Competitiveness of commodity chains:commodity chains:

inter-professional associations pin France

Jo Cadilhon6 7 December 2011 CEPAL Santiago

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6-7 December 2011, CEPAL, Santiago

Outline of presentationOutline of presentation

• Definition of competitivenessDefinition of competitiveness• French inter-professional associations

– How they workHow they work– What they do to enhance chain

competitivenessp• Can they help in managing markets?• How best to integrate smallholders?How best to integrate smallholders?• Latest developments in France and

Europe2

Europe• Lessons learned

Definition of competitiveness

‘‘Competitiveness at the industry level arises from superior productivity, either p p y,in terms of lower costs than rivals or the ability to offer products with superior y p pvalue that justify a premium price.’’

Porter, M.E. and van der Linde, C. 1995. https://notendur.hi.is/bdavids/UAU101/Readings/porter_and_delinde.pdf

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French legal framework

• Inter-professional associations recognized by French law 10 July 1975N fit i ti t t• Non-profit associative status

• 74 inter-professional associations in FranceM b i ti ti• Members are associations representing some or all of:– ProducersProducers– Processors– Distributors

4• They enable chain stakeholders to tackle

issues common to the whole chain

Missions of inter-professionalMissions of inter professional associations

• Advocacy of industry interests in policy making circles

• Collective promotion of products• Concerted setup of quality standardsp q y• Research and development• Extension of innovation to membersExtension of innovation to members• Limited role in ‘market regulation’

– Contract harmonization5

– Contract harmonization– Market information dissemination

Missions - Seeds associationMissions Seeds association

6http://www.gnis.fr/

Missions - Livestock and meat association

7http://www.interbev.fr/

Model of generic French inter-professional association

FO 1FO 4

FO 3Producers’ college

FO 2

PO 1

DO 1

DO 2

IO 1

IO 2

Processors’ college

PO 2 Distributors’college Inputs providers’ college

8Observers or Secretariat

Government services Public research institutes Consumers’ associations

Members of cereals inter-profession

• Producers’ collegeg– AGPB: Wheat producers’ association– AGPM: Maize producers’ association

• Distributors’ college– Coop de France: grains cooperative - marketing branch– FNA: Agricultural trading federation– SYMEX: French union of exporting millers– SYNACOMEX: National union of cereals foreign trade

• Processors’ college– ANMF: National French millers’ association

CFSI F h itt f i d t i l li d ti– CFSI: French committee of industrial semolina production– Coop de France: grains cooperative – animal feed branch – SNIA: National union of animal feed industry– French malt producers

9http://www.intercereales.com/

– French malt producers– USIPA: Federation of starch product industries’ unions– USM: Maize milling union

An association of associations

10http://www.cliaa.com/

Some features of French inter-professional associations

• They should draw their membership only from• They should draw their membership only from organizations that are fully representative of the stage(s) in the chain to be recognized by government

• There must be representational parity between the• There must be representational parity between the “professions” for recognition by government

• Government can extend inter-professional agreements to the whole industryagreements to the whole industry

• There must be unanimity to extend decisions. Inter-professional associations must speak for and act on behalf of all membersbehalf of all members

• Subsidiarity is important. An inter-professional association does not exist to take over the functions of its individual member associations

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of its individual member associations• Voluntary and compulsory funding by contributions

from all industry members

Success story: Th A P I d tThe Agen Prune Industry

• Interprofession set up in 1963 to t th hi l i di tipromote the geographical indication

• Achievements in four main activities:– ‘Market regulation’

• Characterizing the product• Estimating yearly market• Disseminating market information• Agreeing on contractual agreements

– Lobbying for enabling regulations at ti l d EU l lnational and EU levels

– Successful promotion of the product on domestic and export markets– Leader in technological innovations for plum production and prune

processing

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processing� Increased competitiveness: yearly prune sales increased

five-fold since 1963 http://www.pruneau.fr/gb/index.html

Is the system stuck from within?

• Recent difficulties of milk inter-profession to pagree on minimum farmgate price

• Failure of milk interprofession to mediate on b d d d icontracts between producers and dairy

processors• Heterogeneity of producers is not well• Heterogeneity of producers is not well

represented in the college of producers because of election process

• Can numerous producers be on a par with concentrated processors and retailers?

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Or is the environment no longer enabling?longer enabling?

• Inter-professions recognized by EU law but concept still foreign in ‘Northern’ member states wherestill foreign in Northern member states where cooperative monopoly model dominates

• Changing CAP and market regulation environment: if d k t lib li tiagrifood markets liberalization

• French politicians and some farmers would like to transfer ‘market regulation’ activities to inter-gprofessions: managing market information and business relationships for greater market stability, better food quality and equitable chain relationshipsq y q p

• Increased scrutiny from national and European competition watchdogs

• European Commission recently took steps to14

• European Commission recently took steps to recognize specificity of agricultural marketing organizations vs. free market regulations

Integrating small stakeholdersIntegrating small stakeholdersStatutory decision taking in South African

dit ilcommodity councils– Members of commodity councils represent all

stakeholders of the industry, including labourers y, gand consumers

– No parity is needed in decision makingDecisions taken by 2/3 majority vote representing– Decisions taken by 2/3 majority vote representing both members and total industry production

– Only decisions with double 2/3 majority are submitted to government to become statutory

– Government will consult all chain stakeholders again before establishing statutory tax or levy on

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g g y yall the industry

Lessons learned from a wider geographical analysis

+ F h d l ll b d t ti f h i+ French model allows broad representation of chain actors in the association

+ Successful in lobbying, promotion, quality improvement and R&D

– Inter-professions cannot solve all the problems of the commodity chaincommodity chain

– Representation of smallholder farmers and SMEs is problematicR l ti hi b t h i t till t– Relationships between chain actors are still tense

– Funding remains problematic– Underdevelopment of farmers’ associations is a

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pproblem in developing countries

Source: FAO, 2009. Commodity associations: a tool for supply chain development.ftp://ftp.fao.org/docrep/fao/012/i0945e/i0945e00.pdf

Thank you for your attention Expecting your feedbackExpecting your feedback

Read our analysis no 31:Read our analysis no.31: Commodity associations: a widespread tool for marketing chain managementEN: http://agriculture.gouv.fr/Analysis-no31-june-2011-CommodityFR: http://agriculture.gouv.fr/Analyse-no31-juin-2011-Les

C t t j dilh @ i lt f

ES: http://agriculture.gouv.fr/Analisis-No31-Junio-2011

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Contact: jo.cadilhon@agriculture.gouv.fr