g. authenticity, product and process quality, hygiene and safety Most FQAS create a niche market for a traditional product (PDO etc.) Others aim for universal coverage of producers (EurepGAP, Red Tractor / Assured Produce) Two main types of FQAS: Chain internal FQAS e.g. EurepGAP Final market differentiation 23

24 Rules and quality standards Enforcement of legal standards and establishing above-legal standards Restrictions on origin and on production process are often combined (PDO) Common restrictions relate to breeds, feeds, fertilizers, processing techniques, storage and transport, region of production, and distance to processing facilities 24

25 Organisation and coordination Some schemes driven by producers (PDO), some by retailers (EurepGAP), others by wholesalers / processors (Boerenkaas, Label Rouge) Differences in effectiveness of collective action: more difficult to organise if many small-scale producers involved Governance: some schemes entirely private, PPP, others publicly organised or recognized 25

26 Presentation Overview 1. Background 2. Introduction to cases studies 3. Food Quality Assurance Schemes characteristics 4. Food Quality Assurance Schemes performance 5. Conclusions and Recommendations 26

27 Farmer participation Lowest number of participating farmers: Neuland (200) and Boerenkaas (340) Largest: Baena olive oil (11 000), EurepGAP (>50 000) Small-scale farmers in remote locations benefit from PDO (Comté cheese, Extremadura ham) Some schemes allow farmers groups to become member to encourage small-scale farmers to participate Small-scale farmers find it difficult to comply with standards 27

28 Market shares over time FQAS Baena (olive oil) Boerenkaas (cheese) Comté (cheese) Dehesa de Extremadura (cured ham) EurepGAP Label Rouge (chicken) Neuland (pork) Parmigiano Reggiano (cheese) Red Tractor / Assured Produce (potato) Volume or value Market share Unknown 28

29 Strengths and weaknesses of FQAS studied + Vertical coordination (Red Tractor / Assured Produce, EurepGAP) + Some PDO have strong recognition (Comté, Parmigiano Reggiano) + Traditional (artesian) production (PDO, Boerenkaas, Label Rouge) + Focus on specific quality aspect, e.g. animal welfare (Neuland) - Focus on standard production (Red Tractor / Assured Produce, EurepGAP) - Limitation to product innovation (Parmigiano Reggiano) - Limited differentiation from competing products (Baena, Dehesa de Extremadura) - No joint marketing (Boerenkaas) 29

30 FQAS Benefits Producer Benefits Market access (e.g. ability to supply a market) Higher incomes Better prices for raw materials Protection of artesian processing Retailer Benefits Assured compliance to standards Reduced control requirements /cost reductions Consumer Benefits Assure food safety Animal welfare Guarantees of product authenticity / traditional production methods (Premium product with superior organoleptic qualities) General Benefits Employment (e.g. regional processing) Immaterial benefits (e.g. support traditions) Public goods (e.g. landscape conservation) 30

31 FQAS Costs Two types of cost: direct and indirect Direct costs relate to: membership fees, inspections and certification Indirect costs relate to: Compliance with FQAS standards (investments costs for upgrading facilities) and recurrent production costs Directs costs generally modest, indirect costs much higher and more difficult to quantify 31

32 Economic analysis of the value adding process Price premium depends on market (e.g. no premium for Baena olive oil in highly competitive market; high price premium for Parmigiano Reggiano cheese and Neuland pork) Most certified product have a price premium, but not always enough to compensate for higher production costs at farm level (e.g. Comté cheese, Label Rouge chicken) Value added often retained at intermediary (Label Rouge chicken) or retail level (Boerenkaas) 32

33 Value of Comté and Emmental in the chain Consumer price Wholesale price Farm milk Comté Emmental 33

34 FQAS impacts on Rural Development Contributions to Axis 1 (competitiveness) Quality management improves competitiveness (EurepGAP, Red Tractor / Assured Produce) Differentiation of product (PDO, Neuland) Contributions to Axis 2 (environment) Extensive production (PDO, Neuland) Maintenance of fragile agro-eco system (Dehesa de Extremadura) Management of resource use (EurepGAP, Red Tractor / Assured Produce) Contributions to Axis 3 (quality of life) Rural processing (PDO, Boerenkaas) Animal welfare (Neuland, Label Rouge, Dehesa de Extremadura) Traditional production systems and ways of life (Boerenkaas, PDO) Agro-tourism (PDO) 34

35 Presentation Overview 1. Background 2. Introduction to cases studies 3. Food Quality Assurance Schemes characteristics 4. Food Quality Assurance Schemes performance 5. Conclusions and Recommendations 35

36 Conclusions (1) Only the two chain internal schemes (EurepGAP and Assured Produce) have experienced growth in market share in the last decade Most FQAS show price premium for farmers, but not always increased farm income, because: Higher production cost for certified products Value added occurs predominantly at wholesale / retail level Governance a key issue: successful schemes have an effective council or intermediary body Some FQAS make significant contributions to Rural Development 36

37 Conclusions (2) FQAS promote traditional production systems, but may limit the potential for innovation At the same time FQAS may promote innovation through process of upgrading to higher standards Successful FQAS resemble brands: importance of marketing, advertising and branding FQAS can create export opportunities for exclusive food products 37

38 Recommendations Define more clearly the roles of public and private sector in relation to food safety and quality assurance Explore synergies and compatibilities between product differentiation schemes and HACCP-based in-chain management systems Strengthen existing measures for small scale producers to participate Improve speed of granting PDO/PGI/TSG status Avoid fragmentation of public FQAS to ensure recognition by consumers 38

39 JRC-IPTS Team: Monique Libeau-Dulos Emanuela Elia Fatma Handan Giray Pénélope Vlandas Stephan Hubertus Gay Thank you for your attention Case Baena Boerenkaas Comte Dehesa de Extremadura EurepGAP Label Rouge Neuland Parmigiano Reggiano Red Tractor Group leader Francisco Cáceres Clavero (DAP Cordoba) Govert Gijsbers (TNO Delft) Vincent Réquillart (INRA Toulouse) Rosana García Collado (DAP Cordoba) Andreas Schneider (CEPS Brussels) David Nahon (INRA Paris) Andreas Schneider (CEPS Brussels) Paolo Sckokai (Catholic University of Piacenza) Marian García (Centennial Consulting Wye) Project website: - Results and project documents 39