Agricultural Applications Session

International Scientific Conference eRA – 6

The SynEnergy ForumThe Conference for International Synergy in Energy,Environment, Tourism and contribution of Information

Technology in Science, Economy, Society and Education

T.E.I. of Piraeus “G. Ritsos” Cultural Centre of Municipality of Egaleo, Greece

Monday, 19/09/2011

Agricultural Marketing Competitive Strategies and Innovative

Practices in Greece

John Bouris1, Panagiotis Kaldis2, George Alexopoulos3, Alexia Giannouzakou4 and Dimitrios Tseles5

1Dept. of Business Administration, T.E.I. of Athens, Greece, E-mail: jbouris@teiath.gr

2Dept. of Oenology and Beverage Technology, T.E.I. of Athens, Greece, E-mail: pkaldis@teiath.gr

3,4Dept. of Agricultural Economics and Development, Agricultural University of Athens, Greece,

3E-mail: galexop@aua.gr 4 E-mail: alexia@aua.gr

5Dept. of Automation, T.E.I. of Piraeus, Greece, E-mail: dtsel@teipir.gr

T.E.I. of Piraeus

Evolution of farming

• Post war period Focus on quantity (mainly on adequate food supplies at “reasonable” prices)

• Today Focus on quality (concerns on food hygiene and safety, environmental and biodiversity protection, good care and treatment of productive animals etc.)

• Farmers’ access to markets is on a competitive basis and depends on the ability of their products to meet the new set of criteria

• Market researches stress that customers are willing to pay more for quality products that meet their concerns

Forthcoming Common Agricultural Policy of the European Union (2013-2020):

• Central issue – Farmers should secure a fair income from the sale of their products

on the market and as remuneration for the services they provide to society under the European agricultural model

• Keywords creation of public goods– Food sovereignty – Preservation of cultivated landscapes– Maintenance the regional identity and culture– Biodiversity / environmental protection

• In this framework:– Sufficient room for small scale, innovative, locally based quality

production– Urgent need for innovative collective actions and marketing strategies– Strategies to “hold down” value added

Innovative ThinkingInitiatives to tackle challenges stemming from:

• increasingly volatile markets and a trend towards falling producer prices sustain/create income

• the ever-growing market power of the processing and marketing sector vis-à-vis producers added value has to remain locally

• problems in the marketing of local, regional and premium products. Specific legislation is in force but needs to be applied efficiently in order to benefit local and regional markets strengthen product/territorial identity

Strategic Reactions of Farmers

Competitive advantages today lie on:

• Cost Rationalisation (but NOT against quality)– Training– Precision Agriculture – Integrated Crop Management– Modern Technology – Cooperative/collective actions, etc.

• Product diversification – High quality/nutrition value products– Innovative marketing

• Effective supply chain management

Innovative Marketing• product differentiation

– the introduction of distinctive features, attributes, packaging and appearance in the agricultural products in order to achieve supreme quality customers’ perceptions

• product branding– with emphasis in the name, term, symbols, special characteristics etc

intending to differentiate the product of the end-users from those of the competitors

Available Tools• Product policy and Product mix policy

– Processing / Diversity / Transparency / Regionality / “Niche” products / Quality differentiation

• Communication policy• Direct sales & Sales policy

Food Distribution Channels (FDC)

• The agricultural product from ‘farm’ or ‘stable’ to ‘plate’ or ‘fork’, passes through alternatives marketing channels (from zero-level-direct marketing to N-level marketing channels)

• The FDC should be chosen according to their efficiency and adaptability to obtain a concrete target (such as a fair value between agricultural producer price and consumer price)

• The target is to select the channel which minimizes the discrepancy between producer and consumer prices

Local Food Systems - LFS

• The hallmark of local food systems is the development of direct marketing efforts which focus on creating strong links and improving trust between local farmers and consumers, beyond and above the conventional marketing networks

• LFS – are based on committed to sustainable social and

economic structures producers who invest on, and highlight the environmental friendly potential of agricultural production

– improve consumers’ access to typical, high quality/ nutrition value and safe local products

Local Food Systems - LFS

• Alternative food institutions (farmers’ conventional and organic markets, farm-to-school programs, local label schemes, and Community Supported Agriculture (CSA),

• “buy local” campaigns, etc.) are central strategies in LFS

• LFS can also build on the rapidly growing international “Slow Food Movement” which is considered as a central feature of the eating locally philosophy

• A prevalent viewpoint within local food movements is that a sustainable and equitable agri-food economy can and should be based upon a family farm structure

Community Supported Agriculture (CSA)"food with the farmer's face on it"

• It is a recent institution in agriculture for sustainable and cooperative farming

• It is considered as an answer to consumer’s ecological concerns while shortening the “distance” between the consumer and the farmer/farm as well.

• In a CSA organization, the farmer and a group of committed consumers also share both the bounty and the risks of farm production

• A typical (still simplified) CSA approach example:– During the winter marketing phase, a CSA operator (a collective organ)

develops a budget, divides these costs into shares, and offers shares to consumers

– Consumers purchase shares (providing financial support for the farm) and receive fresh produce and other products weekly from the farm

– The farmer can then focus on production during the growing season without the added effort and stress required for marketing

AgriTourism: “small farms, agricultural events, & regional promotion activities.”

• Farmers throughout Europe are increasingly offering tourism services

• There are several types of agritourism operations connecting small agricultural holdings & businesses, agricultural events & regional promotion activities

• Local authorities should promote agritourism activities with direct-marketing methods, Community Supported Agriculture, as well as farm sales of specialty and/or typical products

• Local community through agritourism initiatives should work to expand existing businesses, create new “product-based” festivals and farmer markets, and tie this all together on a regional plan to attract visitors

• In rural and semi-urban areas, there is a need for an integrated plan to connect Local production with Gastronomy in order to improve/differentiate local potential to attract alternative (and mainstream) tourists

Institutional Purchasing• Define economic spaces that potentially improve the

efficiency of direct marketing (even within existing market structures)

• The institutional food market includes elementary schools, universities, hospitals etc.

• Institutional purchasing involves linking local farmers with these institutions that purchase large volumes of food

• This market is growing rapidly, and was a $36.5 billion industry in 2011 in the USA (USDA-Economic Research Service Briefing Room 2010).

Benefits of Local Food Systems/Markets

• Increase resilience and welfare of small producers

• Increase added value in local production systems

• Create sustainable employment in agriculture and agri-food chain, transportation, etc.

• Increase the variety of fresh products and enrich food culture

Benefits of Local Food Systems/Markets

• Educate consumers on seasonality/availability of production and contribute to environmental protection

• Strengthen local links

• Increase and preserve biodiversity

• Increase the environmental potential of agricultural systems and improve the environmental footprint of all linkages

Conclusions• Farming is a key factor in the territorial development of

regions, landscapes and valuable environmental areas

• Farmers (even if small) have a real opportunity to turn consumer concerns to their advantage, by clearly distinguishing their products in the marketplace, and gaining premiums in return

• innovative marketing strategies should focus on: – strengthening the identity of the product & differentiating

products from the mass products on the market– increasing the bargaining power of producers – capture and distribute added value mainly in the local

community

Conclusions• Food may be more than agriculture but it is critically based on

farmers’ ability to actively shape the industry’s reaction • The future of food requires thinking about the way of living and

the way of preserving culture, diversity, health and quality of life across the planet

• Disruption of terroir (a particular geographical area that

includes unique ecological and societal resources and attributes), of culinary tradition and cultural competitive advantages are fast growing phenomena in the last couple decades

• There is a need of active, innovative farmers ready to invest in

building the new rural set up, strengthen the social fabric and fuel capabilities to mobilize endogenous resources & development

The current socio-economic environment calls for the development of intra-sectoral and inter-sectoral synergies on behalf of small scale and/or collectively organised Greek farmers

The capacity of a local productive system to create and develop high added value products and services, on an environmentally friendly manner, is considered as the critical issue of its competitiveness and sustainability

In sum