How we're improving the food supply chain
New research looks at how to reduce the risk of small-scale producers becoming victims of opportunistic behaviour, how they could achieve better financial returns, and how they could foster better relationships with consumers.
14 February 2022
The food supply chain is one of the most important global industries. It determines the type and quality of the food we eat, which in turn has a major impact on our health and wellbeing. It therefore makes sense to ensure that this supply chain is running smoothly by identifying any barriers to access, developing better quality food markets, and helping agri-food producers to get their goods into these markets to improve choice for consumers.
About the research
These issues are investigated in detail in research by Newcastle University Business School. With many small-scale food producers currently economically vulnerable due to unfair trading practices, the research explored how to reduce the risk of these producers becoming victims of opportunistic behaviour, how they could achieve better financial returns, and how they could foster better relationships with consumers.
The study also looked at ways in which alternative business models and quality food markets can improve small-scale producers’ market returns and satisfy consumer needs.
The research is based around two major EU-funded projects:
- COMPETE
- Strength2Food.
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COMPETE
COMPETE looked at the factors that may affect competitiveness in food industries, such as:
- government policy
- productivity in agriculture and food processing
- the choice of governance structures
- the functioning of domestic and international markets
The research found that suppliers benefit from better relationships with buyers if they are members of a marketing co-operative, which in turn can lead to improvements in the quality and quantity of suppliers’ products. The latter are often major problems for small-scale farmers and food producers globally, who lack the ability to meet increasingly stringent buyers’ requirements regarding quality and quantity, severely reducing the financial returns they can generate.
Strength2Food
Strength2Food explored the sustainability of agri-food supply chains and food quality schemes (FQS), as well as innovative market strategies that can improve returns to small-scale producers within mainstream food supply chains – in particular, the adoption of Short Food Supply Chains (SFSCs).
The research showed how SFSCs can help producers build direct relationships with consumers, which can significantly improve trading relations, enhance producers’ economic fortunes, and increase their bargaining power.
Global impact
Overall, the research has had a hugely positive impact on several levels. It has:
- significantly influenced national policy and law in Armenia, Hungary and Serbia
- changed the practices of a major international grocery retailer
- shaped the EU policy agenda on unfair trading practices and food quality policy
- developed alternative markets and Short Food Supply Chains to promote good-quality produce
These impacts have improved economic returns to small-scale producers across a wide range of countries, enabled consumers to benefit from better access to quality foods and helped more than 30,000 children receive more nutritious school meals.
Below are some examples of the impact the research has had around the world.
Armenia
On a national policy level, the research informed the development of a new law on agricultural co-operatives in Armenia; with Armenia’s Ministry of Agriculture recognising the benefits of, and the need for, marketing co-operatives. This came after a programme to develop milk marketing co-operatives delivered training to 667 farmers, which led to the formation of 18 marketing co-operatives with 232 members.
Follow-up interviews were conducted in 2019 by the International Center for Agribusiness Research and Education (ICARE) Foundation – an NGO seeking to improve the viability of small-scale farms in Armenia. Of the 18 marketing co-operatives formed, 14 had continued to function (now with 459 farmer members). This demonstrated the financial benefits to farmers of joining a marketing co-operative membership, especially when combined with training and business advice, as recommended by the research.
Hungary
The study also influenced the Hungarian Ministry of Agriculture’s strategy on the promotion of quality food products under EU food quality schemes, with the ministry working with associations and producer consortia to get small producers’ goods on the shelves of multiple retailers.
Serbia
Meanwhile, in Serbia, a pilot study targeted primary schools and helped small-scale growers bid for school food procurement contracts, while improving school meal nutritional standards. This prompted Serbia’s Ministry of Education, Science and Technological Development (MPNTR) to embark on a project to prepare new laws for the provision of meals in Serbia’s primary schools. Since they were implemented in 2018, the regulations have helped more than 30,000 schoolchildren get access to nutritious meals.
Croatia
The study has also been the catalyst for changing the practices of a major international grocery retailer in Croatia. Researchers worked with an international grocery retailer, KONZUM, and the University of Zagreb on in-store experiments and market strategies to improve sales of local fruits and vegetables in this country.
To give an example, an in-store field experiment undertaken to promote local fruit and vegetable consumption, using point of sale materials, helped the company to increase like-for-like sales by 22%. As a result of this successful marketing strategy, KONZUM has strengthened its local food offering and launched a “local store within a store” in two of its superstores in Zagreb, supporting more than 100 local small-scale producers.
The research also prompted KONZUM to launch a marketing campaign to promote the sale of locally sourced fruit and vegetables. Customers buying selected fruit and vegetables could collect stickers redeemable for “healthy healer” soft toys. In all of KONZUM’s stores in Croatia, the campaign increased sales of local stickered fruit and vegetables by 10-15%. Over a nine-week period in 2018, more than 300,000 customers participated, with over 570,000 soft toys being collected. As a result of its success, the campaign was expanded to stores in Bosnia, Montenegro and Serbia.
Influencing EU policy
Another key impact of the study was its influence on EU policy on unfair trading practices and food quality. Research on improving the position of small-scale producers within agri-food supply chains informed the design of EU Directive 2019/633 on unfair trading practices in agri-food chains. Evidence from the study was cited in the European Commission’s assessment of unfair trading practices in business-to-business relationships in the food supply chain, ahead of the new EU directive’s adoption.
The importance of Short Food Supply Chains
Lastly, the research highlighted the usefulness of Short Food Supply Chains (SFSCs) in building closer relationships between small-scale food producers and consumers. Particular focus was given to the North East England fish supply chain, and how its quality could be increased by the creation of alternative markets and SFSCs.
The study identified key barriers faced by the local fish supply chain, including a lack of skills, consumer reluctance to try novel species, and poor connections between fishers and consumers. It led to new partnerships between a social enterprise and regional fishing industry stakeholders, who worked to overcome these barriers by developing new local markets for seafood.
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The restaurant was also the location for a training programme designed to give 16–25-year-olds seafood preparation and cooking skills – an initiative that’s creating an oven-ready pipeline of skills for the supply chain.
In addition, the research on SFSCs informed the work of Food and Drink North East (FADNE), which was established to support local food producers in the region.
About the authors
All of this far-reaching research was led by Professor Matthew Gorton and Dr Barbara Tocco from Newcastle University Business School. Matthew is now Deputy Director of the National Innovation Centre for Rural Enterprise (NICRE), a £3.8 million initiative that launched in September 2020 at Newcastle University. Barbara is a Senior Research Associate and NICRE Centre Manager.
Matthew and Barbara are leading NICRE’s work on Short Food Supply Chains, working with Food and Drink North East (FADNE) and the Department for International Trade.