11/08/2016
Short Food Supply Chains and Local Food Systems in the European Union. A State of Play of their Socio-Economic Characteristics. Authors: Moya Kneafsey, Laura Venn, Ulrich Schmutz, Bálint Balázs, Liz Trenchard, Trish Eyden-Wood, Elizabeth Bos, Gemma Sutton, Matthew Blackett Editors: Fabien Santini, Sergio Gomez y Paloma 2013
Executive summary
In recent years, as global food chains have expanded, a large array of terms has been used in academic, policy, technical or civic debates to illustrate innovative re-organisations of food supply chains aiming at re-connecting producers and consumers and re-localising agricultural and food production.
These include short supply chains, alternative food networks, local farming systems and direct sales. On the policy side, several EU Member States have developed legal frameworks and incentives to support such types of food chains.
France, for example, defied precisely the notion of a short chain (‘circuit court’) in the framework of the 2009 Action Plan to develop them and Italy has also established legislative decrees for the regulation of Farmers Markets. At EU level, this kind of initiative benefits from Rural Development funding, and the European Commission proposed, within the ‘CAP towards 2020’ proposals1, that short supply chains may be subject to thematic sub-programmes within Rural Development programmes. The recent ‘Agricultural Product Quality Schemes Regulation’ (Regulation (EU) No 1151/92) adopted by the European Parliament and the Council includes a request to the European Commission to elaborate a report on a possible new ‘local farming and direct sales labelling scheme to assist producers in marketing their produce locally’ (Article 55), focusing on the ‘ability of the farmer to add value to his produce’ and, among others ‘the possibilities of reducing carbon emissions and waste through short production and distribution chains’, and, if necessary, ‘accompanied by appropriate legislative proposals’. In this policy context, the present study aims at describing the state-of-play of short food supply chains and local food systems (throughout the report ‘SFSC’ and ‘LFS’ respectively) in the European Union and reflecting on the policy tools to address them, in particular on the introduction of a common EU labelling scheme for farm produce. The methodology taking into account the available means consisted of (i) a thorough review of recent academic literature in economics, sociology, geography and other relevant related disciplines as well as technical and grey literature; (ii) a compilation of available data on 84 illustrative cases of different types of SFSCs throughout Europe; (iii) a more in depth study of 1 See COM(2011) 627 final /2 (article 8, page 34) three case studies and their national / regional contexts in Austria, France and Hungary.
Lessons learnt from these three exercises allow elaborating some concluding remarks on the state-of-play of SFSCs in the EU and on possible policy options to support their development.
Defining and categorising SFSCs
Much recent research has attempted to define what type of supply chain should be at the heart of the reflection on re-localisation and re-connection of agriculture and food production. Both aspects (localisation of the production and length of the supply chain in terms of number of stakeholders involved) have been studied by several EU funded research programmes such as IMPACT, SUPPLIERS or FAAN.
These, and other studies, have generally defied ‘Local Food Systems’ as those where the production, processing, trade and consumption of food occur in a defied reduced geographical area (depending on the sources and reflections, of about 20 to 100 km radius). ‘Short Supply Chains’ on the other hand are where the number of intermediaries is minimised, the ideal being a direct contact between the producer and the consumer. Building on seminal papers of Marsden et al. (2000) and Renting et al. (2003), as well as on definitions proposed by the French authorities or the European Commission, the following definition of SFSC has been adopted in the present report :
“The foods involved are identified by, and traceable to a farmer. The number of intermediaries between farmer and consumer should be ‘minimal’ or ideally nil.”
The specific emphasis on the farmer is adopted because of the above-mentioned policy interest in a potential new labelling scheme.
For the purpose of this study, a focusnon SFSCs rather than LFS has been retained, although the two concepts obviously overlap, and research on the latter is clearly relevant and has been studied in the systematic literature review. The decision to concentrate primarily on SFSCs primarily reflects the difficulties of defining the concept of the ‘local’ (discussed fully in Section 3). Our definition encompasses different types of short supply chains in terms of number of intermediaries. Most of them, which can be grouped following Aubry and Chiffleau (2009) under a single category of ‘sales in proximity’, are also local farming systems, in the sense that locally grown or produced foods are served to local consumers. Agriculture (CSA) and similar schemes known under other names in other Member States (AMAP, etc.) are based on long term partnership between one or several producers and their consumers where consumers are associated to a more or less large extent with the producers’ decisions and labour. Other types of on-farm schemes are numerous, where consumers transport themselves to the place of production to purchase the products of a farmer (farm shops, farmbased hospitality, roadside sales, pick-your-own schemes, etc.). Farmers might also sell off farm their products to consumers in the neighbouring places of consumption in farmers’ markets, shops owned by farmers, food festivals and fairs, farm-based delivery schemes, or through one single trade intermediary (cooperative shops, specialist shops, supermarkets, etc.). Lastly, farmers might sell their products directly to public institutions’ collective catering such as school or hospital canteens, etc. in the framework of public procurement. A few of these short chains can also correspond to non-local sales, in particular direct internet sales / long distance farm-based delivery schemes. Further reflection on the basis of our study suggests that it is possible to differentiate between ‘traditional’ and ‘neo traditional’ SFSCs. The former are farm-based, in rural locations, usually operated on-farm by family businesses and using traditional and artisan production methods. The latter consist of more complex collaborative networks, are often off farm (delivery schemes in particular), located in urban or peri-urban areas and foreground strong social and ethical values (such as CSAs). They may be more subject to a non-profit approach. Both models can be equally innovative and dynamic chains and many individual cases combine characteristics of both of them in a ‘hybrid’ manner. SFSCs’ impacts Research literature has extensively discussed the potential impacts of SFSCs, although there is a lack of baseline and longitudinal data. The research draws on a wealth of case studies, but there are not so many examples of comparative approaches across geographical context or between types of short chains, in particular because of the diffilties of collecting comparable data on micro enterprises and initiatives throughout Europe. In terms of social impacts, there is evidence that SFSCs favour the interaction and connection between farmers and consumers, thus promoting the development of trust and social capital. This can lead to the development of a sense of community and of ‘living-together’ and may even result in behavioural changes (eating habits with public health effect e.g. on obesity, general shopping habits with more social and environmental awareness, etc.). Overall, when farm-based in rural areas, SFSCs might play an important role in the vitality and quality of life of rural areas concerned while in urban areas, SFSCs focus more on promoting inclusive social change through education on sustainability and ethical issues. There are however a few examples where SFSCs have been seen to be associated with social exclusion (excess of localism, focus on wealthy consumers). Economically speaking, benefits can be found in rural development and economic regeneration. There is evidence that local farming systems and short chains do have a higher multiplier effect on local economies than long chains, with impacts also on maintaining local employment, particularly in rural areas. The synergies with the tourism sectors are also well acknowledged. At producer and farm level, they seem to allow a higher share of value added to be retained locally, although quantitative evidence of such impacts is poorly documented. In addition, the requirement for higher labour input with different skills (production, processing, marketing, promoting) is a difficulty at farm level, particularly for small scale producers. The small scale of the schemes at stake and possible higher costs of production as a consequence can also be a threat for their longevity, which may help to explainwhy many schemes turn themselves towards ‘profit suffirs’ or ‘welfare/utility maximizers’ models rather than towards ‘profit maximisers’ ones. Also, there are many examples of farmers using a mix of SFSCs, or combining them with longer chains in order to build resilient routes to market and reduce risks from market volatility. There is a large and lively debate on the environmental effect of SFSCs, where intuitively re-localisation of production might be seen as a driver of drastic GHG emissions reduction. In fact, studies tend to demonstrate that ‘local’ is not a sufficient feature to ensure such benefits. Appropriate logistical arrangements are needed and there is important potential for improvement in SFSCs to this respect. More generally, the methods of production and of processing are important for ensuring less environmental impact; ‘local’ and/ or ‘short’ is not necessarily better, although the importance of ethical values and the higher uptake of environmentally sound practices are de facto elements in favour of a positive impact of SFSCs in the EU. These elements translate themselves into a clear interest of consumers, particularly higher income, urban and educated ones, for products arising from SFSCs. Reasons for this interest may vary from one place to another, but it is clear that ethical, social and environmental concerns, in addition to quality aspects are the key drivers of consumer interest in this sector. There is some evidence in literature that this interest gives birth to a certain extent to a willingness to pay higher prices, with significant price premium (20%) according certain studies (e.g. Carpio and Isengildina-Massa, 2007).
Descriptive state of play of SFSCs in the EU.
From the 84 cases listed in the database compiled, some general elements can be noted. There is a large variety of types of SFSCs throughout the EU and nearly each type is present in every part of the EU. In general, the impression is that collective schemes supplying public institutions seem less developed than other types of schemes and CSAs (as well as ‘neo-traditional’ schemes) are less present in New Member States and Mediterranean areas than in North West Europe (UK, France, Belgium in particular). The ‘traditional’ on-farm schemes are more represented in Mediterranean countries and in New Member States, where also off farm ‘traditional’ types such as farmers’ markets are dominant. Data on the longevity of the SFSC schemes tends to show that the number of urban-driven schemes seems to have developed rapidly in recent years, while more rural ‘traditional’ SFSCs tend to be longer established. Products mainly traded are, fist, fruit and vegetables (mainly fresh, particularly vegetables in the now well present ‘veg boxes’), followed by animal products, principally meat, fresh and prepared, and dairy products as well as beverages. There is a tendency for schemes to complete the range of products offered by other producers’ ones (in some instances non local but produced and traded according to values shared by the scheme, such as organic, artisan or fairly traded). Some SFSCs, in particular in the case of off farm sales, use private labels and logos to promote their schemes, on websites, promotional materials and the labelling packaging of their products. There are nationally-wide (or regional) labelling schemes in some Member States, concerning farmers’ markets for example in the UK (FARMA) or France (MPP) or on-farm sales points (‘Bienvenue à la Ferme’ in France, or ‘Gutes von Bauernhof’ in Austria). Information on the economics of the schemes is extremely scarce, particularly concerning turnover or overhead costs; however, many schemes operate with membership fees for producers and/or consumers together with public support from EU rural development policy and national or regional extra subsidies.
There is more information on the number of producers involved or the number of employees, allowing an impression of the size structure of SFSCs: it seems that there are on one hand large numbers of small schemes (with less than 10 producers involved and less than 10 employees and /or volunteer workers), including micro enterprises (one small scale producer selling direct), and on the other hand a few large schemes involving many farmers (over 100) and employees are present particularly in the North West of Europe. Most SFSCs sell primarily to local and /or regional markets. Less than a third of the examples in our study sell at national level and less than 15% export some products out of their MS. A majority of the schemes implement full or partial organic farming practices (although they are not always certified) and in some instances more stringent farming practices are employed (e.g. biodynamic practices). However, certified organic farming is less present in the examples we identified in the New Member States than in the rest of Europe. The main objectives claimed by schemes relate to social values, principally ensuring quality products to consumers (fresh, tasty) and direct contact between the producer and the consumer (trust, social capital). Environmental values come second (sustainable development, environmentally sound practices, carbon footprint), and economic ones (value added to farmers, support to the local economy) third in the promotion messages of SFSC schemes. The arguments are more diversified in North West Europe than in New Member States and Mediterranean countries where the ‘quality’ argument seems more dominant.
Three case studies in Austria, France and Hungary
The case studies consisted of a family farm doing direct sales in Austria, a producer-consumer co-operative running an internet based local delivery scheme in France, and a local food shop in Hungary. Whilst there are no doubt differences between the three cases in terms of local context and circumstances, some clear lessons can be learned from this comparative case study approach. Firstly, all three examples demonstrate the importance of collective and collaborative action, whether this is amongst producers, or between producers and consumers, or between producers, consumers and local institutions. The French and Hungarian studies in particular reveal the importance of shared ethical and moral frameworks oriented towards principles of fairness, environmental sustainability and care for local cultural resources (as encapsulated in heritage farming practices and typical products). Secondly, traditional and artisan skills which have never ‘died out’ form a vital bedrock in all three cases; without these skills the quality products which the SFSCs are built around would not exist. The new local food enterprises are performing a balancing act: they celebrate and attempt to diffuse this artisan heritage (food democratization) but they also necessarily commodify the local tradition to satisfy renewed consumers’ demand. In terms of the challenges for SFSCs, a problem identified in France and Hungary is the existence of ‘false’ producers who take advantage of consumer interest in buying local produce and sell goods which are not genuinely local. This issue of fraud is one of the main reasons for respondents to consider that a European wide labelling scheme would be useful. However, on the other hand, respondents also emphasized the importance of trust-based, localised relationship and these circumvent the need for a labelling scheme which is really only useful for (distant) consumers who do not know the producers. In all 3 cases, respondents identified a need for training for producers in communication and marketing skills. Producers engaged in SFSCs require multiple skills, not only in production but also in processing and marketing and some respondents (in the French and Austrian cases) sounded a warning note that for the very small family farms, attempting to combine all the different activities and skills could result in a heavy workload and potential burnout of farmers. In all 3 cases, individuals who could be described as ‘social innovators’ have played a key role. In Hungary and France, these are individuals educated to higher levels with professional experience beyond their current places of work. In the Austrian case the individuals draw on their long family history of farming.
Concluding remarks on policy tools The report draws conclusions on whether a labelling scheme can help promote European SFSCs. Synthesising from the literature review, database and case studies, it is possible to draw up a number of pros and cons with regard to a possible labelling scheme. Pros Globally, arguments in favour of a label are that it may potentially bring more recognition, clarity, protection and value added to SFSCs. Arguments against are more centred on the possible absence of benefits, and the potential costs which might be incurred. Labels and /or logos can be used to communicate important information to consumers. They are of most importance when consumers are not buying directly and face-to-face from producers. When consumers buy direct from producers, a label is less important because the consumer can make a judgement about the quality of the product on the basis of their interaction with the producer. A label and/or logo can also be used to signal that a product has been certified in some way and this is important to protect products from cheap imitations.
A label and/or a logo at EU level could be useful to provide a framework and/or a benchmark to stakeholders in Member States where SFSC are less numerous and/or less codified than in others. It is useful to compare the features of well-established labelling schemes such as Bienvenue a la Ferme (BF) and Gutes Vom Bauernhof (GvB) which share common features including high consumer recognition; wide geographical coverage; traceability and external verification; strict entry criteria. Whether a European wide labelling scheme for farm products and direct sales would be effective depends largely on what is to be covered (and possibly certified). Bearing in mind what we know about the motives and values of the producers and consumers involved in constructing SFSCs, it seems that 2 elements are vitally important:
1) The origin and quality of the product – does the consumer know exactly where it came from, how it was made and who made it?
2)The nature of the supply chain – was the product sold at a fair price, e.g., for producers, ensuring the highest share of value added possible is retained at producer level, and for consumer, guaranteeing affordable price for quality food? Cons In a context of proliferation of labelling schemes, consumers might feel even more confusion with an extra layer of labelling schemes and stop taking notice of them. On the other hand, our case studies suggest that SFSC oriented consumers read labels and are interested in having them as clear as possible. It has to be noted there are already several national and/or regional labels and logos referring to SFSCs (BF, GvB, etc.) and a correct articulation between an EU scale approach and the existing examples might not result in more labels and/or logos for consumers but on the contrary would deliver some global clarification on what can be considered as SFSCs, local sales and farm products in the EU. Many respondents in our case studies pointed out that labelling schemes inevitably impose costs on producers and make their products more expensive. Although there is some research evidence of consumer ‘willingness to pay’ for local foods, increasing costs of their produce would not be a helpful strategy given the existence of cheaper imitations, so consideration needs to be given to ways of reducing and/ or subsidising the cost, while not impairing the needs for reliability of the system against fraud and therefore the trust by consumers and citizens. Different countries in the EU are at different stages in terms of developing labelling for SFSCs. Labelling schemes therefore have to be tailored to fi the conditions in each country, including the maturity of SFSC development and consumer behaviour and the existing schemes in place. Therefore, a definitional framework and guidance within which member states have flexibility to develop / create their own labelling schemes could be helpful. Part of the framework could determine some common requirements for a label and/ or logo, concerned with aspects of quality (production, processing and marketing stages), traceability and validation but there should be flexibility in terms of implementation of the SFSCs. In addition to key requirements defining the scope of application, it is important to ensure credibility of the labelling scheme, and so a number of operational questions would also need to be addressed which were beyond the scope of this study. For example, which institution(s) would be charged with managing the labelling scheme, e.g. self declaration or certification, controls? Would participation in the labelling scheme be subsidized through existing EU CAP policy mechanisms (Rural Development) or others (EU cohesion or social policy, national and regional funds). While labelling might help consumers to reduce their diffilcuties in finding / spotting SFSCs products available on markets, on its own it would not address the problem of lack of availability and access to produce from named farms or the barriers to small-scale producers seeking to develop SFSCs, especially in business start-up phase. This instead requires solutions around logistics, marketing, and public procurement, and therefore suggests that the regulating activity should not be restricted to labelling but should include other policy tools such as financial incentives, training and exchange of knowledge and skills, the development of regulatory and administrative frameworks.