The role of Geographical Indications for rural development.

Transcription

1 International Congress on Promotion of Traditional Food Products 3 rd May 2012, Ponte de Lima (Portugal) The role of Geographical Indications for rural development. Andrea Marescotti Department of Economics, University of Florence (I) andrea.marescotti@unifi.it

2 Tuscany Tuscany owns a great renown due to its history, culture, art, famous people. Agriculture and rural areas in Tuscany are also part of its cultural patrimony: a hilly landscape where agriculture had (and still has) a decisive role. Wine is the most famous agricultural product (Chianti, Brunello di Montalcino, Sassicaia). Other famous product are the Chianina beef, the extra-virgin olive-oil, Sheep-milk cheese, Ham.

3 Tuscany s gastronomy The role of Geographical Indications for rural development.

4 Agriculture in Tuscany today Agriculture in Tuscany: Small-medium sized farms, part-time, integration with other local economic activities Intensification and concentration not so strong: big farms only in some sector/area (wine) Due to its characteristics, Tuscan agriculture could well insert in the new mainstream inspired by Multifunctionality Agritourism (4.000 farms), wine routes Environmental services and landscape Social farming (schools, care farms) Direct sales and more recently other AAFN (farmers markets, box schemes, solidarity purchasing groups, farmers shops ) Typical products

5 Typical products In this context, especially starting from 90s, typical products have been often taken as flags of Tuscan renaissance, culture, tradition, history, agriculture, landscape (particular emphasis on wine and extra-virgin olive-oil). I will focus now on PDO and PGI for agricultural and food products different from wine There were great expectations on PDO and PGI (meaning) in Italy, that brought to a sort of run to the top This can be seen also through the high number of registered GIs and the high number of farmers and processors involved

6 PDO/PGI products in EU ( ) A Mediterranean affair

7 PDO/PGI products in Italy Roughly: 5%

8 PDO/PGI in Tuscany REGISTERED (16+6) ON THE WAY TUSCANY ONLY Castagna del Monte Amiata IGP Fagiolo di Sorana IGP Farina di castagne della Lunigiana DOP Farina di Neccio della Garfagnana DOP Farro della Garfagnana IGP Lardo di Colonnata IGP Marrone del Mugello IGP Marrone di Caprese Michelangelo DOP Miele della Lunigiana DOP Olio XV di oliva Chianti Classico DOP Olio XV di oliva Lucca DOP Olio XV di oliva Terre di Siena DOP Olio extravergine di oliva Toscano IGP Prosciutto Toscano DOP Ricciarelli di Siena IGP Zafferano di San Gimignano DOP NOT ONLY TUSCANY Fungo di Borgotaro IGP Mortadella Bologna IGP Pecorino Romano DOP Pecorino Toscano DOP Salamini Italiani alla Cacciatora DOP Vitellone Bianco dell'appennino Centrale IGP TUSCANY ONLY Cinta senese DOP Finocchiona Toscana IGP Fungo dell'amiata IGP Miele toscano IGP Mortadella di Prato IGP Olio XV di oliva Seggiano DOP Pane toscano DOP Panforte di Siena IGP Pecorino a latte crudo delle Montagne e Valli pistoiesi DOP Pecorino delle Balze Volterrane DOP Pecorino Terre di Siena DOP Salame Toscano IGP NOT ONLY TUSCANY Agnello del Centro Italia IGP Vitellone della Maremma DOP

9 The high number of registered PDO and PGI protected is a proxy of the high expectations firms have on their potentialities But the real use of PDO and PGI made by firms is rather low. PDO/PGI products in Italy: turnover at production level PDO/PGI Product Million euro % total Grana Padano DOP Cheese ,01 Parmigiano-Reggiano DOP Cheese ,41 Prosciutto di Parma DOP Ham ,02 Prosciutto S.Daniele DOP Ham 309 5,16 Mozzarella di bufala campana DOP Cheese 290 4,84 Aceto Balsamico di Modena DOP Winegar 243 4,06 Mortatella di Bologna IGP Salami 218 3,64 Gorgonzola DOP Cheese 216 3,60 Bresaola della Valtellina IGP Salami 199 3,32 Pecorino Romano DOP Cheese 156 2,60 Top 10 (out of 239) ,66 Total Italy ,00

10 Consumers: The level of recognition of the PDO and PGI symbols is low in the EU27, and there is confusion as to the meaning of the symbols The evaluation of the EU Commission Indeed, even the evaluation made for the EU Commission in 2008 showed weak benefits from PDO and PGI products Economic reasons such as marketing, gaining market share to keep businesses viable or profitable through the protection of the names, or sending quality assurance signals to consumers, are the most important. The scheme is perceived by PDO/PGI producers as having significant benefits for producers in terms of reputation, but a lower impact on their profitability. For most traders and retailers, PDO/PGI products account for a very small share of their business and they are seen as quite unimportant. For small, specialist shops and traders the PDO/PGIs are more important. The most important benefit is the enhancement of reputation from being associated with high quality products.

11 Costs and benefits from the protection What are the costs and the benefits firms can have from using a PDO/PGI for their products? More generally, what are the (positive and negative) socio-economic effects of the protection?

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13 Costs for firms Preliminary Costs: needed to apply for the registration (expertise for the drawing of technical and historical documents, rural animation, meetings ) Direct costs: costs for inspections and certification. They vary according to the Specifications and the structure of the production system. Indirect costs: costs for adapting firm structure and organization to comply with the Specifications. Ex. New plants, new organization to keep separate two production processes, higher prices for quality raw materials. Non-compliance costs: due to the part of the production which cannot be sold as PDO/PGI because it doesn t reach the minimum standard required by the Specifications Other costs: promotional activities to support the reputation, often collective ones

14 Benefits for firms Price premium: due to certified quality, market cleaning Sales increase: the increased reputation of the product may stimulate an increase of the demand Stable long-lasting relations: the certification system may help consolidating supply-chain relationships and sales channels. New marketing channels: the PDO/PGI gives the chance to open new marketing channels (i.e. export, niche markets, tourists) Quality logic : the introduction of quality certification and controls may help firms to modernize the production methods and their organization medal effect: having PDO/PGI products in the assortment qualify all the production of the firm

15 Some benefits at local production system level Cohesion and collective action: the very activation of the application procedure may stimulate producers to join and to start collective activities. After the registration, PDO/PGI normally requires some form of collective organization and collective initiatives (specially on promotion) PDO/PGI products may benefit from public incentives and funds (for promotion, for associations, for certification costs) available from the Rural Development policy tools and other sources Spillover effects: the high reputation of the product may be used by other local actors to enhance their social, economic and cultural activities (agro-tourism, restaurants, cultural activities )

16 Some problems at local production system level Exclusion: firms located outside the area, or not able to comply with the Specifications due to production techniques used or the marketing channels used, or again informal firms, cannot access to the name Standardization: the Specifications act as a standard. Risk of including market-oriented tradition causing a loss of culture and traditions, and loss of product internal diversity, and a loss of agro-biodiversity (modern plant varieties and breed vs native and local ones) Expropriation of the benefits: power of big firms may capture the extra-price obtainable by PDO/PGI. Multiple retailer, food processors, retailers

17 Case-studies

18 To PDO/PGI or not to PDO/PGI? As far as I know, there are not studies that analyse ALL the effects coming from a protection. There are some studies that take in exam SOME effects for SOME case-studies, with different methodologies. Some references: For Portugal, one good and recent example is: Artur Cristóvão and Luís Tibério (2011), Produtos DOP/IGP de origem animal em trás-osmontes, Portugal: da protecção ao mercado, Perspectivas Rurales. Nueva época. Año 10, N 19, pp I will just give two examples of studies that have been conducted on PDO/PGI issue in Tuscany: study on reasons why firms actually use PDO/PGI for marketing their products on international markets Study on why a product doesn t want to apply for a PDO/PGI registration

19 Reasons given for taking up taking up the scheme (%) PGI Tuscan Extra-virgin olive-oil Use of Increase firm s Useful marketing Access to new Higher price Higher Demand for Toscana reputation tool markets premium PDO/PGI Farmers Coop.millers Private millers Pure bottlers TOTAL Increase Consumer Consumer Protection Increase of market share guarantee of quality guarantee of origin (exclusive name) profit margins More added value Farmers Coop.millers Private millers Pure bottlers TOTAL

20 Reasons given for not applying for a PDO/PGI The cherry of Lari (Pisa Tuscany) Expected negative effects (from discussion among cherry producers): increase of production costs (certification costs, traceability); from informal to formal economy: bureaucracy and taxes higher selection of the product; Expected increase of competition (particularly if production zone will be wider than historical one due to political pressure ); expected increase in the misuse of the name (unfair competition) due to higher prices of the product with PDO; Expected loss in agro-biodiversity (success would favour modern cherry-tree varieties Although a consensus on Product Specifications was rapidly reached (also due to the homogeneity of producers and techniques), so far local producers do not want to apply

21 CONCLUSIONS

22 To conclude More evaluation is needed, especially in the ex-ante phase, to check the possible effects coming from the protection of the geographical indication and decide whether to apply or not. This requires all stakeholders to clear define their objectives and expectations The protection alone is nothing without collective action, good marketing, information, animation and training, connection to other local activities (such as tourism). The role of (local) public institutions can be of paramount importance The protection is only one of the many tools in the hands of producers (to a certain extent ). Other tools may be envisaged (together or without the protection) that may fit to the specificities of the local production systems, products, markets, consumers

23 Thank you The role of Geographical Indications for rural development.

24 made in Mexico!